Thursday, January 27, 2011

Obama Is Now Pro-Business. And That's Dangerous Because Businesses Really Don't Like Competition and They'll Use Government to Try to Restrict It

From Don Boudreaux's excellent editorial making a very important point that Obama should be "pro-growth," and not "pro-business":

"An economy’s success is best measured by how well it pleases consumers, not by how well it pleases businesses. Each business sees matters differently. It wants to profit as much as possible. In a free market, businesses profit only by pleasing consumers. But a business that obtains special favors from government can profit without pleasing consumers. And it’s here that trouble starts.

Consider Obama’s commitment to make America more “competitive.” “Competition” sounds good. But businesses don’t like competition; they like protection from competition – along with subsidies, special tax breaks, and other government favors that relieve them from the need to cater energetically to consumer demands. So a pro-business president is prone to curry favor with businesses by shielding them from competition.

Tariffs and other import restrictions are examples of pro-business policies. They increase the bottom lines of those businesses that no longer must compete vigorously against foreign rivals. Such pro-business policies are also anti-consumer and anti-market. They rob consumers of choice; they shrink consumers’ spending power by enabling protected businesses to raise prices; and they stymie economic growth, in part by channeling entrepreneurs’ efforts into lobbying government for favors and away from figuring out how to build better mousetraps.

The irony is that such policies – which really should be labeled “crony capitalist” – are often labeled “competitiveness” policies. Because these policies increasethe profits of some domestic businesses, they are mistakenly believed to make the domestic economy more “competitive” when, in fact, they make it less so."


At 1/28/2011 7:37 AM, Blogger deniborin said...

interesting article .. according to my study of business .. thanks
best regards from Indonesia

At 1/28/2011 8:07 AM, Blogger Paul said...

He's pro-crony.


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