Friday, July 17, 2009

Strange Bedfellows

I imagine that some people find the notion of government and big business being in collusion to be sort of strange. Indeed, it is decidedly out of the realm of some peoples' paradigms to consider that big business actually likes government regulation. Sometimes it is true that government regulation harms big business. The primary effect of government intervention into the economy is, however, to make it easier for big business to gain a competitive advantage over smaller businesses. Many times, government regulations grant big businesses a virtual monopoly in the market.

Take for instance, the recent legislation to switch all television signals from analog to digital, which my father calls "No Couch Potato Left Behind". It is a little difficult to come up with a rational justification for this law. After all, why can't I watch analog TV if I want to, and some TV station wants to provide it to me? And yet, government does it. In response to this legislation, my family, long-time viewers of analog TV, switched over to cable. We figured that rather than go through the hassle of picking up and installing our converter box, we should just go get cable (and it was probably about time to get cable anyway). I'm certain that other families made similar decisions. Thanks to government intervention, the cable companies benefit, the people get better TV, and virtually everyone is happy. And yet, someone has to pay. There is no such thing as a free lunch. Those people like my family paid for cable. And everyone paid the taxes to produce those converter boxes that were being given out, the television advertising for the converter box (some on digital cable stations, ironically), the bureaucrat salaries to administer everything, and who knows what else. Also in the category of those government actions which promote monopolies are the so-called "economic development strategies" carried out by all of the states. States give money to companies to relocate their businesses to the state. Keep in mind that this money is not free. This is money that is taken from the pockets of all of the tax-payers to give to businesses that can compete on their own. These actions are theft of our hard-earned tax dollars and punish businesses who are already in the state by giving new businesses subsidies. How can an existing store compete against a Wal-Mart if the Wal-Mart has low prices subsidized by the tax-payers? If Wal-Mart wants to come to a town to compete fairly without dipping into the tax-payers pockets, they should be allowed to do so. But giving them a competitive advantage at the expense of everyone is an outrage to capitalism and a free society.

Not only can government regulations grant increased market shares for certain companies at the expense of everyone, they also make it very difficult for small businesses to start up. I am certain that many excellent entrepreneurs have been squashed by the heavily imprecise hand of government. Large companies have the capital to ensure that the seemingly endless checklist of tasks to obtain government's ok can be completed. Often, small businesses do not. Without these onerous regulations, we would certainly have a more diverse and fair economy, as well as one with lower prices for consumers.

In the end, individual government interventions into the economy do not directly harm us to a large extent. But when considered together, they hurt us a great deal. They limit our economic options, reward incompetence (think bailouts), and destroy a competitive economy. Why do these things happen, then? Remember the lesson that Friedman taught us in Free to Choose. When a greatly interested minority with much to gain stands opposed to a largely disinterested majority with only a little to lose, the minority will win. That disinterested majority needs to understand the things that are at stake when government intervenes in the market. The disinterested majority needs to become an interested and passionate majority.


  1. I just have to quick responses to this as I am starving and must head to my show. Firstly, I agree wholeheartedly with this explanation of what is happening economically with regards to the government and the economy in this country; however, I believe you should have included the government "takeovers" of GM and Chrysler; this is, in fact, hidden socialism (as is the government healthcare program that is going to be funded by a $540 billion of taxpayer money), and the government is getting everyone to go along with it because they blindside the public with dire phrases such as "if we don't act now, the economy could take decades to recover", or, "we can't just let these huge American icons fall, we need to build up American industry again". So of course people don't look at the details, or the proposed bills (which are thousands of pages long anyway, and most of congress doesn't even get a chance to read them). Secondly, I must add that everyone needs to read up on the Cap-And-Trade and Carbon Tax proposals; these have NOTHING to do with "preventing global warming", they are government schemes to further enslave the people. Just look up how many things are going to be taxed under these proposals.

  2. I have to agree with you about the Government Motors nightmare, healthcare "reform", and the ridiculous cap and trade proposal. However, things must be kept short and sweet to hold peoples' attention. If I was writing a serious paper on government economic intervention these three things would likely be there. I would advise everyone who cares about the future of this country to keep a careful eye on Government Motors, and it's not too late to stop cap and trade. Call your senators. If they are not communists like mine, that is.

  3. Haha well said. I think its quite unfortunate that we must live in the most government-controlled state in the union (other than California), where the weather sucks to boot! But yes, people need to wake up to the realization that the media is controlled and told what to say by the government, and the government is, in reality, controlled by the very system of monetary regulation it itself allowed to be imposed in 1913, the Fed. For anyone who wants more information, look up the video America: Freedom to Fascism on google video; it is a documentary made by acclaimed film-maker Aaron Russo about the legality of income tax (or lack therof) and the totalitarianism of the Federal Reserve.