Business & Economics — VOICES for REASON

In the Christian Science Monitor, Don Watkins and Yaron Brook draw on Atlas Shrugged to illuminate a crucial difference between two opposite kinds of businessmen in our economy:

The producers, such as Hank Rearden [a character in Atlas Shrugged], inventor of a new metal stronger and cheaper than steel, work tirelessly to create products that improve human life. The looters are basically pseudobusinessmen, like the incompetent steel executive Orren Boyle, who get unearned riches by getting special favors from politicians. Their business isn’t business, but political pull.

The CSM titled the piece “Apple vs. GM: Ayn Rand knew the difference. Do you?” It’s a good oped that sheds light on how government intervention in the economy distorts the behavior of businessmen.

Read the whole thing.

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Nicholas Kristof gives us his best case for passing ObamaCare:

Critics doubt that the Senate and House bills would succeed in containing health care costs very much, and they may be right. It’s hard to know. But the existing system is a runaway roller coaster. Isn’t it prudent to try brake pedals even if we’re not sure how well they’ll work?

You’ve got to love likening a sprawling new government program to further bureaucratize, politicize and intervene in American health care to putting on the brakes.

No, Kristof, I don’t think it’s particularly prudent to expand government’s control over health care based on nothing but the blind hope it will work; I don’t think it’s prudent to approach any problem without understanding the nature of that problem. Read the rest of this entry »

Do you know what Venezuelan strongman Hugo Chavez said the other day? He was speaking at a televised ceremony in his presidential palace. In the room were representatives of Chevron, the American oil giant, and other multinational oil companies. They had just signed on to invest billions of dollars to exploit oil in Venezuela’s Orinoco basin.

“Dear friends, partners, allies,” Chavez told the assembly, “you know you have all the guarantees of our Constitution and our laws.”

Really? And exactly how strong are those guarantees?

Chevron might want to ask ExxonMobil about that. Whatever Chevron’s reasons (or rationalizations) for going in, the record of Venezuela’s treatment of foreign companies speaks for itself. Less than three years ago, Venezuela nationalized massive oil facilities operated by Exxon and several other western companies. They all had signed agreements guaranteeing long-term concessions. Chavez just tore those up and tossed them away.

I call it theft by engraved invitation. I say “theft” because I reject the widespread view that a nation owns the natural resources within its borders and is therefore entitled to seize private assets; when a state like Venezuela seizes private assets, I think that should be regarded as a kind of theft. And I say “engraved invitation” in reference to the so-called contracts that western companies sign with eyes wide open, delivering their advanced technology—and the engineers and technicians who understand and operate it—to the custody of thuggish governments with long histories of seizing private assets whenever they please.

What would happen if companies like Chevron and ExxonMobil were to stand up and declare that nationalization is theft? What if they called upon their own government to issue similar condemnations? What if such companies ceased propping up the world’s failing socialist economies?

I’d like to see what would happen to Chavez and his ilk if they were deprived of victims.

Image: WikiMedia Commons

In Citizens United v. FEC, the recent campaign finance case I discussed here and here, the Supreme Court noted that one of the arguments for restricting corporate speech is that “[s]tate law grants corporations certain advantages–such as limited liability, perpetual life, and favorable treatment of the accumulation and distribution of assets.” According to this line of argument, corporations are “creatures of the state” and they give up any claim to First Amendment rights in exchange for special state-granted favors.

In answer to this argument, the Court quoted a dissent by Scalia from a previous decision: “It is rudimentary that the State cannot exact as the price of those special advantages the forfeiture of First Amendment rights.”

The Court, which admirably upheld the free speech rights of corporations, took it for granted that corporations wouldn’t exist save for special favors from the state. It’s a common view of corporations. But it’s one that must be questioned.

There’s reason to think that all of a corporation’s essential features–”corporate personhood,” perpetual life, and limited liability–could arise by voluntary agreement among individuals on a free market, without a single government favor. Consider what many regard as one of the most controversial features of a corporation, limited liability. Read the rest of this entry »

Jeff Scialabba and I have already addressed most of the substantive arguments Ralph Nader and Robert Weissman raise in their Wall Street Journal op-ed “The Case Against Corporate Speech” (see here, here, and here). But this is revealing:

Corporations know that money makes a big difference when it comes to blocking protections for workers, consumers and the environment. Wall Street, health insurance and drug companies, fossil fuel and nuclear power companies, and defense corporations have been hard at work defeating common-sense reforms that would make them more accountable.

Do we want more elected officials to believe that to challenge corporate agendas is to risk their career?

This means: “We should restrict corporate speech because it interferes with us passing our anti-corporate agenda.” As my colleague Onkar Ghate has pointed out, the same argument could have been made by segregationalists during the sixties: “We should restrict speech by blacks because it interferes with our anti-black agenda.”

Image: flickr

In the name of fiscal responsibility, President Obama is promising a spending freeze–at the record-high spending level he reached in 2009. This is like an alcoholic promising to “freeze” his drinking at 20 beers a night.

Read the rest of this entry »

We need to rise above fear, hesitation, and partisan politics–to give the government all the power it needs to solve all our problems.

That was the message of President Obama’s State of the Union address, which named dozens of problems in America and not once suggested that individual rights, liberty, or freedom were the solution.

From a quick reading of the speech, some statistics:

• Number of times President Obama said “I”: 105–mainly pushing for the government programs he seeks to pass.
• Number of times President Obama said “individual rights”: 0.
• Number of times President Obama said “liberty”: 0.
• Number of times President Obama said “freedom”: 1–but it was freedom for Afghanistan.

flickr: Darwin Bell

For years, Barney Frank has been the most prominent cheerleader of Fannie Mae and Freddie Mac–the colossal failures that have cost taxpayers $110 billion to date. Frank has long denied any problems with the government sponsored entities designed to “promote home ownership” by making or guaranteeing loans the free-market wouldn’t.

“These two entities—Fannie Mae and Freddie Mac,” he famously said, “are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Frank also explicitly endorsed the reckless lending that proved Fannie and Freddie’s downfall: “I want to roll the dice a little bit more in this situation towards subsidized housing. . . .”

Last week, Barney Frank changed his mind: “The remedy here is…as I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac…”

But don’t celebrate just yet. Frank didn’t call for a meaningful abolition–he called for “abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance” (emphasis mine). Read the rest of this entry »

He increased government spending to historic highs. He poured vast amounts of money into a half-baked scheme to “stimulate” the economy. He bailed out failed companies. He expanded government control over medicine. He denounced “corporate greed” and saddled businessmen with crippling regulations and controls.

No, I’m not talking about President Obama. Read the rest of this entry »

What follows are three examples of a common fallacy:

1. The FTC brings an antitrust suit against Intel on the grounds that, among other accusations, the company coerced its customers into buying only its CPUs and GPUs.
2. Congress passes legislation preventing broadcasters from forcing TV viewers to listen to “excessively loud” commercials.
3. The government passes laws to stop health insurance companies from forcing high-risk customers to pay higher insurance premiums.

Each of these is an actual example of the fallacy of equivocating between economic power and political power–of treating as identical the power of private individuals or businesses to engage in trade and the power of the government to use physical force. Understanding this fallacy is a crucial step in untangling these and many other issues. Read the rest of this entry »