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Free Competition Threatens the Rich

Posted by Chance on August 24, 2006

Libertarianism and economic conservatism have often been criticized because many of their proponents tend to be more rich and successful, and that they use that political philosophy just to keep themselves on top. That is probably true in many cases. Neal Boortzeven claims that seeing the amount of money deducted from his paycheck motivated him towards conservatism, then ultimately, libertarianism.

However, many times those who are successful claim to support free markets, but will actually use the avenue of government to work in their favor. There are numerous stories of executives lobbying for subsidies for their business, in the interest of the “common good.” FM radio companies, using the FCC, tried to block the Satellite Radio stations from coming in and competing.

Another avenue in which businesses work is through the avenue of occupational licensing. To the extent that we should regulate business is another topic within itself, but the point is, many companies will convince legislatures to more stringently regulate businesses, in order to make it more difficult for competitors to enter the marketplace. Such legislation can make it easier for a business to maintain a monopoly. Since that business may have been around awhile, it has the capital accumulated to follow whatever new regulations take place, while the cost burdens the little guy coming in. I believe such regulations can cause the scenario that liberals fear most, in which “the rich get richer, and the poor get poorer.”

So, many of the rich will act to constrain markets in order to hurt the poor.

But could some of these people be trying to act for the common good? Maybe. But many of those in power are the ones trying to push the new legislation through. I’m just not that trusting. Also, the fact that some of these regulations hurt the poor somewhat must also be weighed against the necessity of such regulations. Again, that leads to the debate about how much regulation is needed. But does one really need a license to be an auctioneer, a hair-braider, or a horse-teeth filer? How about a psychic? I would like to see what their certification test looks like. (Sorry, I’m not going to do a google search for psychic licensing, but I have heard it somewhere).

Again, even if some regulations are necessary, in excess, they can hinder opportunities for the poor. This seems to be anathema for the American ideal of any political stripe. Conservatives and liberals alike believe that America is supposed to be the land of opportunity.

A couple of the links above point to the Institute for Justice, an organization that sues on behalf of citizens, usually those pursuing an occupation that is laden with licensing laws. IJ is fighting for a free market, but not just for the wealthy, but for the poor as well.

I know there are many things to consider when dealing with the market and regulation, and one of those considerations should be how easy it is for the lower and middle class to make a living for themselves. A land of opportunity is advantageous for the poor, and is something that many of the rich do not want.


16 Responses to “Free Competition Threatens the Rich”

  1. Dan Trabue said

    Many interesting and thoughtful points, Chance. Along these lines, are you familiar with Chapter 11 of NAFTA? (and I think there’s something similar with CAFTA)

    It’s the provision that allows corporations to sue nations for impeding their profit-making!

    What it allows for, for a real-life example-is a company named Metalclad (I believe) to sue a village in Mexico. The village had made arrangements for Metalclad to set up business there. But when they got there and began putting pollution into the streams, the people of the village passed a law saying that you can’t pollute streams.

    This new law interfered with Metalclad’s profits. They sued and won, thanks to Chapter 11! This law allows corporations to have power over sovereign nations – it’s incredible!

    And that “conservatives” support this is even more amazing.

  2. Chance said

    “Many interesting and thoughtful points, Chance. Along these lines, are you familiar with Chapter 11 of NAFTA? (and I think there’s something similar with CAFTA)

    It’s the provision that allows corporations to sue nations for impeding their profit-making!”

    Wow, I wasn’t at all! That’s pretty messed up. I think a condition of free trade is still respecting the nation’s own laws that they have.

    I also see different categories of rules. I can respect rules that enforce environmental considerations. What I am against is overzealous consumer protection laws for the reasons mentioned in the post. The idea of protecting consumers is a good idea, but like I said, it can also limit opportunities for the poor.

  3. Michael Westmoreland-White said

    I certainly agree that some regulations can be draconian. I don’t like “big government” answers to everything. But I think your post shows why we must have govt. regulation, too. Market forces by themselves simply form monopolies and oligarchies.

    Money is power and since people are fallen and sinful, they will use that power for their own gain at the expense of others. We must have checks and balances on power concentrations–in government and against economic concentrations of power. Some of the check against the latter will be governmental. Another will be unions and citizen groups.

    I suppose one reason I can never be libertarian and just fall in love with free markets (though we need markets) is that I distrust power concentrations. But another is my fundamental commitment to democracy, including workplace democracy. I see people more fundamentally as citizens than as consumers or cogs in a corporate machine.

    Although that is not the only biblical perspective, the linking of wealth and injustice IS a strong biblical theme as is the distrust of dominating power. So, while I may (probably do) have experiential sources for my democratic socialist commitments apart from Scripture, my faith reinforces these.

  4. Dan Trabue said

    Another thought I have along these lines is that, when we say, “Free Competition Threatens the Rich,” or “Environmental Regulations Hurt the Market,” that I’d tend to think that these are perceptions of reality.

    I don’t know that I think free competition or environmental regs hurt businesses, but Businesses perceive that they will be hurt by these sorts of things.

    I think a healthy market is only made healthier by sound policies. It’s an obvious example, but if there are no trees left to cut down, then the lumber industry is going to be hurting. No one wants to take actions that will benefit us today but undo us tomorrow.

    Or rather, no one, but those interested in a fast and easy dollar. And that is one concern I have in relation to businesses and even private finances: We will always be tempted to take actions that will help us in the short term, especially if the longterm damage won’t be seen in our lifetimes.

  5. Chance said

    Or rather, no one, but those interested in a fast and easy dollar. And that is one concern I have in relation to businesses and even private finances: We will always be tempted to take actions that will help us in the short term, especially if the longterm damage won’t be seen in our lifetimes.

    I suppose it depends if those policies affect other people, or just those involved. For instance, pollution is something that should be controlled, because it affects other people. As far as financial decisions just affecting that business, or a person’s family, if that’s what you mean by “private finances”, I believe it is not the govt’s responsibility to manage that. If someone is short-sighted with their business, then that’s their problem, and a business that better meets the customer needs for the future will prevail.

  6. Chance said

    I suppose one reason I can never be libertarian and just fall in love with free markets (though we need markets) is that I distrust power concentrations.

    That makes sense but, barring monopolies, I don’t see instances of corporations having much real power, other than through gov’t avenues.

    For instance, take a company like Pepsi or Coors. They don’t have any real power over me, the consumer. They can pressure me to buy stuff, but all they have is persuasion.

    But let’s take something people need, like groceries or oil. Concerning groceries, no company can charge excessive prices, because there will be another company that will undercut them. With oil companies, same thing. I discuss that in a previous post (http://sadastronaut.blogspot.com/2006/05/why-are-oil-companies-making-more.html).

    The idea is that many things we don’t need, and even for the things that we do need, competition prevents concentrations of power. Maybe not concentrations of money, though. Kerby Anderson from probe.org said it paraphrasingly, “those who hate a several corporations deciding what we do should wonder about a few bureaucrats deciding what we do.” Except, again, I feel like corporations can only persuade, bureaucrats can force.

    Now, the real power comes in when it comes to issues like the environment, because Exxon or whoever can essentially bribe politicians so that they can keep polluting. That is why I believe in transparency when it comes to who is funding politicians. In that case, I believe the people should have power and do something about it. So, in that sense, money is power.

    However, that is a case where government must be involved. That’s why I say keep gov’t and business as separate as possible when we can, because businesses only have real power when interacting with gov’t.

    Concerning monopolies, then free market advantages go out the window. That is an issue I am dealing with now. Does the free market naturally destroy monopolies, or does gov’t action need to be taken to break them up or prevent them from happening?

    Oh, I thought of another thing. Barring slave labor concerns overseas, let’s look at Wal-Mart. Who has more power. A store which comes in and offers things for people to buy at their own free will? Or, the local government that decides people cannot even make the choice?

  7. The Prophet said

    Interesting Post.

    Oh my gosh, don’t even get me started on psychics. I sell advertising for the local newspaper.

    The psychic ads in our newspaper are “payment in advance” because so many psychics have left town without pay for their ad. So after we take their ad, we have to ask for a credit card. 9 times out of 10, their credit card declines.

    I remember once I took a sizeable ad from a psychic. It was pretty expensive. When I quoted her the price, she freaked.

    I wanted to tell her, “I thought you would know what the price is before I told you, being that you’re a psychic!”

  8. Chance said

    That’s funny Josh.

    The whole psychic thing is weird. I think, “well if people want to give their money to some random person so that they supposedly have their future told, that’s their issue.”

    At the same time though, at what point does it simply become fraud?

  9. The Prophet said

    Totally unrelated, but concerning your question about Skillet… they’re MySpace page is http://www.myspace.com/skilletmusic.

    I’ll check their music out some time this weekend, since I can’t listen to them at work.

    Have a good weekend!

  10. Chance said

    Thanks Josh.

    Concerning your comment on your blog, concerning the Collide album, the songs that are good are excellent, spot-on, but about half of the album is somewhat repetitive. I think they hit brilliant heights, though.

  11. Michael Westmoreland-White said

    Chance, since you don’t publish your email, I’m going to have to use this space (even though I hate using comments sections for off-topic matters) to invite you to see my post on just peacemaking on my blog and give feedback.

    (I do understand the decision not to publish your email. I have this annoying critic that keeps emailing me at home until I blocked him.)

  12. Dan Trabue said

    Who started the revival of the phrase “spot-on”? I see it all the time and it’s usually at more Right-leaning blogs.

    (I realize the phrase has been around for a while, but seeing it overly-frequently used at Right-ish blogs makes me suspect some Right-ish leader has been using it…)

  13. Michael Westmoreland-White said

    “Spot-on” is typically British. The American equivalent is “on the money.” (Telling about our culture, no?) So, maybe the Harry Potter phenomenon is responsible for Americans picking up on this?

  14. Chance said

    That’s interesting. I usually don’t use the term “spot-on”, but it just kinda came to me.

    It is funny to notice the difference in slang between the two countries, or even some of the terminology. I had a friend from New Zealand, and I think he may have used some of the same words. He called a trash can “rubbish bin” and he always said he was going to “ring” me when he meant call me on the phone.

    You could be right Michael, I do think if I ever visited an elementary or middle school these days, I would see a noticeable affect of Harry Potter on the slang of young kids.

    Maybe that’s what some of the Baptists are looking out for. They don’t care about witchcraft, they just don’t want them Brits infecting us with their only slightly-conservative culture 😛

  15. Chance said

    Actually, if any Brit has been influencing my vocabular, it has been Simon Cowell. Yes, I know, American Idol is a corporate machine, but they hook you with the bad singers at the beginning. I didn’t mean for it to get so far, it just happened.

  16. Michael Westmoreland-White said

    I am proud to say that the only “reality” TV show I have seen is the first episode of the original Survivor. I said, “This is trash” and never looked back. This is capitalism at its worst: We’re tired of paying for good writers and actors, so we’ll use “ordinary” people in stupid contests. Then we’ll flood the market so that nothing else is on.

    It does make it easier to keep the boob tube off and read books!

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