A couple weeks ago I went to Lithuania to attend a camp started seven years ago by Simon Black and Matt Smith called the BlackSmith Liberty and Entrepreneurship Camp, or Sovereign Academy… it seemed to have a few names. Continue reading
I thought of this little example to show that good government is a gamble.
Currently, the FDA (Food and Drug Administration) is a great example of horrible government. They get more than half of their operating budget from drug companies that are seeking FDA approval. Essentially everything people worry about without regulation of drug companies has happened under the FDA, because all the companies have to do is pay to play. There are plenty of dangerous drugs approved, and countless safe alternatives nixed, or simply not reviewed by the FDA. Big pharmaceuticals win by paying off the government, the little guy loses by having unsafe drugs on the market, or not getting their safe drug approved.
Commission E is Germany’s version of the FDA. They have reviewed hundreds of natural herbs to determine their effectiveness against diseases and ailments, and recommend when to use the herbs, in what way, and how much to use. This does not make Commission E money, they do it because that is their task as a government agency.
These are two government agencies, from two different governments. The FDA has become corrupt, wasteful, and harmful to the general public of the USA, while Commission E appears to be relatively neutral, and has helped people by suggesting natural cures. Neither one of them has much to worry about in the way of consequences for being wrong. Neither organization must meet the demands of the consumer. Each simply rely on the political process to make them work. Sometimes this proves affective, sometimes it proves disastrous.
But notice my example of good government comes from Germany. If you will recall, just 70 years ago the German government had started a global war, was wreaking havoc across Europe and Africa, was systematically murdering millions of Jews and Gypsies, and would leave its dark mark on the world for at very least, decades to come. Government can help people by recommending the proper herbs to eat and use in natural healing. It can also carry out genocides. But it is going to take a hell of a lot of cured sick people to make up for the tens of millions of lives ruined by the not-so-distant-past German government.
It is not impossible for government to do something good, but the odds are against it. And the good it does seldomly outweighs the bad it does.
At least in the private sector a business must attract customers and investors; corruption is unattractive. And guess what, much of what was publicized by Commission E was research already done in the private sector.
The difference between the depths to which a government can go, versus a business, is simply that a government can monopolize and kill competition with force. Without government for hire, businesses cannot do the same. If they care about their bottom line, engaging in mafia style tactics will be too costly on a scale as large as government does it. Even if they did try to bully their way to the top, the company’s reputation would suffer too much (and profits slip too much) to be able to establish monopoly control over the media, law enforce, justice system, and consumers. The only reason they can do so now is by using the budget of the United States government (almost $4 trillion each year) to do the policing, spew the propaganda, prosecute the enemies, “lose” the criminal file on the cronies, deregulate their business, over regulate their competitors, or force the public to buy a product.
And without a single government agency to pay off for approval (the FDA), it would be difficult for a company to buy good reviews from the hundreds of competing online and in print publications, organizations, and non-profits who evaluate drugs, and publish findings on healing remedies. The market for information would bring to light the risks of certain drugs, and turn profit from selling information on positive natural alternatives. Competition among these groups would keep the information reliable, and advertisers would keep the information cheap.
The point is that government can do good things, but does such bad things that it is impossible to outweigh them with the good. And even so, it is a gamble whether they will do anything good at all. If a business does something bad, you are not forced to give them your money anyway.
I read three hit pieces on libertarianism the other day, which was interesting. It was interesting because it made me realize how little these publications care about consistency. The authors did not get the difference between what the philosophy would “allow” for, and what would actually happen. They do not understand that believing a free market will sort everything out does not preclude the possibility of businesses doing bad things, it simply allows mechanisms other than force to define the outcome. They don’t get that men with guns forcing us to do what is “right”, is worse than the possibility that people will do something “wrong”, albeit, something that does not initiate force on another person.
So the authors are all hating on Uber (the unregulated cab service) because of unethical business practices towards competitors. “See, it’s not a free market if they are trying to dishonestly disadvantage their competitors”. Uhh… no, it would still be a free market. It is the responsibility of the consumer to choose what business tactics they will put up with; that’s what a free market means. A business can do anything that does not initiate force, and the consumers can choose which businesses to keep alive. Does this mean it is possible for assholes to own successful businesses? Yep.
But what a non-libertarian philosophy says is, if 51% of people agree, we can use force to outlaw being an asshole, or get rid of a business we have convinced 51% of the population is mean…even if they aren’t really. Libertarians say, we don’t have to use force, as long as Uber didn’t use force. You don’t like what they do? Don’t buy from them, and support the other guy. Boycott, and raise awareness about how bad the company is. Don’t resort to violence to force a company or person to “be nice”, unless they are aggressing on someone else.
Apparently Uber employees were calling up a rival taxi service, then canceling, causing delays for real customers. I don’t like that they did that, it seems dishonest. But there are ways to fight back without abandoning free interaction, throwing your hands up and being like, “oh, damn, I guess we need thugs with guns to make sure businesses play nice”.
The way it is now, “official” taxi companies do not need to resort to agressive tactics like Uber, because they already have! What do you think a union is? Literally, damaging another company with the threat of violence if they encroach on your business without jumping through the right hoops, which may preclude a new business because it adds costs which have nothing to do with the sales, safety, or market demands. So somehow Uber is worse for causing their competitors trouble without using force, than state sanctioned cabbies who never allow a competitor in the first place at the threat of violence or theft by the state. Just go and try to pick someone up in NYC and charge them for a ride, and see what happens if you get caught. That is okay?
And in addition to responding with boycott and other market solutions, the rival unregulated taxi business does have recourse. They could explain to their customers what happened, and tell them that is why they are implementing a system where, say, if you reserve a cab, there is a non-refundable $5 fee that pays part of the fare if not cancelled. They could explain to their customers what happened, and encourage the public to do the same to “punish” Uber. But to say because some businesses are run by jerks that all business should be subjected to thug regulators is silly. I’d rather a business be allowed to be a jerk, than have a business that is allowed to use legal thugs with guns who can imprison you. Right now we have the latter.
“Libertarians loooooove discrimination, and are racist”. And here is where people should really see the inconsistencies. Arguing that someone should be allowed to discriminate does not mean you yourself would discriminate, nor support businesses that discriminate. I honestly can’t believe people are serious when they argue this! Do people just go through life being carried by the wind, with no more philosophical grounding than, “that seems good” or “that seems bad”. “Well I know discrimination is bad, so if someone supports it, they must be bad!”
First off, the word discriminate means to tell apart. Would you discriminate against rapists who want to come into your child’s school? I would certainly hope so! People need to realize that no one is forced to patronize a business. What if a noisy motorcycle gang always came into your pizza place, makes a mess, and scares off the usual clientele without buying much? Would it be appropriate to discriminate against bikers if your business would otherwise fail? Or is being non-judgemental more important than your livelihood? Denying someone service is not the same thing as taking something from them, and I don’t think the authors of the various libertarian hit pieces understand that.
It is popular to equate discrimination with force, with stealing. But this necessitates a philosophy that says business owners are there to serve, not to profit. It essentially says, businesses are slaves to the people who must be provided us with things. If I took the time, energy, and money to make a product, that product is not owed to anyone for less of a price than I am willing to part with it. If that willingness to part with the product or service depends on who the customer is, that just means the provider of the product does not see value in the transaction. Should he be enslaved by the state and forced to provide that product or service? That is what anti-discrimiation laws do. They say, since you chose to go into business, and provide something of value, you no longer have the right to choose who to give that thing of value to, and will provide that product or service for the same price you provide it to others.
Again, this does not mean I am pro-discrimination! But to argue that they shouldn’t have the right to deny any customer betrays the intellectual depth of a toddler. I am the one who decided to make, sell, or provide a service, and if those transactions are not free for either party to agree or disagree to, that is literally slave labor. Should airlines go out of business with half full planes because their fat customers cannot be forced to buy 2 tickets, since that would be discrimination? Or should the skinny customer be forced into only half a seat, when he paid for a full seat, because the person next to him is overflowing?
How about gun shops that are currently forced to discriminate, based on who is approved by the government? Say I can’t afford the hundreds of dollars and hours of time and transportation to get my gun license, so I am discriminated against? I mean seriously we talk as if voter ID laws discourage minorities from voting, and we are okay with more hoops, and greater costs being imposed if people want to protect themselves? So to act as if these thugs we allow to have control over our lives (government) will prevent discrimination is absurd, they currently sanction countless types of discrimination. The difference is, since there is no free market, there is nothing we can do about it!
In a free market, am I going to support a business that hangs a sign, “No Irish”? No! Do they have the right to hang the sign? YES! What is so hard to separate about things you shouldn’t do, and things you shouldn’t be allowed to do?
Woof. Anyway this is turning into a rant and I am going to try to wrap this up. The bottom line is, stop pretending libertarians are racist just because their philosophy precludes government backed force. Just because I support the right to free speech, to say WHATEVER you want, does not mean I like or enjoy racist hate rants. It means I understand the philosophical pinnings that say someone is always going to want to silence you, so let’s be consistent in allowing no one to be silenced. Let’s never allow the initiation of force, which means even when you deny a customer service because they are Jewish, men with guns will not come and arrest you, kill you, put you in jail, and put a gun to your head while you make that sandwich.
And you want to talk real world? Fine. What is more democratic than allowing a business to die because they won’t serve Jews? Or are these anti-libertarians afraid that the business would survive while being terribly prejudiced? Yes, that is what they are afraid of. Not being able to initiate force against someone when they disagree with their non-aggressive—though unsavory—actions. And THAT is what being a libertarian is about. Knowing that no matter how rude, selfish, mean, or hateful a person is, force should not be used against them to quell their behavior, until he initiates force against someone else. That is the simple line of when it is okay to use force, when responding to it. Otherwise it is all arbitrary.
For each action there is an equal and opposite reaction. Discrimination by a business does not legitimize locking that person in a cage, or taking their money at gunpoint. It does legitimize a social response of boycott, shunning, and lecturing; it does elicit the response of non-agressively ruining that business, and making sure every decent person knows what a horrible jerk the owner is.
I want to live in a world where people are decent because they want to be (or economic opportunity forces them to be nice out of self interest), not because there is a gun to their head. And guess what, if that world doesn’t exist without a gun to our heads, then it doesn’t actually exist with a gun to our heads either!
Girl in the class I’m subbing for: “I would be a bad President, I’d just let everyone do whatever they want”.
Me: “No, that would make you a good President”.
There are plenty of things wrong with the governments in some Caribbean countries, but one thing they seem to get is economics surrounding tourism. Why do people like visiting countries like Mexico, Honduras, and Belize? The weather, the price of goods, and opportunities to do fun things, among other reasons. But what you see is no obvious regulation in the tourist areas, because tourism is so important to these economies. The fear is that anything that would restrict the free market in these areas would strangle tourism which accounts for in some instances 90% of the economy. The fears are justified.
And what if tourists were dying all the time because of the lack of regulation? Do you think my cruise ship still would have stopped in Roatan if each time they did, a passenger was lost? The few deaths and disappearances over the years associated with the Norwegian Dawn (which I had the pleasure of cruising on last week) happened while on board the ship, and I could find nothing of passengers being harmed or going missing in the port cities the ship frequents. The lesson here is that economic opportunity is a better regulator of behavior than an overbearing government with excessive regulation.
I’m not sure I would have been able to play with monkeys in the United States. Maybe there would have been medical forms and waiver forms and consent forms and a 2 hour talk before being allowed into the cage with the adorable happy little creatures jumping onto your shoulders and eating sunflower seeds from your hands. You can bet the price would have been a lot more than $10 per person; after all in sue-happy U.S. the business would need to purchase excessive insurance for the unlikely event anything went wrong. Really these Caribbean countries the Dawn visited expect travelers to take personal responsibility for their actions and decisions. What a novel concept!
That’s why when some of my travel mates went on a “Snuba” excursion, the preparation was ten minutes instead of ten days. And guess what, they all made it out just fine. A couple people decided not to go to the bottom of the ocean with a hose attached to the top, after already paying for and attending most of the excursion. That’s fine, it was their choice. It’s empowering to be treated like an adult, and its a bit sad that sometimes we need to go to Mexico for that to happen.
On a side note everyone at these ports spoke excellent English, because it benefits them to be able to speak to the tourists. Who was the worst English speaker I met? A police officer in Roatan. He had his government job, so he apparently saw no need to learn English. I wondered who ever gets arrested on the island anyway; our cab driver said, “sure crack those beers in the back seat, the cops don’t care”, and the dreadlocked Rastafarian smoking weed didn’t seem to bother the officer much either.
So to get back to the subject of the girl in class who thought that Presidents must be controlling or make a lot of rules to be effective, I disagree. People are quite capable of making their own decisions. I am very grateful I didn’t have someone telling me I had to attend a week long zoology class in order to play with monkeys. I was thrilled that the decision was my own, complete with risk assessment and cost benefit analysis. And of the people whose livelihood depends on ships stopping in their port, and tourists feeling safe to walk through the towns, eat the food, drink the drinks, and get in a taxi–you can bet they regulate each other better than their government or ours ever could.
It is in the best economic interest of that business in Roatan to make sure their monkeys aren’t going to bite me, and make sure their parrots aren’t going to spread disease. It is in the best economic interest of the entrepreneurs in Costa Maya to make sure the ice in their margaritas doesn’t make me sick, and the chicken (or iguana?) in their tacos is just fine for human consumption. Somehow I made it out of there without the USDA’s boots on the beaches of Cozumel, obscuring the beautiful view of coconut trees and crystal clear water.
As Americans we might be conditioned to demand authority, to think of a leader as someone who restricts us for our own good. I’m starting to think I may too have been brainwashed by this mentality. I was worried getting off the ship at the first port, yet my fears quickly subsided as rationality took over. There’s nothing like the free (and perhaps somewhat under the table) street markets of the Caribbean to clear your head.
People like to blame business for various ways they “mistreat” their employees. But if we step back and think about it for a second, we would realize that the alternative is that the business doesn’t exist at all. So really when someone argues that a business isn’t doing enough for their employees, they are arguing that the employees would be better off unemployed than, say, employed with “sub par health coverage”.
Saying “business should supply the best health coverage to all their employees” is like saying, business should not be allowed to exist within the borders of America unless they are willing and able to provide their employees with certain things that third parties decided are necessary for the workers. Why is it so easy for people to accept that kind of force in the marketplace? And are people really willing to accept the alternative?
The alternative would be that the company is not started, employs no one, and therefore cannot offer “inferior employment benefits”. Or would the rich also be criticised for not starting companies? Because here’s what happens: a company is started for the purpose of delivering a product or service for a profit. The company offers jobs which people are free to apply for, or not. No one applies? The salary and benefits increase. Everyone wants the job? The company doesn’t have to offer as much. And no one has to take that job.
Yes, contrary to popular belief, American businesses don’t actually raid poor villages and towns in order to enslave and exploit employees. Employment in the U.S. is still a choice; the employee gets to decide what skills to learn, which companies to apply to, where to live etc. He can say “no thanks” to a job offer, and he can quit and seek other opportunities.
So people get angry that a company has a better bargaining chip than a job seeker? People actually get mad that there are so many benefits of employment that job seekers have to “take it or leave it” when it comes to a job offer? People actually look past the fact that a business is providing a product, jobs, tax revenue, and argue that the business is not doing enough? And people are so bothered by these facts they want to use the force of government so that if you are a business in America, you must offer a certain trade to your employees for their skills and labor, without getting anything extra in return.
So my question is: is it more moral for a company to shut its doors than to forgo employee health coverage? Would we rather a company stop its production, fire all employees, and dismantle the business, rather than see a company offer “sub-par” or no health insurance to their employees? Or should we also use the force of government to keep businesses open against their will? (Hint: Sometimes that’s referred to as fascism).
Maybe everyone with a certain amount of savings should be forced to start a company or invest in one, since after all, people need jobs. So why not just force companies to open, and then force them to offer all sorts of benefits to their employees, while forcing them to keep their production up and forcing them to keep their prices down?
Or maybe we could just accept the fact that free transactions with mutual benefit absent of force will result in all different types of employment and all different types of compensation for that employment. Can we accept that someone might want a job with no extra benefits instead of no job at all? Or as third parties, do we know better than the employer, and know better than the employee, so we have a duty to step in and “help” the employee and punish that greedy company?
You know, the greedy company whose founder risked his or her money, time, and effort to build a business, with the possibility of failure, bankruptcy, and disappointment around every corner. The greedy business that only grew because investors believed in the founders’ ability and skill, took a risk with their money, and now need to be paid back in order to invest in and create future companies. The greedy business who provides livelihood for hundreds, thousands, tens of thousands of people who trade their labor voluntarily for what is offered by the company, yet doesn’t have to be offered at all. That greedy company who pays taxes to pave the roads, to pay the welfare benefits, and to fund state propaganda that “educates” the people about the evils of free market transactions and agreements absent of force.
Or we could continue on the same path that 99.5% of human history has followed of allowing government to force individuals and groups of individuals (as in, companies) to provide certain things for other individuals, without any benefit to the former. This same old, familiar, cliché, widespread, establishment idea that somehow the government can solve all our problems and protect us from scary things–the idea supported by “counter-culture rebels” who are so anti-establishment that they support the most historically established entity on earth: coercive centralized government.
Well maybe my mind’s not open enough to accept the same old subjugation that has been going on for thousands of years. I guess I’m just stuck in the past for considering the possibility of market based societal organization absent government force–which has never fully been tried before. I guess I’m just too afraid of change which makes me want to keep the same stale system we have always lived by in one form or another.
Newsflash: promoting coercive government to “solve problems” is not a new idea, and it’s not anti-establishment; it’s a cause without a rebel.
People forget how “the rich” got rich in the story of Robin Hood. Was Robin Hood stealing from the rich who earned their money running factories, managing farms, building homes, and employing people in these enterprises? No, Robin Hood was stealing from the rich who had taxed the “peasants” into poverty. Robin Hood was against crony capitalism. The King decreed unfair taxes and regulations which strangled “the little guy”, and the Sheriff of Nottingham collected those taxes, taking a little on the side for himself. Then the King distributed some of that tax money to his Lords and Ladys, who also became rich because of their connections with the King, in exchange for loyalty and help in subjugating the masses.
The largest concentration of “one percenters” is currently found in Washington D.C. What does the city of D.C. produce? Do they provide food, shelter, clothing, comfort, or medicine? They like to pretend that they do, but if I put a gun up to a surgeon’s head and told him to perform a free surgery, would I be the one providing the life saving medical care? No. The Lords and Ladys in D.C. get rich off of your tax dollars, and give you peanuts in return. Then they tell you how greedy and selfish you are.
Don’t worry! The King has a solution. Lords and Ladys will sign a pledge to hire those who have been long term unemployed. They will return (if they keep their pledge) a fraction of what the government has stolen and given to them to employees. Of course the employees will then be visited by the Internal Revenue Sheriff of Nottingham and forced to give half of that money back to the King.
Bank of America, which lent $15 million to Obama’s 2012 campaign, and Dow Chemical, whose CEO Andrew Liveris has been described as Obama’s “right-hand man when it comes to advanced manufacturing,” confirmed that they signed Jarrett’s vague and ultimately non-enforceable pledge. The White House will hold an event Friday highlighting the pledge, which is expected to be signed by at least six other companies.
Because, why not run a country like a high school student council? Where’s Robin Hood when you need him?
Venezuela sure knows how to keep prices down, the government just orders retailers to sell TV’s and fridges at a loss due to the government induced 54% inflation rate. But unfortunately for Venezuelans they may not get much use out of their cheap electronics, as power outages have increasingly plagued the Socialist country run by Chavez successor Maduro. Some would call it irony that the power cut out halfway through Maduro’s speech about how great Socialism is, but not Maduro. According to him, the power outages were sabotage by right-wing extremists. Apparently Venezuela has the same problem that America has: they would be a utopia already if it weren’t for those damn obstructionist far right zealots!
“Be strong against this electrical war that yesterday’s fascists have declared against our people,” Maduro said in another address to the nation at about 11 p.m. local time.
When translated from the left-wing vernacular, “fascist” means anyone who I disagree with or wish to blame for the failure of my own policies. Fascism is a system of totalitarian government characterized by government control–but not ownership–over the means of production, so it is unclear how the opposition to Venezuela’s Socialist government could accurately be described as such. In reality the “fascists” who “sabotaged” the electrical grid were really socialists who have nationalized so much of the economy that no competent business would stay in Venezuela and be compelled to operate at a loss. Note the similarity of language and divisive tactics used in Venezuela compared to America: “War on electricity”. To quote Simon from Lord of the Flies “Maybe there is a beast… Maybe it’s only us”.
Never-the-less, Maduro must move Forward! So he will continue to realize the socialist dream of equality and utopia by cracking down on car prices, the same way he cracked down on electronics. Here, the socialist and fascist tendencies of the government are tough to tease apart, as sometimes companies are nationalized (AKA stolen) and sometimes they are just instructed how much they are allowed to charge customers (hint: not enough to turn a profit). Good thing America would never intervene in the car industry in the name of the greater good!
Maduro said that Venezuela will set new car prices, order prices lowered on used cars, and force used car prices to remain lower than new cars, which was being explained before the power outage in the speech about setting “fair” prices and “reasonable” profit margins. Of course profits are hard to come by while savings and salaries are decimated by 54% inflation caused by printing money. The price controls just cause shortages of goods, as there is no incentive to produce, import, and sell products at a loss. Already toilet paper and flour are scarce in the socialist country which has been intervening in the economy on a massive scale since Maduro’s predecessor Chavez became President.
Instead of reducing inflationary pressures, however, the price caps are likely to spawn a black market for the buying and selling of used cars much like the one that already exists for rental apartments, where regulations are also severe, said Asdrubal Oliveros, an economist at Caracas-based economic think tank Ecocanaltica.
“Cars are going to become even scarcer, and prices will rise further,” Oliveros said.
Still, Maduro and the Socialist government claim that price gauging and greedy businessmen are the cause of all their woes, ignoring the fact that businesses produce goods necessary for survival, and have been handicapped by government intervention at every turn. While cars are scarce, production has been well below capacity for years, showing that foreign investors and producers are reluctant to sink resources into a country that thinks nothing of nationalizing entire industries, and then running them into the ground. The difference between America and Venezuela is just the degree of socialist policies. America only kinda intervenes in the car industry, and only sets some prices. America also doesn’t print as much money at as fast a pace as Venezuela. But American politicians have no problem biting the hand that feeds by criticizing production the same way that the Venezuelan politicians do, and that should raise red flags to us all.
The solution to the economic crisis in Cyprus and the rest of the world is not going to come from government taxing the savings of their citizens. The only way for the world to climb out of this financial hole is a grassroots approach. The solution is the exact opposite of what just happened in Cyprus. When individuals are allowed to keep the products of their labor, whether gained through muscles or mind, is when the world will start to heal from the damage done by looting governments.
It is only the saver, the entrepreneur, and the technologist who move our society forward, and rule of law is exactly what allowed these people to come into being. When the saver knows that what he works for and puts into his account will not be stolen by the government, his neighbors or invading hordes, is when his bank account will grow large enough to support new technologies, innovations, products, advancements, companies and jobs. It is because his savings are not robbed that his money will work to benefit all of society. Had the government plundered his savings, there would be no societal advantage other than what can be forcibly accomplished with the crack of a whip at the end of a gun.
If every time Bill Gates saved a buck, the government took it, where would the capital to start Microsoft have come from? If every dollar Thomas Edison worked for was taken by the government for the “betterment of society”, would we still be sitting in the dark? And it is not just about resources going from the private sector to the government, it is about future wealth never being created, because why save something that will be stolen from you? Why, if you live in a bad neighborhood, save money in a jar if that jar is stolen once a month? If the message that government sends is that it is not worthwhile to work hard and save, fewer people will work hard and save.
Why were men finally able to create farms and grow crops? Because the government had a rule of law which was followed, that meant the farmer knew exactly how much of his crop would be given to the government before he grew it, and he knew that with that share of his wealth the government would protect him from foreign and domestic robbers who would otherwise take his harvest. Now imagine the government comes in after the harvest, and says extra crops will be taken that year. The rule of law has been breached, and the incentive to grow more crops than necessary has been crushed. That individual farmer may be fine with what he and his family can save, but now he has nothing to trade with his neighbor, or sell. This means it will be harder for people in the area who are not farmers to get food, because farmers only grow enough for their families, since otherwise the government takes it. Now, because the government ignored the rule of law, the wealth of the farmer and his region has been reduced, not only by the initial amount of food taken by the government, but also by curbing the future supply of food with their actions.
The same incentives exist behind the complicated markets of today’s economy. Cyprus cannot expect to attract investors, savers, or companies after implementing a savings tax, because people will not be guaranteed the fruits of their labor. The situation has greater implications since it was not the Cyprus government acting alone, but in coordination with the EU. This means that if you live in the European Union, you can not be sure that money in a savings account will not be taxed. To some this means moving money and investments out of the EU. To others it may mean investing in physical gold and a strong safe, which would damage the lending capabilities of the banks which used to hold the deposits that have been turned into gold. To many it means abandoning plans to start a new business, to expand a business, or to create new products, innovations and jobs. Why go through the grueling work of building a company, if what you work for could be taken by the government in the blink of an eye?
The rule of law has been breached by implementing a tax on what one has already earned, and already paid taxes on. No one could plan for this surprise tax, and when people were putting money into their accounts, they did not know about this tax. People in the EU can no longer be certain that what is theirs will stay theirs. The one time tax on savings in Cyprus will most likely have terrible economic repercussions for all of the EU, not because of the $7 billion taken in taxes, but because of the precedent set, the uncertainty created, and how people will act with their money in the future.
Antitrust laws came into being in the United States in 1890 with the passage of the Sherman Antitrust Act, named after the Republican Senator who introduced it. Also referred to as competition laws, the bill was purported to be an act which would prevent monopolies and other forms of unfair competition in the market place. What it did was create the only real monopolies as we think of them, by allowing the government to pick and choose the winners in business, as opposed to the free market. Now business did not have to rely on solid proven business tactics and belt tightening, balanced with expansion and innovation. Instead, now all a company had to do was buy off the right politicians, and they would be a main competitor (if not the only competitor) due to the crippling legislation the bought-off-lawmakers would invoke.
The Sherman Act was said to empower government to regulate business for the public good, but it instead allows politicians to extort business, forcing them to pay “protection money” in order to receive the proper permits, licenses, and comply with other government regulations. There are enough of these regulations and stipulations in the Sherman Act to ensure that whatever a business is doing will in one way or another violate the antitrust laws: “if he charges prices which some bureaucrats judge as too high, he can be prosecuted for monopoly, or rather, for a successful `intent to monopolize’; if he charges prices lower than those of his competitors, he can be prosecuted for `unfair competition’ or `restraint of trade’; and if he charges the same price as his competitors, he can be prosecuted for `collusion’ or `conspiracy’” -Ayn Rand, America’s Persecuted Minority: Big Business. Politicians have even argued against clarifying these laws because the elastic interpretation is good for the politician, but very bad for business (and therefore the economy, and employment).
Ayn Rand takes on anti-trust laws in a lecture she gave called America’s Persecuted Minority: Big Business. Here Ayn Rand points out that businessmen are a minority and that people discriminate against this minority in ways we would consider disgusting if it were directed towards a racial minority. She also points out that “government holds a legal monopoly on the use of physical force”. Business cannot get at you, government can. Business relies on your choices to make them powerful; government forces you to make them powerful. Business cannot come into your home and arrest you, government can. The only way business can use force against an individual is if business and government are one; anti-trust laws are the first step to allowing business the access to the force of the government. Business can now pay off a politician whether illegally or through campaign contributions, and have that politician bring antitrust charges against a competitor of that company.
In 1945 the Associated Press was found guilty under antitrust laws because they had certain restrictions about who could join the association, therefore it was ruled that smaller newspapers starting up did not have the same opportunity as the AP, so the AP had to share what they had earned and built over time with anyone who woke up and decided to start a newspaper.
In 1951 it was found that movie distributors violated antitrust laws of collusion, because they all denied first access of their movies to drive-in movie theaters.
The Aluminum Company of America was guilty of violating anti-trust laws because they excluded competitors by consistently enlarging their facilities and ensuring shipments of materials so as to keep up with demand and still supply metal at a low price–i.e. running a successful business.
In an attempt to follow antitrust laws General Electric charged the same prices as its smaller competitors even though it could easily have charged lower prices and put the small companies out of business. GE and about 25 other electric companies were then taken to court for this “conspiracy to set prices”. Turns out a government agency had legally fixed these prices during WWII, but when that government agency was ended after the war these companies continued to engage in the same activity, but now it was illegal because it was corporations setting the price instead of government. Businessmen got jail time, and one killed himself on the way to prison. Antitrust laws ruin people’s lives and businesses, stifle the economy and impede what under laissez-faire capitalism would be an ever skyrocketing standard of living.
Antitrust laws are largely ignored in media today; no one really seems to talk about them, know exactly what they are, or see how terrible these laws are for businesses and individuals. Despite claims to the contrary, they do not help promote competition and do not protect against unfair business tactics. The free market will protect individuals and businesses better than the antitrust laws ever could. Any politician in favor of these laws is certainly not a supporter for business or individual freedom. We need to bring this debate to light and force politicians to repeal these harmful laws. With the shackles cut from the wrists of business we will see exponential innovation which will produce a higher standard of living for everyone [Read my recent article, “An Economy Absent of Force”]. So quick are some to bite the hand that feeds.
Corporate welfare, crony capitalism, or the upward redistribution of wealth; no matter what you call it, the taxpayers lose. The problems that capitalism has been blamed for over and over again, are actually caused by government involvement in capitalism. Capitalism is simply mutually beneficial transactions entered into without force. When the government gets involved, force is introduced to the equation, and capitalism no longer exists. The system we live under in the United States today is Crony Capitalism, more commonly referred to as corporate welfare.
In fiscal year 2012 almost $100 Billion tax dollars were spent on corporate welfare: money went to businesses mostly in the form of subsidies. $25 Billion of this went to the Department of Agriculture, I have posted in the past about how taxpayers spend Billions to make food less healthy and more expensive. These subsidies to the farm industry have made small, family owned, and organic farms disappear while giant farms spring up because of their government connection. Capitalism would generally be blamed for these giant companies like Tyson with lower health standards and more risk of contamination, yet these companies would never have been able to grow that large without the government subsidies. Plus, when the government offsets the cost of running a giant farm with taxpayer money, it is impossible to compete as a smaller farm without the government funding.
While crony capitalism is easily identified in the farming industry, it hurts the economy in other realms as well. The $18 Billion that the Department of Energy dished out last year will actually hurt the green energy industry. This is because it went to companies like Solyndra, which seem well meaning, but are so terribly run that they lose taxpayer money. In the private sector while the chance of failure is still there, the consequences are much greater to private investors as opposed to taxpayers footing the bill. Private investors will insist that everything is done to keep the company afloat, meaning more successful investments in energy had that $535 Million that went to Solyndra stayed in the private sector.
Small businesses starting out are not only at a loss because of the subsidies flowing to larger companies, but they also must spend a greater percentage of profits to abide by government regulations, and plod their way through the tax code. Big companies hardly notice the dozen or so lawyers and accountants who interpret regulations and find tax breaks, but this burden on small companies can be devastating to the business and the individual who took a risk to start the business.
…subsidies also undermine the market by diverting resources from market-preferred businesses to those preferred by policymakers and allow policymakers to “bet” on firms with shaky finances and questionable business models, fostering a “corrupt relationship between big business and government.”
The Cato analysis concludes by saying that rising spending and huge deficits are pushing the nation toward an economic crisis – and cutting corporate welfare programs is a good start.
“Despite [the] hurdles to reform, Congress is entirely capable of cutting spending and will have to do so in coming years to avoid economic calamity,” DeHaven wrote.
“Corporate welfare doesn’t aid economic growth and it is an affront to America’s constitutional principles of limited government and equality under the law. Policymakers should therefore scour the budget for business subsidies to eliminate,” the report said.
This is an easy $100 Billion that could be cut from the budget. It would make up almost 10% of this year’s budget deficit, keeping that money in the private sector while the government takes on less debt. Cutting this upward redistribution of wealth is a no brainer, and a win for every taxpayer in America. (Full Article Here).