Please Don’t Feed the Businesses

[Chris]

Please Don’t Feed the Businesses is about the difference between being pro-market and pro-business. It is a liberal view that can't quite admit government is part of the problem yet surprisingly offers a political solution.

It gets to the heart of the difference and the problem quickly:

In a competitive system, businesses make money because they are better. In a crony capitalist system, businesses make money because they have distorted the rules to their advantage or because they have found a way to divert money to their advantage.

This is the fundamental distinction, all too often unappreciated by the press and in political debate: the difference between being pro-market and being pro-business. If you are pro-business, you like subsidies for businesses; you want to make sure that they make the largest profits possible. If, on the other hand, you are pro-markets, you want to behave like the ranger in the Grand Canyon: by enacting restrictions, ensuring that markets remain competitive and rules are designed properly, and preventing businesses from becoming too dependent on a crony system to survive.

I take issue with "businesses make money because they have distorted the rules to their advantage or because they have found a way to divert money to their advantage." Businesses don't make the rules, the government does. The government is the one that creates the subsidies that businesses then take advantage of.

Once that is correct, it follows logically that the solution to corrupt crony capitalism is this:

...One is that the best way to make a system robust to corruption is to decentralize and distribute the power. Similarly, the best way to make sure that rules are designed to make markets more competitive and not to favor incumbents is to try to bring to the table the largest number of people. If you have to legislate to make rules about general principles, it will be much easier to find some points in common that benefit everyone. Once we go into the details and bring the interested parties to the table, those parties will have a vested interest in distorting the rules to their advantage.

In practice, this decentralization, this distribution of power, is nothing less than a form of democracy. If you want a capitalist system to work well, you need to have a democratic system that works well at the same time. You need to bring to the democratic process as many people as possible because they are more likely to design rules in the interest of the community at large rather than the interests of a few small producers.

We need rules. We need to protect private property and we need to protect contracts. What we do not need are rules that try to manage businesses for political purposes.



(The use of tPF is to deal with trolls.)

[Newpublius]

Well that is exactly what things like QE are doing, there's a bunch of zombie companies out there that are taking advantage of QE to raise cheap money when they should be dying actually. AMC is actually a good example. They were able to do a raise based off of their inflated stock price and now they have a warchest of money to keep their movie theater business going at a time when the market is very clear that it wants significantly less theaters.

[Collateral Damage]

Please Don’t Feed the Businesses is about the difference between being pro-market and pro-business. It is a liberal view that can't quite admit government is part of the problem yet surprisingly offers a political solution.
It gets to the heart of the difference and the problem quickly:



I take issue with "businesses make money because they have distorted the rules to their advantage or because they have found a way to divert money to their advantage." Businesses don't make the rules, the government does. The government is the one that creates the subsidies that businesses then take advantage of.

Once that is correct, it follows logically that the solution to corrupt crony capitalism is this:



We need rules. We need to protect private property and we need to protect contracts. What we do not need are rules that try to manage businesses for political purposes.



(The use of tPF is to deal with trolls.)

Part of your statement needs clarification, IMO. Businesses, via lobbyists, do indeed 'make the rules'. It's how our Congressweasels are bought and sold.

[Chris]

Part of your statement needs clarification, IMO. Businesses, via lobbyists, do indeed 'make the rules'. It's how our Congressweasels are bought and sold.

Sure, if Congressweasels allow for it. Like Obamacare written by insurance companies. But still at the heart of it is a dysfunctional government manipulating for agendas.

[Chris]

To be clear, my point is for there to be cronyism, there must, by definition, be two sides. Crony: a close friend or companion. It's the collusion that's the problem. The solution is decentralization. Make government less of a target.

[RMNIXON]

Business large and small has always tried to manipulate Government in their favor, take a look at the Rockefellers history if you doubt it. And sometimes it does benefit the public, as in lower taxes and less regulation that keep costs and prices down for the consumer and encourage competition.

But the bad aspect is all the more reason to keep the interferences of Government at a minimum. When government is being used and abused to favor one business over another through pull. When some types of industry are subsidized and others punished for political reasons.

And of course the modern Woke industry of Government/Business partnerships that invite all kinds of corruption. It was just those kinds of partnerships that drove the economy of Nazi Germany and today's industrial China BTW!

And yet the American Left are moving us in that very direction.....

[Chris]

Keep not only government interference at a minimum but also as a target for corruption.

[jet57]

Please Don’t Feed the Businesses is about the difference between being pro-market and pro-business. It is a liberal view that can't quite admit government is part of the problem yet surprisingly offers a political solution.

It gets to the heart of the difference and the problem quickly:



I take issue with "businesses make money because they have distorted the rules to their advantage or because they have found a way to divert money to their advantage." Businesses don't make the rules, the government does. The government is the one that creates the subsidies that businesses then take advantage of.

Once that is correct, it follows logically that the solution to corrupt crony capitalism is this:



We need rules. We need to protect private property and we need to protect contracts. What we do not need are rules that try to manage businesses for political purposes.



(The use of tPF is to deal with trolls.)

That is a good article. I am actually for less governmental controls, but as we all know business will never police itself and predatory practices are what kills competition, ala walmart, nonunion trucking, Machiavellian employers, Wall Street practices ala the 2008 housing crises etc etc etc. These things create the need for government intervention under the General Welfare clause. Another bad practice is out of sight lease prices that small businesses cannot afford and in such locations as the SF bay Area, wages are kept too low and prices kept so high that working people can't afford a place of their own in many circumstances, OR you have 10 people living in one apartment.

We'd all love the panacea, but greedy human nature won't allow it.

[jet57]

Keep not only government interference at a minimum but also as a target for corruption.

The problem with targeting corruption, as we've seen over and over again, is that there is no accountability: "In an agreement the company will pay x amount in fines without admitting any wrong doing".

That's what keeps the bad guys rolling.

[jet57]

To be clear, my point is for there to be cronyism, there must, by definition, be two sides. Crony: a close friend or companion. It's the collusion that's the problem. The solution is decentralization. Make government less of a target.

I agree and will add that most of the cronies are really just thieves...