Video: How some businesses use government to stifle competition and increase their bottom line
Some people have a misconception about fiscal conservatives and libertarians. They think that supporting the free market means you think businesses – especially big ones – can do no wrong.
Nope. Supporting free-market principles means exactly that – you support a market where individuals are free to make their own choices. Now, consumers often overwhelming prefer one company or a handful of companies in a specific industry. Those companies grow larger, because they are the best at meeting individuals’ preferences. In other industries, however, individuals won’t overwhelmingly select one company and many smaller firms will compete for business.
So a truly free market will lead to some very large businesses (although these businesses’ profits and size are not permanent or guaranteed) and some medium and small ones.
Some businessmen and women, though, want to take a shortcut to success. Instead of earning money by meeting consumer demand better than their competitors, they seek to use the power of government to limit market competition, which leads to greater profits for themselves at the expense of consumers. While these businesses can grow very large, the reason for their success represents the antithesis of free-market principles.
How does that play out in real life? Watch this excellent, excellent video from ReasonTV to find out how a Washington, D.C. businessman wants to use government regulation to limit competition and increase his profits in the taxicab business – and how his actions would hurt hundreds of entrepreneurs.
As detailed by Frederic Bastiat in his brilliant short book The Law, there are two main ways the law is perverted: socialistic/communistic wealth distribution and the politically powerful using the law to enrich themselves (in the above video, the businessman who would benefit from the taxicab medallion system). Here Bastiat explains why some business owners turn to government to ensure their profits.
But there is also another tendency that is common among people. When they can, they wish to live and prosper at the expense of others. This is no rash accusation. Nor does it come from a gloomy and uncharitable spirit. The annals of history bear witness to the truth of it: the incessant wars, mass migrations, religious persecutions, universal slavery, dishonesty in commerce, and monopolies. This fatal desire has its origin in the very nature of man — in that primitive, universal, and insuppressible instinct that impels him to satisfy his desires with the least possible pain.
Property and Plunder
Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property.
But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.
Now since man is naturally inclined to avoid pain — and since labor is pain in itself — it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it.
When, then, does plunder stop? It stops when it becomes more painful and more dangerous than labor.
It is evident, then, that the proper purpose of law is to use the power of its collective force to stop this fatal tendency to plunder instead of to work. All the measures of the law should protect property and punish plunder.
But, generally, the law is made by one man or one class of men. And since law cannot operate without the sanction and support of a dominating force, this force must be entrusted to those who make the laws.
This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.
I can’t urge you strongly enough to read Bastiat’s The Law. It’s available for free online here and will show you the dangers of government overreach by socialists and by crony capitalists.