Just as democracy can be corrupted by repressive populism, so can capitalism be perverted by “rent-seeking” — when people seek to gain more than the goods and services they produce are worth to others.
Sometimes they use political influence to sustain monopolies or to prevent new entrants and innovators from competing for custom. Sometimes they use governments to provide subsidies from taxpayers, or to prohibit cheaper imports.
Sometimes they do deals with governments that provide taxpayer funds to cushion losses derived from incompetence or recklessness. These forms of crony capitalism detract from capitalism’s real benefits and achievements.
What capitalism should now do is to free itself from these rent-seeking perversions and spread its benefits as widely as possible.
It should act against anti-competitive practices to give people instead the power of free choices between competing goods and services. It should spread ownership of capital and investment as widely as possible through such things as personal pensions and individual savings accounts.
It should lower the barriers to entry so that everyone can aspire to start up a business to bring goods and services to others. It should seek a tax system that rewards success rather than punishing it.
Capitalism should become inclusive, making it as easy and as attractive as possible for as many as possible to set aside some part of present consumption in order to invest some of their resources and their time in providing goods and services that others will want. It should become true capitalism.
Dr. Madsen Pirie, contributing to “Viewpoints: What should capitalism do?”, BBC News, 2014-05-26.
May 27, 2014
QotD: What capitalism should do now
May 25, 2014
Russian rocket export ban means increasing opportunities for private enterprise in space
Strategy Page looks at the knock-on effects of the Russian government banning the export of rocket engines to the United States:
The U.S. government is being forced to use satellite launchers developed without government financing because the usual methods of obtaining these launchers is falling apart and currently is unable to supply enough rockets to get all American military satellites into orbit. The immediate cause of this problem is the recent (since earlier this year) Russian aggression against Ukraine. The U.S. responded to this aggression by placing sanctions on some Russian officials and firms. Russia responded to that by halting RD-180 shipments to the United States. That’s breach of contract and it will do enormous damage to Russian exports in the future because now many countries and firms realize that a contract with a Russian firm can be cancelled by the Russian government for any reason. This was always seen as a risk when doing business with Russia and many Western firms declined to do so or have pulled out of Russia in the last decade because of the growing unreliability of Russia as a business partner. The RD-180 affair got a lot of publicity, all of it bad with regard to future Russian exports of high-end industrial items. Europe, which gets about a third of its natural gas from Russia, is already looking for alternate sources and investors are fleeing Russia (and taking their money with them).
[…]
This is good news for the new private firms that are developing rockets for launching stuff into orbit. One such firm is SpaceX (Space Exploration Technologies Corporation) and is has been trying to break the current cartel controlling U.S. government satellite launch services. Since 2006 all this business has gone to a government-approved monopoly called the ULA (United Launch Alliance) which is composed of Lockheed Martin (Atlas 5 rocket) and Boeing (Delta 4). These two firms have dominated U.S. space launches for over half a century. Because of the RD-180 the Atlas 5 is more attractive (in terms of performance and price) than the Delta 4. Meanwhile SpaceX expects to have Atlas 5 competitor ready in a few years.
In 2012 SpaceX obtained its first contract to launch U.S. military cargo into space. SpaceX had earlier obtained a NASA contract which included 12 deliveries to the International Space Station (at $134 million each). What makes all this so noteworthy is that SpaceX developed its own launch rockets without any government help. SpaceX also developed the Dragon space vehicle, for delivering personnel and supplies to the International Space Station.
SpaceX has since proved that its rockets work and is pointing out that the SpaceX rockets can do the job cheaper that ULA. Currently ULA gets a billion dollar a year subsidy from the government that SpaceX would not require. SpaceX still has to get all the paperwork and approvals done so that they can handle classified missions. SpaceX does not see this as a problem, it’s simply going to take another year to satisfy all the bureaucrats and regulations.
April 9, 2014
QotD: “Perhaps being a boy is a learning disorder”
… more children are being diagnosed with “autism spectrum disorders” than ever, specifically that diagnoses have gone from one in about a hundred and fifty to about one in sixty eight. A lot of these diagnoses are for children with extremely mild Aspergers, right at the borderline between normal (whatever that is) and Aspergers. Now this may be a result of more people suffering from ASD’s, especially extremely mild Aspergers, as a result of cumulative mutations and pregnant women being exposed to environmental risks. Or it could be that ever since the Fed’s started throwing money at diagnosing and providing educational services for kids with ASD’s they have become the diagnoses de jour. In fact, it is worth noting that since the Feds started throwing more money at ASD’s and less at ADD and ADHD the number of children diagnosed with the former has increased and the latter two decreased. Apparently getting more Federal funding causes learning/psychological disorders and getting funding cut cures them.
That or educators are blowing off the needs of kids with disorders that are not “getting the love.” My own personal opinion is that favored problems get over-diagnosed and those not blessed with Fed money get under-diagnosed. Shame on the education establishment either way.
It should also be noted that whichever disorder is getting attention it seems to hit males about four times as often as females. In fact, it seems that a lot of the descriptors of symptoms for various ASD’s and ADD read like pretty normal behavior for boys.
Perhaps being a boy is a learning disorder (there’s a large number of females who would nod their head in agreement with this thesis).
A.X. Perez, “Old News Interpreted”, Libertarian Enterprise, 2014-04-06
March 12, 2014
The unheard-of withdrawal of a corporate welfare request
A strange thing happened in Ontario last week:
A major corporation, Chrysler, withdrew its request for federal and provincial subsidies for a multibillion-dollar revamp of its assembly plants in Windsor and Brampton. Decrying the fact that its request had become a “political football,” Chrysler said it would fund “out of its own resources whatever capital requirements the Canadian operations require.” How about that! A capitalist firm acting like a capitalist firm.
The reason this is so strange is, of course, that capitalist firms haven’t behaved this way in a long time. Instead, they impress upon governments the importance of what they’re doing in terms of jobs, innovation, economic growth, research and development and then not so subtly threaten to take their investments elsewhere if the governments don’t come across with generous financial assistance. It’s a genteel and widely accepted form of extortion, but extortion is what it is and it seems Ontario PC Leader Tim Hudak’s having called it that is what Chrysler is referring to in saying the issue has now become a political football. If that’s true, then good for Hudak. He’s already saved the province a couple of hundred million dollars even before becoming premier.
Chrysler’s decision is also strange in light of the tough-guy lecture its Canadian-raised CEO, Sergio Marchionne, gave our governments just a few weeks ago at the opening of an auto show in Toronto. Canada is “like a guppy playing in shark-infested waters,” he said. The car business “is not a game for the faint-hearted. It takes resolve, and it takes cash.”
February 28, 2014
Corporate welfare bums
David Sirota says that in at least some high-profile cases, President Obama was quite right to say they didn’t build that:
Remember when President Obama was lambasted for saying “you didn’t build that”? Turns out he was right, at least when it comes to lots of stuff built by the world’s wealthiest corporations. That’s the takeaway from this week’s new study of 25,000 major taxpayer subsidy deals over the last two decades.
Titled “Subsidizing the Corporate One Percent,” the report from the taxpayer watchdog group Good Jobs First shows that the world’s largest companies aren’t models of self-sufficiency and unbridled capitalism. To the contrary, they’re propped up by billions of dollars in welfare payments from state and local governments.
Such subsidies might be a bit more defensible if they were being doled out in a way that promoted upstart entrepreneurialism. But as the study also shows, a full “three-quarters of all the economic development dollars awarded and disclosed by state and local governments have gone to just 965 large corporations” — not to the small businesses and start-ups that politicians so often pretend to care about.
Of course, anyone who thinks major corporations as a whole are “models of self-sufficiency and unbridled capitalism” doesn’t spend much time in the real world. Far too many spend as much time trying to use their market position to exclude smaller competitors and lobbying for regulations that will prevent new entrants into their respective fields of business. As with anything, when you subsidize certain kinds of activity, you’ll inevitably get more of it — and governments compete with one another to offer sweet deals to corporations in terms of tax breaks, direct subsidies and other inducements to set up or expand their operations in a given state or country.
January 28, 2014
Reforming the NFL (and the NCAA)
Gregg Easterbook is worried that we’re at peak football (NFL football, anyway), and has a few suggestions to fix what he thinks are some of the worst problems facing the game as a whole:
For the NFL:
- Revoke the nonprofit status of league headquarters, and the ability of the league and individual clubs to employ tax-free bonds. A bill before the Senate, from Republican Tom Coburn of Oklahoma, would end these and other sports tax breaks.
- Require disclosure of painkiller use club by club — as anonymous data, with names removed. Painkiller abuse may be football’s next scandal.
- Change law so images of football games played in publicly funded stadia cannot be copyrighted. The effect would be that the NFL would immediately repay all stadium construction subsidies, and never seek a subsidy again. Altering national copyright law seems more promising than trying to ban pro football stadium subsidies state by state, since the handouts originate with a broad mix of state, county and city agencies. (Yes, careful wording of such a law would be required to prevent unintended consequences.)
For the NCAA:
- Graduation rates should be factored into the new FBS playoff ranking system. Not the meaningless “Academic Progress Rate” the NCAA touts precisely because of its meaninglessness — graduation is what matters. News organizations that rank college football should add graduation rates voluntarily, as news organizations have voluntarily agreed to many best-practice standards.
- For FBS players, the year-to-year scholarship — which pressures them to favor football over the library, to ensure the scholarship is renewed — should be replaced with a six-year scholarship. That way once a player’s athletic eligibility has expired, typically after 4.5 years, and once the NFL does not call — 97 percent of FBS players never take an NFL snap — there will be paid-up semesters remaining for him to be a full-time student, repair credits and earn that diploma. Not all will need the extra semesters. But six-year full scholarships would change big-college football from a cynical exercise in using up impressionable young men and throwing them away, into a fair deal: The university gets great football, the players get educations.
- NCAA penalties should follow coaches. If a coach breaks rules at College A then skedaddles to College B, all College A sanctions should follow him. The NFL should agree, voluntarily, that the length of any NCAA penalties follows any coach who skedaddles to the pros. So if Coach A gets out of town just before the posse arrives and imposes a two-year sanction on College B, Coach A should face a two-year sanction from the NFL.
[…]
For football at all levels:
- Eliminate kickoffs, the most concussion-prone down. After a score, the opponent starts on his 25. Basketball eliminated most jump balls; purists cried doom; basketball is just fine.
- Ban the three-point and four-point stance. Because of these stances, most football plays begin with linemen’s heads colliding. No reform reduces helmet-to-helmet contact faster than requiring all players to begin downs with hands off the ground and heads up. Will this make football a sissified sport? That’s what was said of the forward pass.
- Only four- or five-star rated helmets should be permitted. Some of the safest helmets are prohibitively expensive for public high school districts, but the four-star, $149 Rawlings Impulse is not. Only double-sided or Type III (individually fitted) mouth guards should be permitted. Double-sided mouth guards are the most cost-effective way to protect against concussions. Many players won’t wear them because they look geeky. If everyone was wearing them, this would not matter.
A more general reform is needed, too. Football has become too much of a good thing. Tony Dungy told me for The King of Sports, “If I could change one aspect of football, it would be that we need more time away for the game, as players and as a society. Young boys and teens should not be doing football year-round. For society, it’s great that Americans love football. But now with the internet, mock drafts, fantasy leagues and recruiting mania year-round, with colleges and high school playing more games and the NFL talking about an even longer schedule — we need time off, away from the game.” We need less of everything about football.
January 24, 2014
Government subsidies that make flooding worse
Chris Edwards on the oddity of an EU subsidy that inadvertently makes it more likely that floods will be worse:
… Britain has been suffering from river flooding, and a Daily Mail article explains how subsidies are a key culprit: “Thought ‘extreme weather’ was to blame for the floods? Wrong. The real culprit is the European subsidies that pay UK farmers to destroy the very trees that soak up the storm.”
The author is a liberal environmentalist, but his piece illustrates how liberals and libertarians can share common ground on the issue of government subsidies.
The article describes how forests in the upstream areas of watersheds can mitigate floods. However, there “is an unbreakable rule laid down by the EU’s Common Agricultural Policy. If you want to receive your single farm payment … that land has to be free from what it calls ‘unwanted vegetation.’ Land covered by trees is not eligible. The subsidy rules have enforced the mass clearance of vegetation from the hills.”
In the United States, we’ve got our own environment-damaging farm subsidies. We’ve also got the Army Corps of Engineers, which the Daily Mail could be describing when it refers to British policy: “Flood defence, or so we are told almost everywhere, is about how much concrete you can pour.
Another foolhardy thing, in the long term, is government subsidizing people to rebuild after devastating floods … in the same location that is just as likely to be damaged in the next flood. If you can’t get property insurance without getting the government to force insurers to offer it, you’ve probably built in an area that you shouldn’t have. A lot of the perception that major storms are more dangerous now than fifty years ago is that a lot of buildings are being erected in areas where storm damage is more likely to occur.
December 18, 2013
Should the government subsidize silly walks?
Prof. Art Carden has developed some silly walks and is seeking payment for his work. Since he cannot find anyone to pay him voluntarily, perhaps he should apply for a government subsidy for producing silly walks. But while silly walks may benefit society, the fact that people will not pay for their development voluntarily indicates that people do not value silly walks as much as other things people would pay Prof. Carden to do. Are some subsidies valid, though? What about for food? Or for education? How about subsidies for clean energy? Is government assistance definitely better for society? What do you think?
December 14, 2013
QotD: Defining “fairness”
Is there a way that we can explain supporting Medicare while cutting Medicaid, Social Security but not welfare checks, farm subsidies but not food stamps? For readers of Jonathan Haidt’s amazing book, The Righteous Mind, the answer should be “yes.” It lies in reciprocity. You’ll find an extensive discussion of this in my forthcoming book (she mentioned casually), but for now let’s concentrate on Haidt.
Jonathan Haidt’s original research led him to divide our moral intuitions into five groups, one of which was “fairness.” But when he wrote that liberals cared more about fairness than conservatives, he received an outpouring of vitriol from conservatives. They cared a lot about fairness, they protested — and they thought it was very unfair for people to be able to live without working. Haidt realized he was dealing with two very different conceptions of fairness: one of which had to do with equality, and the other of which had to do with reciprocity. “Fair” is a complicated word that appears unique to English (for more on its dizzying strangeness, I suggest you read economist Bart Wilson’s piece, edited by me, from several years back). Different groups have invested it with very different meanings, which can make it hard to see how your political opponents can possibly believe what they do.
Megan McArdle, “How Republicans Justify Cutting Food Stamps While Boosting Farm Subsidies”, Bloomberg.com, 2013-09-23
December 7, 2013
Pro and college football as taxpayer-funded non-essential services
In Time, Nick Gillespie points out that among the most-subsidized industries in the United States, the college and pro football leagues get a lot from taxpayers (even taxpayers who don’t like football):
As we enter the drama-filled final week of the regular college football season and the final month of the National Football League’s schedule, forget about GM and Chrysler, Solyndra, or even cowboy poetry readings. Fact is, nothing is more profitable, more popular, and more on the public teat than good old American football. That’s right. You, dear taxpayer, are footing the bill for football through an outrageous series of giveaways to billionaire team owners and public universities that put pigskin before sheepskin.
It’s just not right when governments shovel tax dollars at favored companies or special interests, even when those firms are called, say, the Minnesota Vikings or the Scarlet Knights of Rutgers University. The NFL’s Vikings are lousy at scoring touchdowns — they have the worst record in the NFC North — but they’ve proven remarkably adept in shaking down Minnesotans for free money. Next year they’ll be playing ball in a brand-spanking new $975 million complex in downtown Minneapolis, more than half of whose cost is being picked up by state and local taxpayers. Over the 30-year life of the project, the public share of costs will come to $678 million. The team will pay about $13 million a year to use the stadium, but since it gets virtually all revenue from parking, food, luxury boxes, naming rights, and more, it should be able to cover that tab. Not that the Vikings were ever hard up for money: Forbes values the franchise at nearly $800 million and the team’s principal owner, Zygi Wilf, is worth a cool $310 million. When the Minnesota legislature signed off on its stadium deal for the Vikings, the state was facing a $1.1 billion budget deficit. Priorities, priorities.
[…]
Especially in an age of busted government budgets, even the most rabid sports fan should agree that it’s an outrage that the highest-paid public employee in a majority of states is a college football coach (in another 13, it’s a basketball coach). It’s far better to be broke and have a cellar-dwelling NFL franchise, right?
Minor nit: they just broke ground for the Vikings’ new stadium, so it’ll be a few years before they actually open for business there. Other than that, Nick is quite right.
December 5, 2013
The much-touted economic benefits of government subsidized professional sports facilities
In short, if there are any positive externalities to governments spending vast sums to erect baseball, basketball, football, or hockey facilities for professional teams … most of the profit is captured by the well-connected and doesn’t benefit the communities who put up the money. I’ve linked to several articles that debunk the usual claims about how building this team a new stadium will provide so many millions of dollars in new spending, and the story always seems to be the same, regardless of the location of the latest corporate welfare pitch.
Earlier this year, Neil deMause linked to this Tampa Bay Times analysis of the local economic impact of the Tampa Bay Rays:
In 2008, Matheson studied sports projects from across the country to see if taxable sales rose after stadiums were built. The study also examined whether tax collections dipped when sports leagues shut down for strikes or lockouts.
“There was simply not any bump at all,” Matheson said.
Tax collections were as likely to drop as rise when a team started play in a new city. And collections dropped during some strikes, but rose during others.
The main reason relates to how spending ripples through an economy, said Dennis Coates, an economist at the University of Maryland, Baltimore County.
When a couple spends $100 for dinner and a movie, much of that money goes to waiters, ticket takers and other local workers and suppliers. Those people, in turn, spend their paychecks on rent, food and other sectors of the local economy.
Each dollar of original spending can contribute $3 to $4 to economic activity and job creation.
Professional sports mute this ripple effect.
“Spending that goes on inside a stadium tends to flow into the pockets of a relatively few, high-income individuals who live a large portion of the year outside the city,” Coates said. “Much of that money flows out.”
[…]
Sports franchises also drain an economy by soaking up taxpayer money that could go to other city services or tax relief — both of which stimulate economic activity.
In her 2005 study, the “Full Count,” Harvard University professor Judith Grant Long pegged Tropicana Field’s public subsidy at 130 percent of its construction cost, one of the highest public shares in the country.
“The real cost of public subsidies for sports facilities is significantly higher than commonly reported,” Long wrote. “Public costs associated with the operation of the facility and foregone property taxes are routinely ignored.”
The best face on Rays economic impact came from two 2008 studies that indicated that baseball bolsters tourism revenues to the tune of $100 million to $200 million a year.
Tourism analysis is an optimistic approach because it focuses only on dollars flowing into the area without examining how baseball might sap local spending levels.
At Field of Schemes, Neil deMause also notes:
The economists note other reasons why sports spending is overblown (some studies could be double-counting fans for each game that they attend even if they’re in town for an entire series, among other things); the whole article is worth reading. And when you’re done with that, check out Shadow of the Stadium’s rundown of other reports on how economists nearly unanimously agree that stadium subsidies are a really, really bad idea. Not that economists are always right, but it should if nothing else put the burden of proof on team owners to show why the heck they should be getting hundreds of millions of dollars in public cash, when nobody can spot any significant public benefits.
December 2, 2013
Reason.tv: Gregg Easterbrook on how football fleeces taxpayers
Published on 2 Dec 2013
Whether you like football or not — whether you’ve ever bought a ticket to a high school, college, or NFL game — you’re paying for it.
That’s one of the takeaways from The King of Sports: Football’s Impact on America, Gregg Easterbrook’s fascinating new book on the cultural, economic, and political impact of America’s most popular and lucrative sport.
“The [state-supported] University of Maryland charges each…undergraduate $400 a year to subsidize the football program,” says Easterbrook, who notes that only a half-dozen or so college teams are truly self-supporting. Even powerhouse programs such as the University of Florida’s pull money from students and taxpayers. “They do it,” he says, “because they can get away with it.”
At the pro level, billionaire team owners such as Paul Allen of the Seattle Seahawks and Shahid Khan of the Jacksonville Jaguars benefit from publicly financed stadiums for which they pay little or nothing while reaping all revenue. Easterbrook also talks about how the lobbyists managed to get the NFL chartered as a nonprofit by amending tax codes designed for chambers of commerce and trade organizations.
As ESPN.com‘s Tuesday Morning Quarterback columnist, Easterbrook absolutely loves football but also isn’t slow to throw penalty flags at the game he thinks is uniquely America. In fact, he sees the hypocrisy at the center of the business of football as “one of the ways that football synchs [with] American culture….Everyone in football talks rock-ribbed conservatism, self-reliance. Then their economic structure is subsidies and guaranteed benefits. Isn’t that America?”
Easterbrook sat down with Reason‘s Nick Gillespie to discuss The King of Sports, how the business of football burns taxpayers, and whether increased worries about brain injuries and other problems spell eventual doom for the NFL and other levels of play.
Produced by Todd Krainin. Cameras by Meredith Bragg and Krainin.
November 25, 2013
Amtrak even manages to lose money on food services
As I’ve said several times before, long distance passenger rail service is an economic dead-end, and the latest story on Amtrak’s financial situation just reinforces that:
As any popcorn-stand profiteer posing as a movie house operator can attest, captive eaters create golden opportunities to supersize profits. But on the Southwest Chief — and Amtrak trains in general — food and beverages are a financial drain. Last week, the inspector general revealed at a congressional hearing that Amtrak lost $609 million on its meal services over the past six years, citing all kinds of eye-popping details about giveaways to staff, spoiled food, and service workers earning about four times the standard industry wage. Defenders of Amtrak argue that the report was just a headline-grabbing jab that distracts from the larger story of the organization’s resurgence.
But the food service fiasco is just the tip of the iceberg. Amtrak has a chaotic management culture, routinely misappropriates funding, and is hamstrung by insane union work rules, as has been described in great detail by its former president, David Gunn.
Amtrak’s been running red ink since its founding in 1971, and tales of its financial imprudence are nothing new. But the 2008 law that authorizes it to operate is set to expire, so Congress is once again mulling what to do with this rolling money-gusher. The Brookings Institution has come out with a major study claiming that in the last five years Amtrak has finally gotten on the right track. The study, titled A New Alignment: Strengthening America’s Commitment to Passenger Rail, characterizes the 2008 legislation as a success that should be tweaked and renewed.
By glossing over facts, the Brookings report obscures the real story. In the last five years, Amtrak has grown increasingly reliant on public subsidies at all levels of government. Between 2007 and 2011, it received a record $8.4 billion in federal funding — a 50 percent increase over the prior five-year period. States have now become major contributors to Amtrak’s bottom line, kicking in an additional $842 million over the same timeframe. Amtrak’s ridership gains in the past few years are a nearly undetectable blip when placed in the context of the larger U.S. transportation network.
I’d often heard that the only profitable portion of the Amtrak network was the Northeast Corridor, but even that heavily used section is only profitable if you play accounting games:
So what about the Northeast Corridor (NEC), which is the busiest section of rail in the U.S.? Contrary to Brookings’ assertions, the NEC is also a giant money pit. The study claims the NEC generated a $205.4 million operating balance in 2011, but that figure was arrived at using Amtrak’s own selective bean counting methods. In violation of generally accepted accounting practices, routine maintenance expenses are counted as capital expenditures, according to O’Toole, while real capital expenditures never appear on Amtrak’s books because the federal government picks up the tab. According to calculations arrived at by Andrew Selden, an attorney and vice present of the United Rail Passenger Alliance, the federal government has poured roughly $40 billion into capital projects for the NEC since 1975. Now Amtrak says it needs another $151 billion to bring high-speed rail to the corridor by 2040.
November 15, 2013
Corporations and social responsibility
In this week’s Goldberg File email, Jonah Goldberg talks about the notion that corporations should operate with an eye to “social responsibility”:
Milton Friedman was famously opposed to the whole idea of “corporate social responsibility.” His argument was that corporations have a single obligation: to maximize profits for shareholders. When CEOs spend money on gitchy-goo feel-good projects, they are exceeding their authority and wandering outside the lines of their job description. I’ve always been very sympathetic to this view. If you asked me to invest $10,000 dollars in your startup company and then I found out you spent $5,000 of it to sponsor a program to teach prison-gang members to settle their disagreements by acting out scenes from Little Women, I’d be pretty pissed. That’s not why I gave you the money. And it’s pretty shabby of you to buy fame and praise for your generosity while spending someone else’s money. Indeed, it’s not much less selfish than blowing it on a three-day bender with the mayor of Toronto.
There are lots of different takes on this argument and, because this is my “news”letter, I choose not to deal with most of them. My problem with the profit-maximizing-über-alles creed for Big Business is that it offers no principled or moral reason for Big Business to stay out of Uncle Sam’s bed. If the federal government can make it rain Benjamins for any business willing to twerk for its amusement, why should GE or Big Pharma or the insurance companies demur?
Of course, some businessmen understand the risks of getting in bed with the government. But, since there’s lots of money to be made, there will always be other businessmen perfectly happy to put on the French-maid uniform and bark like a dog.
Even Adam Smith said, “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” That’s true. What’s even more true is that when government officials and business leaders sit down to talk, the inevitable result is a new “public-private partnership” that uses government force to limit competition from non-whorish corporations. Railroad magnates lobbied for the Interstate Commerce Commission. AT&T asked the government to make them a monopoly in the name of “efficiency” so they could clear the field of competition. Andrew Carnegie wanted government control of the steel industry so he could rely on Uncle Sam to guarantee his profit margins. GE loves Obama’s green-energy stuff, because without the inherent subsidies and regulations, it couldn’t make money off of its green tech.
I have no problem with contractors doing work for the government. It’s better that the guys building roads and bridges work for the private sector. But when big businesses agree to make the country less free, the market less competitive, Americans less prosperous, and the state more powerful just to make a few more bucks for their shareholders, it makes me think that Milton Friedman was wrong. We need a free-market version of corporate social responsibility. We need to equip businessmen with an ethical code that tells them there’s a principled reason not to get in bed with the government. They’d still be free to violate that principle, of course, but if they did, I hope they’d have the good sense not to come running to us to complain that the government has asked them to eat a bowl of dogsh**t.
