A Blank Spot on the Map

Saturday, April 25, 2009

Ike's Excellent Post ( borrowed from Cafe Hayek)


It is time for you to confront a central assumption. It is clear from this statement:

"Trade needs to be set up to benefit people first and not CEO's of banks and multinational corporations."

That you somehow believe there is no correlation between the actions of a powerful government and the actions of corporations.

ANY intervention that you allow a government to take, NO MATTER how noble you believe that purpose to be, EMPOWERS the government. The centralized collection of that power emboldens bureaucracy, and makes it a greater target for legislation and lobbying.

When government attempts to coerce businesses and individuals to trade in unnatural manners, it CREATES A MARKET FOR INFLUENCE.

All of your assumptions about "what government ought do" are based on a fallacy of a universal agent of good, who is beyond corruption. By creating a market for influence, you challenge three different classes of agents to alter policy:

1) Corporations, who do in fact have collective muscle and resources to look out for the interests of owners, stakeholders and employees. Because much of American tax policy places corporations in the position of being a Tax Collection Agency at the expense of individuals, the more your central government leans on corporations THE MORE INFLUENTIAL AND POWERFUL THEY BECOME, because they pass the real tariffs and costs to individuals.

2) Individuals, who are essentially powerless. Few have the resources or time allocation available to lobby on their own behalf, unless they are so empowered by positions within corporations. They power of the vote is too little, too removed, and not often enough to act as a meaningful signal in the Marketplace of Influence.

3) Government. Every time the government steps in and creates an unnatural barrier to trade, it creates inefficiencies. It also emboldens and empowers government further.

So -- we have corporations and government both in the same position in the Marketplace of Influence. When Government increases power, BOTH corporations and government gain.

Your incorrect premise about the nature of the Influence Markets is that Government is a "tool" of corporations, and each operates in a vacuum. Clearly, since FDR and the New Deal, the Federal Government has embarked on a long love-affair with corporatism, trying to align entire industries for some desired purpose or another. And in those instances where whole economic sectors "fight back," the only entities that gain in influence are Government and Corporations.

Posted by: Ike | Apr 25, 2009 12:46:04 PM


At 6:41 AM, April 26, 2009, Blogger muirgeo said...

Muirgeo gave my comment a new home at his blog. I'm still new to Cafe etiquette -- what does that mean?

Posted by: Ike

I think it was a good question/post that needs pondering (from both sides). Pretty much everyone here agrees that government is necessary but we vary greatly on what its function should be.

The real world and these issues are never black and white. To me the ultimate questions seems to be what is the governments purpose and who is it to serve. And secondarily does the economy exist to serve people or do people exist too serve the economy.

When Sam says, "The thin(g) with protectionist is that they view jobs as a means of wealth distribution rather than as a cost of production." or "Either I am free to trade with anyone, or I am not." they are good statements that are hard to refute on the surface but have wider implications when thought through in detail.

The libertarian claims his position maximizes liberty and by presumption economic efficiency.

But what if it in fact it concentrates wealth (and power) and decreases economic efficiency? Should we or the masses still support it because it maximizes liberty? Could it even be said to maximize liberty considering such results?
Ultimatly the position IMO is one taken by a minority of wealthy people who indeed themselves want to CONTROL everything by amassing such great fortunes. The guise of the libertarians claim is the only way to make it sound morally justified. Claiming discrimination against the wealthy and productive, tyranny of a majority against their minority and standing for liberty are just good covers for one more approach to power and control.

My point has been ultimately that the libertarian position great as it sound on paper or in oration is less efficient with regards to both economic activity and liberty. So why should the average person back it.

Ultimately the position of Edmund Burke was to claim that a small elite needed to give an air of control to the commoners to maintain their sense of control while allowing true power to be held by the "Uppers" of society who new best how to order society.

It's the debate between Burke and Paine. In the real world the libertrians/ the Burkes are winning.. and handely. They control massive amounts of global wealth and power and they ultimatly have stymied real gloabl economic potential and liberty with it.

They are not noble liberty seekers. They are self interested power and control freaks no different from kings , dictators and despots of all of history. And yet I see the flip side and dangers of allowing increased power with in the government. That too can lead to bad consequences as well. The key IMO is to get a government that truly represents the will of the people and keeping it in check from gaining to much control and power.

Simply we need to hold politicians to much higher standards and insist the government open up to much more scrutiny and oversight. Politician after politician and white collar criminals should be regularly sent to jail and for long times when they break public trust. How to get there I don't specifically know but in general you need a strong middle class. The powers that be if those of private fortunes or political powers certainly fear a strong idle middle class with too much time on its hands.

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