Government is a zero-sum game: Someone wins, and someone loses, unlike in the market, where it’s win-win, where merchant and customer thank each other.
The market is more of a zero-sum game than ever, due to the lack of competition propagated by oligopolies, which drive up prices, drive down wages, and collect the profits.
In a sense, you are correct: what most consider the market today is closer to zero-sum than it has ever been. Big corporations crowd out competition, both foreign and domestic. Entrenched businesses crowd out entrepreneurs. Unfortunately, you fail to see the true culprit: government. What we have now is corporatism, or crony capitalism. This is not a free market, and less of one than it has been in a while.
A government that has the power to regulate can stifle a favored corporation’s competition. A government that has the power to impose tariffs can prevent competition from their crony’s foreign competitors. A government that can issue licenses or require inspections can set criteria that helps their entrenched cronies. A government that can tax can issue tax breaks for their favored cronies or industries. A government that can grant subsidies can directly enrich their cronies. A government that can grant “stimulus” or “bailouts” can protect cronies from the consequences of their failures. And a government that grants itself large budgets to spend as it pleases can spend it on their favored cronies.
But without these myriad government protections, corporations would have to rely on selling a better and/or cheaper product or service than their competition. In other words, pleasing consumers.
“Anytime that you have the government expressing anything,” [Matt] Welch continued, “it’s a battle of values. If a government is supporting an art show, people who find that art offensive have a legitimate claim. If a government buys … a new baseball stadium, well, my wife hates baseball, so how is that fair to her?”
Anytime that anyone expresses anything, it becomes a battle of values. People disagree with each other. If the entire market for airfare is controlled by five or six parents corporations which make deals with each other to keep prices fairly uniform between the groups, but constantly rising, while the quality of service decreases, every customer has a legitimate concern.
This is just ridiculous sophistry. Let’s logically consider your hypothetical for a moment and how it wouldn’t exist successfully in a free market. This is very simple economics.
1. Why would a business collude with another if it has the ability to earn bigger profits by undercutting its competition? If a company lowers prices to increase market share, this would be a net positive even if profit remained flat. In other words, profits being equal (higher volume sold compensating for lower unit price), an increase in market presence yields greater long-term viability of a company. The greater market share means greater market power and greater division of costs. This is how businesses grow.
2. If businesses do collude and set prices as you suggest, straining the consumer’s ability to pay - the market will always furnish alternatives provided that new market entrants aren’t prohibited by law. So if, in your example, all the airlines somehow raise prices in unison, this increase in prices does multiple things. First, fewer people will fly - but planes still compete against other forms of transportation: car, train, boat, even video-chat. So the search for greater profits through gouging would backfire because the airlines do not exist in a vacuum. Second, the increased prices create more room for new competition. Whereas once a new airline’s startup costs may have exceeded viable profitability, now prices are high enough to feed these new opportunities while simultaneously providing consumers lower prices than the “cartel.” The cartel would buckle under these pressures - unless, of course, government offers its protections.
As I’ve written previously:
[A]s prices go up, the greater profits signal greater incentive for competitors to enter the market. The ‘monopoly’ either lowers prices to quell the incentive for others to compete for their profits, or they purchase the competitors. Buying up potential competitors can be expensive. To make up for this increase in expenditures, the ‘monopoly’ may raise prices again. But all that does is again increase incentive for competition, in addition to squeeze out some consumers - which translates to less revenue and more expenditures. So for a ‘monopoly’ that is not protected by government to persist profitably, it must keep its consumers happy and prices as low as possible if only to keep even the potentiality of competition down. Maintaining a monopoly by entering a cycle of price increases and competition buy-outs only leads to its own self-destruction. Then, all those competitors can pick apart its pieces and pick up right where the ‘monopoly’ left off: in search for the profits that come from pleasing consumers.
Plainly: natural monopolies (and “cartels,” which are group monopolies) are a myth, as I explain in a previous conversation.
When industry giants gouge wages and suppress the right of unions to organize, and can move their industry to countries with smaller wage requirements, the workers under them have no option but to put up with the free market.
The right to free association certainly means that workers have a right to unionize - but it also means that businesses don’t have to recognize said union. Legislation that forces this is definitionally counter to a free market.
Also, you forget the consumer here. When businesses move their operations “to countries with smaller wage requirements” - consumers benefit from lowered prices. Why should anyone do for themselves what can be more cheaply done by someone else? Outsourcing is natural to progress. Unless you built your house from scratch - creating every brick; melted copper for every power cable; laid every pipe; forged metal into faucets, nails, and screws; grew, chopped, and cut the trees that made up the frame; turned sand into glass for windows; created plastic for outlets; etc. - then you have outsourced labor.
So when businesses make profitable considerations to allow themselves to remain competitive in the market, they are, as a consequence, benefitting consumers.
In the mean time, prices of products increase, the middle class is clenched, and we invent an artificial market based on theoretical money, ie credit, so that the middle class, despite their true net value reflecting negative integers, can continue to consume needless products (propagated by advertising) so that the business class can continue to make a profit.
This makes no economic sense. Literally, none. You begin with the incorrect assumption that prices would increase and spiral into an incoherent morass of NYT buzzwords and Marxian class warfare.
And by profit, business leaders do not mean an accounting profit…no they want a running profit, whereby they make more money than they did the previous quarter, etc, etc.
That is just an odd stipulation. Of course they want to make more money than they did the previous quarter. Profit is good. The promise of profit is what incentivizes people to take risks. Conversely, the potential for loss is what incentivizes people to be reasoned, efficient, and prudent in their risk-taking. Profit - either material gain or gains in happiness - are what mostly drive human cooperation and innovation.
Anything you do that is not profitable is a waste of time. If you do anything that does not create either greater production or greater happiness, you have squandered time and resources. As Isabel Paterson explained: if you plant a potato, tend to it for a season, and months later you only yield one potato - you have produced nothing (no profit) and you have wasted your time and labor.
What happens is that the money, in order to preserve the bottom line, is extrapolated into the hands of a virtually invisible group of individuals that keep it in their bank accounts, accumulate interest, and acquire more wealth.
Again, more twaddle. I think first you need to understand what interest is, and why savings matter. Without a central bank manipulating markets, interest rates would signal the amount of savings available for lending - an interest rate, then, would be an elastic figure that would shrink when there is a lot of savings (creating incentive for innovation and production) and increase when there is little savings (creating incentive for savings and naturally signaling it not being a good time for risk-taking). None of this inherently involves invisible evil-doers.
“Fifty-one percent of the people get to tell the other 49 percent what to do, how much to pay, where you have to show up,” [Nick] Gillespie added. In the private sector, everybody gets to pick what he or she wants.
In the corporate world, less than 1% of the people get to tell the other 99% what to do, how much to pay, where you have to show up, when you will be sued, what laws ought to be passed, who should be regulated, what international trade agreements should be signed.
Of course, courts, laws, and trade agreements are not currently under the “private sector,” which is what the quote you were responding to was discussing - so this is mere obfuscation. And as should be clear by now, these privileges are only available to businesses and corporations through the favor and protection of government.
In the perfect private sector, everybody gets to pick what he or she wants. But wait! Does that not occur in government as well? If you don’t want to pay $600 for a plane ticket to Seattle: don’t buy a plane ticket. But you don’t get to vote on what plane prices should be. And when there is a small percentage of the population controlling the entirety of a market which is viewed as necessary for a society, that is like telling people that they have the choice to follow laws or to move from the country/state/etc, which is pretty much impossible.
You do get to vote - every time you choose a different airline or when you don’t fly at all. Your comparison to voting illustrates the opposite of what you were hoping to: when people vote on something through government there is no variance, there is not conformity, there is no catering to individual tastes: it is only what the majority (or more precisely, a majority of the voters who accede to the system and vote) decides and all must comply. And built into this is the carving out of favors for the very same corporations we loathe - so those corporations get a bigger vote than the rest of us.
If the state of California voted on what type of tires it would make available for all the citizens, we’d likely get a pretty standard 15” hub-capped Michelin for everyone. But what about those who prefer Firestone? Or those who drive big trucks? Or smart cars? Or those who like fancy rims? Or those who want bicycle tires? Or those who want wooden wagon wheels? The market provides for varied demands - government does the opposite.
To put it in other words: Assume that Water Corp 1, Water Corp 2, Water Corp 3, and Water Corp 4 all share the supply of water in any given community. If the four CEOs of the individual water corps get together and conclude that they are making too little profit, so each decides to cut out certain testing in the water for things like arsenic (which are expensive) and to remove a few high-cost technical employees and replace them with workers in other countries with smaller standards of living, and the companies each decided to raise their prices marginally, by say, 5%, what choice do the people have now?
Any business that is willfully negligent in product safety would suffer multiple consequences in a free market. First, they’d lose the business of those consumers who are affected. Second, they lose the business of other consumers who hear about the lack of quality. Third, they face litigation from those consumers who were wronged - and if the negligence is criminal, a free market would not shield the corporations from the serious consequences. As the BP spill helpfully illustrated, corporations derive great protections from the very same government regulatory agencies that ostensibly exist to protect the consumer.
But let’s pretend this actually would happen in some alternate universe. or starters, consumers who cannot afford 5% more on their bill will begin to use 5% less water. And as stated above, other businesses not currently in the market would be incentivized to enter. If they cannot have access to the local watering hole for whatever reason, then the high demand of the local populace would drive businesses to find alternatives - digging for underwater reservoirs or even creating new plumbing systems to bring in water from areas further away. Some crafty inventor may find new ways to recycle used water, collect rain, or even provide filters for the existing water supply. Neighboring towns with clean, cheap water will begin to develop new housing for the people moving out of your dirty water city. In the most extreme of outrageous scenarios you can craft, the consumer is the ultimate boss - and any of those Water Corp who don’t give up the cartel would be epically suicidal. No business can survive - much less make a profit - without any customers. And even if only one of the members of your cartel realizes that it is more profitable to lower prices, the entire fiction implodes in on itself.
You act as if government is the absolute power house.
Well, government literally has a legal, jurisdictional monopoly on force. No business can force me to do anything without government’s help. No business in a free market can have any of my money unless I willingly give it to them. And I will not give up my money to any business unless I value what I receive in return more than the money I give. And this is what it means to not be zero sum.
It is the beautiful paradox of free exchange: it is mutually beneficial.
Control of the market is the absolute power house, and corporations are designed to consume as many lines of production as possible so that they can control the supply and demand. Supply and demand in a free market guided by the collective will of the people is perfect, and as such, it doesn’t exist. Supply and demand artificially inseminated by extensive advertising campaigns, tax-breaks, government de-regulation of business practices, is nothing but tyranny under the guise of the free market.
"[C]orporations are designed to consume as many lines of production as possible so that they can control the supply and demand"…?
This is just more nonsensical buzzwords. Thomas Friedman and Robert Reich would be proud.
The market - nor supply and demand - are not perfect. But nothing is. And only the market is malleable enough to make corrections in pursuit of more perfect data re: supply and demand. The market is not a thing, it is a process. It is a discovery of demands, a conveying of supply, and a catering to interests - it is the weeding out of inefficiencies and course correcting when problems arise.
A living economy needs to create inefficiencies, and lots of them, to set the stage for greater efficiency and ongoing innovation. And that’s just what the market process does.
“There are troubles and tradeoffs,” Gillespie said. “But … if somebody starts selling stuff you don’t like, you don’t hold a rally and you don’t try and get a bunch of people to vote to change it. You go to the next grocery store … or you build your own grocery store. It’s hard to do that with schools … with health care and … retirement.” Of course, as government makes more decisions for people and limits competition, it reduces our choices. It’s also given us horrible, unsustainable debt.
If every grocery store sells Monsanto products and Monsanto is tied to every farm, your scenario dissolves immediately.
Yes, because everyone knows that the farming industry - and corn in particular - is completely de-regulated, free of any market manipulations, protections, or subsidies whatsoever.
Oh, wait… quite the opposite.
I can hear libertarians crying now because doing things like influencing the government takes time and effort and its so much easier just to say that all government regulation is bad, even though it’s blatantly wrong.
As much as it may provide comfort that our position is couched in intellectual laziness, ours is, in reality, about the principles of self-ownership and non-aggression… about voluntary association and exchange. What is blatantly wrong is the economic illiteracy seeped in partisan hackery you’ve demonstrated.
If government said that corporate acquisition of public lands was legal: there would be no public lands.
What is public land but misused land?
But you’re right: if it weren’t for government, we’d have no parks open to the public. Actually, that’s not true. I was just in a beautiful park in Playa Vista yesterday that is open to the public but - egads! - is owned privately. I suppose there wouldn’t be children’s play areas like the ball-pit my daughter was playing in yesterday. Sorry, that was McDonald’s.
Land - like all property - should be private - away from the corruption and sway of corporations, politicians, and bureaucrats, and instead catering to the needs of free people making voluntary exchanges.
If the government said that a corporation has the right to detain suspected criminals, the corporations would.
If you weren’t making sense before, you’re making less now. Do you suddenly agree with me that governments are - as you phrased it - “the power house.” Do you not see that corporations are only as powerful as they are because of government?
It is not that regulation is bad in and of itself, it is that current regulation is designed to give American companies an overwhelming amount of control over the global economy, at the expense of the American public as well as the world at large, which is bad.
That is correct. I can’t tell what you’re talking about anymore - are you quoting a hypothetical libertarian response? Because I would agree with this. The regulations often actually work to help the corporations.
Further, a free market would have regulations. The options are not (1) government regulation or (2) chaos. Consumer demand, competition, insurance, public opinion, consumer advocacy groups, and no protection from consequences - those are some of the regulatory safeguards of a free market and they are far superior to the corporate welfare and bureaucratic inefficiency of government regulations.
Which is better:
A company owning California, writing the laws and regulations for the citizens (basically employees), enforcing those laws and regulations, and only being accountable to shareholders?
The people of California, via a representative democracy, owning the land of California, writing the laws and regulations for the citizens (just citizens here), enforcing those laws and regulations and only being accountable to the citizens of California that are not prohibited from voting due to arbitrary felony laws?
Why are these the only two options?
How about a third: a voluntary society of individuals who make free decisions for themselves, who are free to do as they please under an agreed-upon rule of law - not a rule of man - that punishes those who violate the life, liberty, and property of others. Give me that California.
As an aside, you may want to read up on the Calculation Problem and Price Theory.
Epic, epic, epic, epic, epic, epic shut-the-fuck-down post.