Who's Afraid of a Little Competition?

More people than you think. In a recent article in Forbes magazine, Art Carden explains the difference between being pro-business and pro- free market. There are many businesses large and small along with just as many politicians who may take a pro-business stance but who are decidedly anti- free market.

Carden goes on to illustrate the difference between the two notions:

"A private company wants a patch of ground on which to build a hotel, a grocery store, a shopping center, or an office building. The “pro-business” solution is to seize the land via eminent domain and claim that the increased tax revenue is a public benefit (if increased tax revenue is going to be our standard, why don’t we compel labor force participation and make everyone sell their property to special interests?). The free market solution says “if the owner will sell to you, it’s yours, but don’t expect to be able to get government officials with guns to go get it for you.”

Pro-business essentially means making laws or implementing regulations that will benefit one business or industry at the expense of another. This is also known as picking winners and losers in the marketplace. Rather than not providing any government favors or assistance whatsoever and letting the market i.e. consumers, decide which products and services are worthwhile, governments instead substitute their judgement for the judgement of the consumers.

Businesses themselves often try and work counter to the free market by lobbying the government to write laws or regulations that will benefit them at the expense of some of their competitors. If one wonders how we get money out of politics, one must look to the source of why there is money in politics in the first place. In his succinctly classic book, The Law, French philosopher Frederic Bastiat put his thumb on the problem two and a half centuries ago.

"Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame and danger that their acts would otherwise involve… But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to the other persons to whom it doesn’t belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Then abolish that law without delay - No legal plunder; this is the principle of justice, peace, order, stability, harmony and logic.”

When we turn the law from an instrument of merely protecting property into an instrument of plunder, "...then everyone will want to participate in making the law, either to protect himself against plunder or to use it for plunder.”

We see this today in modern examples. I've mentioned  before the plight of new ride sharing apps like Uber and Lyft who are being prohibited from operating in certain states and jurisdictions. In many cases this is due to the taxi cab industry lobbying the government to erect laws preventing any competition from entering into the market. This benefits the taxi cabs at the expense of these new start-ups and at the expense of the consumers yet nonetheless it could still be construed as a "pro-business" maneuver by legislators.

Similarly, the popular accommodations provider, Airbnb, has come under fire in many large cities. There are certainly some legal fig leaves that give complaints about such businesses an air of credibility, but at the heart of it you can be sure to find the powerful hotel lobby amongst many others behind the scenes creating a stink trying to get legislators to "do something" about this pesky new business model that is causing them to lose business.

One will often hear liberals and progressives cry for tougher regulations on corporations and industries that have come under fire for one reason or another. They often call for these regulations in a misguided attempt to try and diminish the power of these corporations (who run our lives, dontchyaknow?) without realizing that many regulations actually benefit the largest corporations at the expense of smaller businesses.

Think about it, if you're Walmart or Amazon, industry giants, and the government slaps another regulation on that industry, closing a tax loophole, for instance, which will increase the cost of compliance and cause a monumental increase in paperwork to be filed for the regulatory agencies, who do you think is going to feel the brunt of this regulation the most? Will it be Walmart with billions of dollars in sales or will it be a smaller competitor, perhaps a local chain trying to go national that is still operating under thin margins while trying to gain a foothold in the industry? In the end, sure Walmart might have to pay extra to file their paperwork but it will hardly be a dent in their bottom line whereas the same regulation might be acutely felt and even completely stifle any growth of a potential competitor. In trying to diminish the power of a corporate giant, some of these regulations have the complete opposite effect which is to make competition imminently more expensive and cost prohibitive for smaller businesses thereby stifling competition.

It is no accident that after the passage of Dodd-Frank in the wake of the financial crisis, a leviathan of a bill with over 2,000 pages of legalese, that the Too Big To Fail banks the bill was intended to regulate are now even bigger than they were five years ago and the number of banks in America is at an all time record low.

Industry giants are very aware of this regulatory phenomenon and, believe it or not, are actually often the source of government lobbying for increased regulations. A very clever way of increasing market share while giving the appearance of trying to be responsible corporate entities.

It is important we remember these differences and allow the free market to let new businesses freely enter and exit the business arena. We all benefit from this by increased consumer choice, more job/income opportunities, a better allocation of tax dollars, and better uses of resources. Who's afraid of a little competition? It turns out, quite a lot of people. Competition is cutthroat, as anyone who pays attention to sports knows, but it is also the vehicle through which improvements, innovations, and advancements are made. Rather than fear it and try and regulate and legislate competition out of existence, we should embrace it and welcome the advancements that emerge when businesses are forced to legitimately compete in the marketplace of ideas. 

3 Myths About Libertarianism Debunked

I'm baaack! Many apologies to anyone who reads this semi-regularly for my delay in posts. If you've read my bio, you know that my full-time job is as a yacht crew member and the end of the year is always crazy for us. Since December, I've been working 12-16 hour days almost every day, which leaves very little time, energy, or motivation to even keep up with current events nonetheless blog about them! But things have settled down a bit for now so I'll try and bang out a couple of blogs in the next week or two before things get crazy again.

Today, I want to tackle a few of the prominent misconceptions that seem to plague libertarianism that its detractors either don't fully understand or don't care to. Let's dive in.

1) Libertarians don't care about the poor, sick, or elderly
Really? I mean, really? Do you really think there is a huge, growing swath of individuals who really could care less if their own grandmothers died or that there are poor children in the U.S. and elsewhere without food to eat? Of course libertarians care about the elderly, poor, and sick. We just have a different notion of how to deal with social problems than many others.

First of all, we don't believe that using State initiated violence will ever be the way to solve any sort of complex societal problem. Problems like poverty and poor healthcare are extremely complex and have many origins. Using the state's monopoly on violence to rob individuals of their wealth to redistribute to other politically favored groups is hardly a panacea to problems that require more than just someone else's money to solve.

Contrary to popular opinion, libertarians don't want to throw granny off the cliff

Individuals, businesses, and communities need to be empowered to deal with the unique situations that each of them face that lead to lack of healthcare access or income inequality. While having access to resources, including money, is certainly part of solving any big scale problem, stealing someone's money and then handing it out to politically connected individuals and businesses does not appeal to libertarians who prefer to let people and businesses keep their money and voluntarily give their resources to charities and businesses that they believe do good work in helping to alleviate these problems.

Let's think about this for a second. If there was no Social Security, no Medicare, no Medicaid, or any other programs of those types, given the number of people who obviously care about access to healthcare and who wish to end world poverty, do you think all those millions of individuals would just sit idly by as people were dying in the streets because there was no government healthcare or safety net set in place for retirees? Or do you think that out of those millions of people in the U.S. who clearly care about the sick and elderly that maybe a few thousand of them across the nation might somehow take it upon themselves to start up organizations, charities, or businesses that address these problems and come up with any number of solutions unique to their location? Of course, we would all be much richer and have more resources with which to start such organizations, donate to them, or just to put towards aiding members of our family and friends because we wouldn't be robbed of a quarter of our money with each paycheck we take home to pay for the government-mandated solutions and the bureaucracy required to administer them.

Many libertarians much smarter and more prominent than me have dedicated many thousands of words and pages outlining a myriad of solutions to societal problems that don't require using State violence to rob citizens of their money and apply one size fits all solutions to these problems (see here, here, and a good one here for just a few examples). Perhaps the naysayers should check out some of these writings before just issuing blanket insults inferring that libertarians don't care about the sick, elderly, and poor just because we advocate addressing some of these problems using voluntary means rather than top-down, State-mandated solutions achieved through their monopoly of force and violence.

2) In a libertarian society, corporations would take over
One of the biggest myths about libertarianism comes from the majority of society being unable to distinguish between capitalism and crony capitalism. Despite tens of thousands of pages of new regulations passed and an ungodly number of pages added to our bloated and labyrinthine tax code each year, some people still operate under the misconception that we operate under some sort of "free market" system in the US. Similarly, despite over 100 regulatory agencies "overseeing" Wall Street and the banking industry, the crisis of 2008 is somehow blamed on the "unfettered free market" and "laissez-faire capitalism".  

While libertarians are certainly proponents of capitalism and free markets, what we have in the U.S. today is not anywhere close to a free market. Libertarians decry any sort of taxpayer funded corporate bailout like TARP, championed by conservatives and liberals alike, or any taxpayer funded corporate subsidy for that matter. In a libertarian society, corporations would have to earn their gargantuan status without the help of any sort of government privilege or taxpayer assistance. Despite what many liberals believe, regulations actually help many of the giant corporations and in fact are lobbied for by them because they know that their smaller competitors who operate under thinner profit margins cannot bear the cost of the added burden of compliance. 

Libertarians also differ from many conservatives in this regard in that while libertarians are pro-free markets and pro-capitalism, conservatives are more pro-business. There's a huge difference between the two because pro-business often means conferring special privileges on certain businesses or industries often under the guise of job creation or aiding the economy. Libertarians favor oil industry subsidies no more than they favor green energy subsidies; conservatives can make excuses for giving oil subsidies while denying green energy subsidies and vice versa. In other words, despite paying lip service to getting government out of people's pocketbooks, conservatives often have no problem finding some tax payer money in the coffers for their favored industries. As for liberals, despite their anti-corporation rhetoric, they certainly don't mind when their favored businesses receive taxpayer subsidies or get bailed out either. Libertarians are the only ones ideologically consistent in this position.

By denying the government the power to pick winners and losers in the market through subsidies, burdensome regulation, and costly new taxes, a libertarian society creates an environment where competition thrives and it's much harder to become a mega corporation without providing desired goods and services and treating employees fairly. In short, we would see fewer corporations, not more, and those corporations would achieve their status through fair means of competition, not cronyism, benefiting consumers and employees alike.

3) Libertarians are isolationists
If I had a nickel for every time I saw "libertarian" and "isolationist" in the same sentence, I could probably retire happily. This erroneous term is often used deliberately in neoconservative circles when they wish to smear libertarians for wanting to not spend another several hundred billion dollars fighting another war we have no business entering into.

Let's get this straight, North Korea is isolationist. They don't allow people to enter or leave their country, they engage in trade with virtually no one, reporters are rarely allowed to enter their country, and almost nothing is known about their culture and way of life except what information they allow to be disseminated.

Libertarians, by contrast, do not wish for the US to be like North Korea. We advocate free trade with everyone, including supposed enemies like Cuba and Iran, in the belief that trade between nations often fosters goodwill and friendship and reduces the likelihood that the parties will want to engage in a conflict with one another. We do not want to shut down our borders to outsiders and we encourage legal immigrants to enter our country and make a living. I fail to see how any of these beliefs make libertarians "isolationists".

Nonetheless, neoconservatives, and nowadays even liberals, like to invoke the term "isolationist" when they're trying to fearmonger us into another conflict or intervention. Libertarians prefer the term "non-interventionist" instead which more accurately depicts our views on foreign policy. We prefer the Constitutional approach to foreign policy in which we are authorized to defend our nation's borders and provide for a strong national defense, but not police the world and try and circumnavigate the globe wasting lives and resources trying to eradicate every baddy that ever lived and who's ever uttered a negative word against America.

John Quincy Adams instructed us that "America does not go abroad in search of monsters to destroy. She is the well-wisher to freedom and independence for all. She is the champion and vindicator only of her own." As we enter a second decade of conflict in Afghanistan at an almost incalculable cost in lives, money, and resources, our views are everyday becoming more vindicated.

Even today, headlines are screaming out about a resurgence of al-Qaida in Iraq despite the hundreds of thousands of Iraqis already killed in a conflict we entered into based upon lies and propaganda and a war chest comprised of more money than every other country in the world combined. What does it say when the country with the largest, most expensive, and most powerful military in the world can't even keep one small country free from terrorists for more than a year? Maybe it says that we aren't being told the full story as to why these people hate us, which is why we can't win a conflict with them. Maybe it says that unless we commit to full occupation of the Middle East for the next 100 years as John McCain proposed, that we're fighting in a war we can't win and will only spawn ever more terrorists. Perhaps al-Qaida's resilience in Iraq has more to do with our decades long occupation and intervention in their land and affairs than the laughable notion that they hate us because we can eat Big Macs and they can't.

And yet the big government champions in both parties, including today's leadership of the supposed anti-war left, would have us enter into even more conflicts in Syria, Yemen, Pakistan, and now they are even sending troops into the depths of Africa. It will never end so long as we keep believing the myth spoon fed to us by our politicians that all this death and destruction is somehow good for the economy and job creation and keeps us safe from harm.

Libertarians certainly don't argue that there aren't bad people who have done bad things overseas, but our argument is that our intervention into their affairs has not made things better for their citizens and have actually made us less safe, not more, within our own borders. Our money and the lives of our men and women who have bravely chosen to serve our country are better served by actually defending our borders, not by meddling in the affairs of nations that never have and never will pose a direct threat to us.

Ron Paul continues his legacy as the champion of non-interventionism through his new think-tank, the Ron Paul Institute for Peace and Prosperity. There, you can find loads of articles cutting through the warmongerer's BS as he continues his advocacy for a peaceful foreign policy and the protection of civil liberties at home.

While there are certainly many more myths about libertarianism out there that make me facepalm myself on a daily basis, I would say that these three are certainly some of the most common. Most of these misconceptions could be cleared up easily if people would take the time to actually read and educate themselves about libertarian philosophy rather than just foolishly believe that we advocate for something we haven't fully thought through. Hopefully this article or any of my others might inspire you to find out more about libertarianism. Given that it's not something we're ever taught in school nor will you find any fair treatment in it in the mainstream (or even alternative) media, you must seek out the information yourself, something I do every day of my life in order to become better informed.