Since I write about capitalism and crony capitalism and government and business every day I have the opportunity to read quite a lot about these subjects from various perspectives. I read libertarians, and conservatives, and liberals, and progressives, and just about anyone else who is interesting. I read the comments here at ACC, and at sites all over the web.
One of the things I am fascinated by is the degree to which some people are seriously afraid of free enterprise, the voluntary exchange of goods and services, of capitalism. It is bizarre to me as it seems pretty self evident that where free enterprise is allowed to flourish people also flourish. History has shown us this over and over and over. And yet people still fear.
Is it ignorance? Is it ingrained lessons from school? Is it an overall culture of statism? Is it the search for a religion in a world which often lacks religion? (I am convinced that “big government” is in fact a religion. I will admit this from the outset.)
There are probably dozens if not hundreds of reasons why some people fear free enterprise. Some reasons are more valid than others. I think however that there are some core reasons which can be readily identified and I’d like to take the space to explore some of them.
This essay will be an ongoing one which I will revisit periodically. Below are a few reasons why I believe people fear freedom and free enterprise. This is just the first batch.
Boeing and GE really really want to keep the taxpayer underwritten Export-Import Bank. It’s a sweet deal for them and they (along with a few other companies) have deployed an army of lobbyists in an effort to keep the boondoggle alive. In this case it appears that one of GE’s lobbyists stepped over the blurry ethical line. Not that this isn’t to be expected. There’s a lot of taxpayer money potentially at stake.
(From The Washington Free Beacon)
A General Electric employee pressed a Wisconsin legislator to falsely blame the closing of a facility there on the expiration of federal subsidies, the legislator said this week.
State Rep. Scott Allen said in a Monday statement that GE government relations executive Patrick Theisen asked Allen to blame the closing of a Waukesha engine manufacturing facility on the recent expiration of the U.S. Export-Import Bank.
“Mr. Theisen was eager to connect me with his public relations department to help me gin up a press release blaming Congress and demanding they act,” Allen said.
Click here for the article.
By Ron Paul
This month marks the seventh anniversary of the bursting of the housing bubble and the subsequent economic meltdown. The mood in Congress following the meltdown resembled the panicked atmosphere that followed the September 11th attacks. As was the case after September 11th, Congress rushed to pass hastily written legislation that, instead of dealing with the real causes of the crisis, simply gave the government more power.
Just as few understood the role our interventionist foreign policy played in the September 11th attacks, few in Congress understood that the 2008 meltdown was caused by the Federal Reserve and Congress, not by unregulated capitalism. Not surprising to anyone familiar with economic history, the story of the 2008 meltdown starts with the bursting of the Fed-created tech bubble.
Following the collapse of the tech bubble, the Fed began aggressively pumping money into the economy. This money flooded into the housing market, creating the housing bubble. The Bush Administration and the Republican Congress also added fuel to the housing bubble. These so-called “free-market” conservatives expanded federal housing programs in hopes of creating an “ownership society.”
If Congress understood the Austrian theory of the business cycle, it would have allowed the recession that followed the housing bubble’s inevitable collapse to run its course. Recessions are the economy’s way of eliminating the distortions caused by the Federal Reserve. Attempts by Congress and the Fed to end a recession via inflation and government spending will only lead to future, and more severe, economic downturns.
GE is one of the great American crony companies. Jeff Immelt, once head of Obama’s “jobs council” and current CEO of General Electric, has played the crony game extremely well. First in securing emergency financing courtesy of the American taxpayers because it screwed up royally. And then he was able to exploit various Obama era boondoggles which funneled money GE’s way on an ongoing basis. (Think wind turbines etc.)
Now Mr. Immelt is stamping his feet because it looks like GE may permanently lose the the sweetheart deals it has at the taxpayer underwritten Export Bank. This is crony capitalism full on.
I almost didn’t post this headline because the term “leftist” is used in a pejorative sense. That is not terribly constructive.
But the article itself is important. The author reports on a statement made by the new UK Labour Party’s economic flag bearer who said that the money one earns isn’t actually one’s money. You don’t actually pay taxes so much as give the government back its property. Essentially he is saying that your ability to feed and clothe your family, indeed to prosper in any way economically, is at the pleasure of the government, of the state.
Copyright is a valid thing within clear parameters. But in our opinion copyright in the USA and in some cases abroad has been taken to ridiculous levels. Much more should fall under “fair use” and “public domain” than currently does. In a free flowing 21st Century economy information needs to flow freely.
We are not taking an absolutest stance here. Copyright has its place. But whenever we write about the need to liberalize copyright there are always a couple of song writers (or lobbyists, hard to tell sometimes) who complain that with no copyright they’d lose income. And this may be true. But that doesn’t make unleashing information from patent trolls and from others who harbor what we would consider to be unreasonable claims is wrong.
Yesterday we asked whether the EPA (or some other regulatory agency) would have gone after GM like the EPA is going after VW, had GM done what VW is alleged to have done. We argued that it likely wouldn’t have. In the back of our minds was the recent GM ignition switch scandal which the US government didn’t seem very concerned about. Well, actually the government was concerned, but not for the public. The Obama administration didn’t want to make a big stink because GM, Government Motors, was a chosen “winner.” The administration had bailed out the Detroit based company for political reasons and it didn’t want to be embarrassed by a high profile example of incompetence. So what if over 150 people died?
Not only that. The government has protected GM from plaintiffs who can’t sue because the ignition switch issue occurred under the “old” GM.
VW may see as much as $18 billion in fines from the EPA.
Apparently VW had installed “defeat devices” into its diesel vehicles which were able to recognize when a vehicle was being tested for emissions. When the diagnostics were run for emissions the vehicles then adjusted their engines to emit lower levels of pollutants than normal. Once back on the road the vehicles reverted to standard mode and resumed higher levels of emissions – and performance.
The easy way to look at this story is to just say ” Well, there you go. A giant corporation cheating the regulatory agencies (and in some eyes the American people). See, capitalism is bad.”
But it’s not that simple. Volkswagen has long had state support in Germany (and I am sure in many other places. It is a massive company.) It was after all Hitler’s “people’s car,” volks – wagen. There also seems to be a leadership struggle underway at the company. The cheating news hit the wires right before the current CEO was to have his contract renewed. Whether the emissions story is a coincidence we don’t know. But the timing is interesting.
Also, consider if GM was caught cheating tests like this whether the EPA would have come after the company with threats of crippling fines. We bet not. Not unless the Dems want to lose Michigan and Ohio.
This is definitely one of those “lots of ins and outs and what-have-you” cases. As the Dude might say.
Rules (or lack of) for them, and rules for the ruled.
This massive chicanery does not happen without a Federal Reserve system backstopping the deal. Fraud will always happen to some extent, but the fiat financialization of the globe allows this sort of shadiness to explode on a scale which is hard to conceptualize.
Yup. Extremely well said. Voluntary exchange is moral and just. Legalized theft, facilitated by government via taxation and crony capitalism (often under the guise of “justice”) is immoral and unjust. We are either free people or we are not. Capitalism, or more exactly, “free enterprise” is the economics of free people. As Professor Williams explains.
Don’t buy the protectionist bull. International trade is a very very good thing. It has brought us far better cars, better and less expensive clothing, jobs in a myriad of industries. Generally international trade has brought America a much higher quality of life.
There are people who do not like the change which comes with international trade. For instance the politically powerful auto unions used to never stop complaining about it. But guess what? Most of us are way better off because the Honda Accord and the Toyota Camry killed the cobbled together bits of steel, plastic, and rubber which used to pass for family cars in the 1970s. America is better off for the death of the AMC Hornet.
Think of 2008 as a primer. A very difficult and disruptive primer. Nothing’s “fixed.” Markets never really cleared.
Additionally, as is explained below, the now 0% interest rates are almost locked there as the cost of serving US debt by the US government would explode upward with increased (and very likely closer to real market level) rates. That’s a sticky place to be to say the least.
But people will continue blissfully along, until they can’t. Then they’ll scream that “capitalism” messed everything up. Watch.
We focus a lot of our energy on those businesses which are gaming the system. Companies like Boeing, GE, Monsanto, Goldman Sachs, you get it. But there are businesses which do business the non-crony way. (Though at times it can be hard to do given the crony structure of our economy.) There are still businesses out there committed to being the best in the marketplace, providing value to consumers, and which abhor getting into bed with politicians. (All we can say is use protection if you’re going to do it.) And these businesses and business people need to fight for economic liberty, free prices, and voluntary exchange, and against cronyism, crony capitalist regulation, and central planning from Washington. Their voice needs to be heard.
We are certainly committed to this fight. Our friend Fred Smith at CEI is committed to it. We know there are many others.
The way out of poverty is through capitalism, free enterprise, free markets, and free prices. But so many people who I believe honestly want to do good do not understand this. They believe that central planning and aid from “rich countries” will solve the world’s problems even though they have only worsened things in aggregate around the world for decades.
Where poor people can build wealth and enjoy property rights and honest pricing the tendency is toward prosperity. Where there is government intervention, where the government or connected cronies can just seize the limited wealth of the poor (often in the name of “justice”), where prices are obfuscated, there is poverty and misery.
We do not believe in free prices and free markets because we want to keep “what’s ours.” We believe in them because we know, and have seen, how much better capitalism is for everyday people than state intervention and its associated cronyism.
In order for a society to truly proper people need both personal liberty and economic liberty, which are actually one and the same. Capitalism allows for both and offers a path out of poverty. (Not that it is always easy.) But many people just refuse to see this. It fundamentally conflicts with everything they’ve been told, to date.