In a comment to this post on Congress’s penchant for sucking on consumers’ teats, trumpit says to me:
You amaze me! You loathe the venal pols, yet you give a free pass to
the loathsome, greedy corporations who really control the government.
That is a one-sided and naive viewpoint.
I do not give a free pass to the loathsome, greedy corporations. Rent-seekers who use the state to enrich themselves at others expense sicken me.
As for the emphasis in my original blog post, Russ Roberts and I agree that, while it’s true that rent-seeking private parties are just as predatory as are the goons they hire to do their actual predation, everyone understands that private business people are in business primarily to earn a living. No one presumes that business people are motivated chiefly by altruistic, other-regarding motives; business people don’t seriously pose as saints who sacrifice their personal interests in order to promote those of the public; no one calls business people "public servants"; no CEO of a corporation sports the title "Hon."
Politicians, in contrast, do pose as public servants — as special people who routinely sacrifice their own personal well-being for the larger cause of the greater good. They are called "public servants."
To point out that a lion has sharp teeth is rather pointless; to point out that the lamb is really a lion in disguise is more useful.
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I don't trust corporations either. I *do* trust corporations to try to screw each other. That's why I want free markets, where nobody is able to capture the government and use them to create an advantage for themselves.
As our world economy shifts away from material goods towards virtual goods, we may be at a point where evil corporations can provide our "free bread and circuses" better than more evil government can.
Governments have traditionally grown based on their coercive ability to give away stolen stuff. Now that a lot of "stuff" can be duplicated at no cost, corporations (or individuals) can give away stuff and achieve government style influence.
For now at least, I welcome our Google overlords. It is interesting to ponder where this "really free" market competition will lead us. In the long run it may be that every real world good or service we purchase will have a "virtual tax" built into it as the costs of those goods and services must include marketing costs paid into the virtual information economy.
Dr. Boudreaux, (who, by the way, I believe is the clearest economic thinker writing today), have you considered where we end up now that private non-coercive entities can fairly readily give us our free bread and circuses- a role once the exclusive province of governments and gangs?
Trey, with all due respect, WTF are you talking about? Virtual goods? Virtual tax? One cannot eat "virtual" bread or drive a "virtual" car or take a "virtual" vacation to Lake Tahoe.
And if the "tax" is an expense paid to the producer/promoter, it's a "price." A tax is levied by the government, and the government only.
Advocates of free markets would do well to focus more than they do now on shaming corporations and industries who lobby for protectionism and other market-distorting favors. That could be an effective common cause with the left, just as fighting tax-and-spend legislators is a common cause between libertarians and the right. Now that is not to say we should push for regulating such corporations and industries even further. Rather, I think we should promote what I call an Anti-Favoritism Pact (from my blog post at http://edutheria.com/2006/11/20/anti-favoritism-pact/ )…
"under which companies agree to never lobby for government favors, but to instead solely lobby against government favors for their competitors and suppliers. This pact would be more realistic than any general anti-lobbying effort, because it would harness the power of self-interest. Companies wouldn’t be leaving themselves victim to those competitors and suppliers who choose to take the low road, as they would if they just stopped lobbying altogether. They could still freely spend on the political process to improve their situation. But, under the pact, the entire political budget of a company would at the same time be profitable to the company itself and beneficial to the economy as a whole. Most corporate social responsibility efforts are seen by many economists as an ineffectual misallocations of society’s resources. And many corporate critics see them as nothing more than cyncial ploys. But being an “AFP Company” would be a badge of honor, as well as a sign of intelligence for a company’s public and investor relations. The Anti-Favoritism Pact should in no way be a government endeavor; it should be completely voluntary, and perhaps even non-contractual. Enforcement would be through media “naming and shaming”. It could be a new focus of high-minded conversation for enlightened business leaders. If the AFP spreads, it could completely reform our economy. Baleful economic policies would be shot down one by one by focused corporate money. And as these reforms radically improve the lot of the whole country, the pro-business ethos could no longer be painted as an intellectual justification for only enriching the select few."
People always confront me with this false dichotomy. In reality there is no contradiction nor double standard.
It's true that many corporations today engage in rent seeking and other practices that are detrimental to society. But this is almost universally BECAUSE OF the the "venal pols" and bureaucrats. The only way that the corporations can secure these rents is by riding on corruption of government.
The root of the problem is the power of government and the corruption that abuses it. Strike at its root, and the entire problem is solved. If you remove from government the power to enact these regulations, you simultaneous take the fangs from corporations, however evil they might LIKE to be.
Rent seeking and corruption is an inevitable consequence of an interventionist government.
The more authority and opportunity the state and it's Representatives have to intrude into the market by granting benefits to some at the expense of others who are thereby harmed or disadvantaged, the more will be the incentive to seek the benefits; while to avoid being harmed.To respond by advocating that more authority to oversee and control private organisations and citizens be granted to the state as a solution is the equivalent to advocating that more guns and opportunity be given to a mugger over their victim.
That "solution" is exactly what has created this environment in the beginning. The proper response would be to limit the discretionary power of the government regulators and their Representatives and thereby eliminate any opportunity or reason to seek influence over those Representatives.
doinkicarus:
Sorry you didn't understand- allow me to explain as others may likely have the same perspective.
Virtual goods are those things that are good and can be supplied at zero marginal cost- like software, movies, and songs.
Since the marginal cost is zero, absent government intervention the price will eventually be zero or possibly less (yes, I may pay you to listen to my song if it makes me famous by doing so, and I desire fame over money).
Personally, as I age and we get farther along into the information economy, I find myself consuming lots of virtual goods and relatively few physical goods. Most of the stuff I need I already own and it is long lived stuff. Food and various forms of fuel are my major purchases of physical goods.
The term "tax" is self referential to the post. The post posits that a central feature of governments and gangs has been providing "free bread and circuses" to their constituencies. I'm saying, that in providing free services as Google does- search, email, calendar software, Google Maps, etc., that Google still needs to be paid somewhere somehow.
Google gets paid with advertising dollars spent by other providers of goods and services that mostly (but not all) get paid by their customers. In the not far away long run, the virtual goods will tend to be free but will still need to be paid for somewhere in the economy- that is the "tax" that I'm getting at- the premium that will be paid for physical goods and services in order to support the virtual economy that will, at the limit, be free.
The interesting question posed is what does the world look like when private entities are viewed as the big providers of "free stuff" rather than governments? I already have way more interactions with Google every day than I've ever had with any government and I have never personally paid them a single dime.
If this explanation is inadequate please let me know and I will be happy to refine it. If I'm just crazy I'd love that feedback also.
Nice post.
I'll be using that analogy in the future.
Both entities are human driven, and both will go as far and as fast as one allows them. But one is clearly defined, whereas the other is in a kind of disguise.
It's a knee-jerk populist reaction to assume that anyone making a profit is somehow chiseling or cheating, but yet Jim Traficant, Bill Clinton, and this Jefferson cat from New Orleans can do no harm as far as their constituents are concerned.
CWuestefeld,
"The only way that the corporations can secure these rents is by riding on corruption of government."
…and the only way that government can be corrupted is if there is somebody to corrupt them. Everybody involved in the corruption is culpable. I'm not saying we should regulate the protectionist steel or lumber industries, anymore than I'm saying we should "regulate" the protectionist Lou Dobbs. But we can, and should, speak out against their protectionist ways, just as we rightfully ridicule Lou Dobbs.