Blog author: jcarter
by on Thursday, August 22, 2013

Zombies-aheadEconomist Luigi Zingales provides a helpful explanation on the difference between being pro-market and pro-business:

A pro-market strategy rejects subsidies not only because they’re a waste of taxpayers’ money but also because they prop up inefficient firms, delaying the entry of new and more efficient competitors. For every “zombie” firm that survives because of government assistance, several innovative start-ups don’t get the chance to be born. Subsidies, then, hurt taxpayers twice. . . .

And a pro-market approach holds companies financially accountable for their mistakes—an essential policy if free markets are to produce sound decisions. A pro-market party will fight tirelessly against letting firms become so big that they cannot be allowed to fail, since such firms may take risks that ordinary companies would never dream of. . . .

[The Republican Party] has to move from a pro-business strategy that defends the interests of existing companies to a pro-market strategy that fosters open competition and freedom of entry. While the two agendas sometimes coincide—as in the case of protecting property rights—they are often at odds. Established firms are threatened by competition and frequently use their political muscle to restrict new entries into their industry, strengthening their positions but putting their customers at a disadvantage.

(Via: AEI Ideas)

  • Curt Day

    The real problem isn’t pro-market/anti-market. The real problem is that the market and economics is treated as the pie while other areas of life, if recognized unlike the environment and ecology, are pieces of the pie. The real problem is that we use the market to solve too many problems and use the market model for every area of life.

    The real problem is the faith we have faith in the all-mighty, inerrant market.

    What happens to the people in those companies that fail in a society where the market is everything? And what happens to the communities these people live in?

    One economist gave an example of the problem with the market. This economist lives in South America in an area where they make butter. And yet, the butter he saw available in a hotel was from New Zealand. According to the market, that might make sense. Yet when the market determined it made sense, did the market measure the impact on the environment that shipping butter from New Zealand to South America? Does the market measure the accumulated impact on the environment when it demands this kind of transportation of goods to an area that already produces them?

    It seems that one subset of Zombies are those who believe in an all-mighty, inerrant market. Because though they might be smart in wheeling and dealing in the market, they have no ability to question the system they espouse.

    • Jump

      Curt, the proposal at issue is a market governed by free and virtuous citizens. What alternative system do you propose?

      • Curt Day

        A market that views itself as a subsystem, a piece of the pie, rather than the whole pie. A system where businesses are worker-owned and democratically run.

        The problem with the system above is that the market still allows for the consolidation of wealth and power and when that starts occurring, there goes your free and virtuous citizens. The trouble with the market described above is that though it demands free and virtuous citizens, its primary energy source is still greed. And, again, there goes your free and virtuous men.

        If you are really serious about free and virtuous men being the prerequisite to the market, then we should suspend the current market until we have a sufficient number of free and virtuous men to manage it. But, then again, you would end up with a consolidation of power. And we know what power does to people.

        • Marc Vander Maas

          Is every business driven by greed? Is every businessman who starts a business and desires to be successful by definition greedy? Are workers immune from greed?

          Why in the world do you believe that any business that becomes reasonably large could be run successfully as a democracy?

          What of the entrepreneur who risks significant amounts of his or her personal time, treasure, and property in order to start a business, many of whom fail multiple times before establishing a successful venture? Should they not be able to control the destiny of the company that they started? Have they no rights?

          Man, just so many questions for you, Curt.

          • Curt Day

            Marc,
            The overall system is based on greed regardless of the instance of individual businessmen who are not.

            Question #2, there several forms of democracy. So yes. But here is the issue, if you can increase efficiency by installing a managerial system do you forsake a democracy by doing so? That is the historical question of the day.

            Question #3, what the entrepreneur risks is not the only issue. The longer the employees work for the entrepreneur, , the more they are risking their future.

          • Marc Vander Maas

            Define greed.

          • Curt Day

            Those who have to ask are afraid to know what it is. The dictionary definition is, “the intense and selfish desire for something.” Noting that selfish is more than just self-concern, it, it lacks consideration for others.

          • Marc Vander Maas

            Thanks for your little editorial slap at me there, Curt. Much appreciated, as always.

            No, I’m not afraid to know what greed is, whatever you mean by that. I’m curious to know if there is any action that a person can take in life in order to advance their interests that you would not classify as greedy. You love to accuse people of being greedy, and you never fail to overlook the point made by Jump below that greed is a property of persons. To listen to you, one would come away with the impression that free markets cause greed, and that ridding ourselves of the horrible market influence will help us to rid ourselves of that terrible side effect of markets.

            So, is any desire to better ones self financially simple greed?

          • Curt Day

            Marc,
            You are more than welcome. After all, I wrote my answer with your in mind. And your mentality was just illustrated by your accusation that I love to accuse people of being greedy. Actually, I have not accused any single person of being greedy. Rather, I provided a definition of greedy and selfishness so that you can come to your own conclusion.

            As for ridding ourselves of the market, it definitely needs to undergo a massive restructuring. For the market seems to use the greed of some of its individuals as a source of energy. In addition, we seem to look at the market as the pie rather than a piece of something larger.

          • Marc Vander Maas

            I suppose that constantly insinuating/outright asserting that an entire class of people is greedy is different than accusing specific people of being greedy, Curt. Yes. That is technically correct. I bow to your superior intellect.

            I can see that we’ve entered the phase of our conversation where you start pretending that you’ve actually responded to my question and that my failure to understand how you have absolutely demolished my worldview is only due to my inability to grasp your deep deep mindthoughts.

          • Curt Day

            Marc,
            Speaking about groups in general is not the same as describing each individual person.

            BTW, you wrote that you hear me saying that free markets cause greed. But I responded you by saying free markets rely on greed. There is a difference. But since you are in a mood to insult, I won’t respond anymore.

          • Marc Vander Maas

            Well that’s kind of a bummer, considering that we’ve just circled around to the beginning of our “conversation” again, where I asked you to define greed. In another comment, Jump goes into some detail about your conflation of greed and self-interest. I note, for the record, that you never responded to that one. That’s pretty much what I’m trying to get at here as well, and you’re (as usual) just unwilling to acknowledge it or address it. So what is it, Curt? Is any attempt to better one’s self or situation nothing more than greed? Or is it only good up to a point? Who determines what that point is? You? Yeah, it’s probably you.

          • Curt Day

            Marc,

            For both you and Jump,I have provided the dictionary definition of greed and selfish, the only word I saw him ask the definition for was the word “selfish.”

            You asked me to define greed and I immediately responded with the following:

            The dictionary definition is, “the intense and selfish desire for something.” Noting that selfish is more than just self-concern, it, it lacks consideration for others.

            So that is the first response I gave to you in this thread and now you say we are at the beginning.

          • Marc Vander Maas

            Yes. Thank you for copying and pasting a definition of greed from an online dictionary and tacking on a sentence that does not address what either Jump or I are trying to have you address.

          • Curt Day

            Jump asked what selfishness was. You requested that I define greed. In providing the dictionary definitions, I left the rest of the work for you. But since I responded to those simple requests, you are wrong in saying that I did not address what you requested.

          • Marc Vander Maas

            I can’t help but respond to you, Curt. I’m actually laughing at your intransigence here.

            Are you even familiar with the concept of a follow up question? I mean, in some technical sense, yes, you’ve answered my question. But then I asked you an additional question, in an attempt to delve just a touch more deeply into the subject at hand. So yes, you’ve given me an answer to my request to “define greed.” You did it in the most cursory manner possible, but yes, you did answer that original question. Subesquent to that, I asked you if you think there is any legitimate distinction between greed and self interest. For some reason you insist that the definition you copied and pasted from Merriam Webster online or wherever suffices as an answer to that question as well. Any rational person can understand that it does not; yet you insist on not even acknowledging that the question has been asked.

            My inkling is that you refuse to answer the question because you know that any subsequent discussion that would flow from an actual response might reveal some deficiencies in the neat, tidy, anti-market worldview you constantly promote here.

          • Curt Day

            Marc,
            You enjoy laughing at others and this laughter is because you think you are superior. Who cares? I didn’t follow up because I felt the definitions were sufficient. And any further discussion would be because people are looking for a way around them.

            So enjoy your laughter.

          • Marc Vander Maas

            I’m laughing because you’re hilarious. And, no, your definitions were not sufficient, at least not if you’re interested in actual dialogue. Your intransigence is your way of avoiding any meaningful discussion. You do it all the time here. So, pat yourself on the back for scoring whatever meaningless point you think you’ve scored against the heartless capitalists or whatever. Congratulations. You continue to be the least convincing troll on the PowerBlog.

          • Jump

            “Jump asked what selfishness was.”

            You seem to be confusing me with someone else. I didn’t do that. Rather, I pointed out that self-interest and greed are not identical.

          • Jump

            Curt,
            By the way, self-interest and selfishness are two different things, and you must distinguish between them. Selfishness, like greed, is a vice. Self-interest is not.

          • Jump

            “For the market seems to use the greed of some of its individuals as a source of energy. ”

            Curt, You are repeating what you said several days ago here. I gave several objections to the view that greed is a relevant consideration in assessing the moral worth of the free market. Do you have a reply?

          • Jump

            “As for ridding ourselves of the market, it definitely needs to undergo a massive restructuring. For the market seems to use the greed of some of its individuals as a source of energy. In addition, we seem to look at the market as the pie rather than a piece of something larger.”

            The free market does not eliminate greed, true. But that’s an uninteresting observation. No economic system eliminates greed–that’s because people in their fallenness are always prone to greed come what may. Here’s what’s far more interesting: only in a free market can greed actually redound to the benefit of others. Any other economic system? No. This is not an endorsement of greed; it’s a statement of how marvelously redemptive the free market is.

            You’re too fixated on greed.

          • Jump

            “The longer the employees work for the entrepreneur, , the more they are risking their future.”

            That statement doesn’t make sense, Curt. The entrepreneur takes risks that far exceed that of the workers. This is not to say the workers take no risks–I took a risk in taking the job I have over another I could have taken. That’s opportunity cost for you. If an employee is free to stay or leave, then the risk is theirs to manage as they see fit.

          • Curt Day

            Suppose you are correct in saying that the risks taken by entrepreneurs exceeds that of the employees? How would that negate my statement? When a person takes a job, the risk is not just with the present and whether one has a job or not, the risk is also with the future especially in terms of pensions. Sometimes, a job loss means a losing one’s pension and other times it means receiving a smaller pension that might which could be inadequate. In addition, suppose you lose your job, getting another one that pays enough to support your current lifestyle is not guaranteed. That means that you might have bypassed looking earlier when the job market was better, These are some of the risks involved?

          • Marc Vander Maas

            Jump is correct. I can’t think of any reason why anyone would think that there’s more risk involved in accepting a job at a company than there is in starting that company from scratch. I don’t even think you believe that.

            That being said, I can’t figure out what point you’re trying to make. Are you saying that all risk is bad? Sure, we can all agree that it’s sad when people make bad decisions and end up with regrets. But that’s life. What larger point are you trying to get across here?

          • Curt Day

            Marc,
            It is very clear, just because the worker does not have the same risk as the owner, doesn’t mean that the risk they take is insignificant. That is if you suppose that the owner takes the greater risk.

          • Marc Vander Maas

            OK, we’ve established that both employees and entrepreneurs take risks. We agree on that. Great. Everyone takes risks; that’s part of life. (And yes, I do suppose that the owner takes the greater risk, because the owner clearly has much more invested in the business than the employee. Whatever risk the employee is taking in the context of their personal life is another issue, but in the context of the business, I don’t think there’s really any doubt who has more at stake.)

            What has not been established, however, is reason to believe that whatever risk an employee takes in accepting a job at a company entitles them to have a similar degree of control over their place of work as the individual who assumed the risk of starting the company in the first place. I don’t know what moral principle you would base that assertion on. In fact, to give the employee as much control as the entrepreneur seems unjust to me, in that doing so would deprive the individual who invested the most time, treasure and energy in getting the enterprise off the ground of control over what they have built, without any compensation. Now, if the employer chooses to run the business in that way, they certainly could. But that’s their prerogative, and I doubt that there are many business owners who would do such a thing.

            So we go back to my original question: what right does a person who shoulders the substantial risk of starting a business have to control and profit from their enterprise should it become successful?

          • Jump

            Ditto.

          • Jump

            Curt, no one here is arguing that the risks incurred by employees in the course of their daily lives is “insignificant”. That claim is no part of a defense of the free market, nor need it be.

          • Jump

            Marc,
            I am equally puzzled by Curt’s view.

          • Jump

            Curt, Your observations about the employee’s risks are good examples of opportunity cost. All of us face opportunity costs, including the employer (though in addition to her own opportunity costs, the employer incurs risks over and above those of the employee).

            Opportunity costs and risks. Those are just a part of life. I can’t tell why you’re bringing up the subject here though. Why is this even coming up? Do you take this to show some kind of moral failing of free markets? If so, what exactly is the problem?

        • Jump

          Curt,

          In a free market, and only in a free market, does the phenomenon of wealth accumulation not carry the untoward implication that someone else has to be the poorer because of it. Assuming otherwise is just the old false fixed-pie view. The pie isn’t fixed in the market. This is why wealth/power consolidation is not relevant to considering the moral worth of the free market.

          About “suspending the market until we get enough free and virtuous people to manage it,” the suggestion is incoherent. Think about what that means. The market just *is* the domain in which human freedom is exercised–remove it and people are ipso facto not free in the sense of being “free and virtuous.” The market is also the chief domain in which we get to practice and grow in the virtues. Your suggestion is therefore akin to claiming you wish to draw triangles, but without so many corners.

          Concerns about oppression, morality of power and wealth distribution, etc, are actually valid if aimed at a command-and-control system, which has those problems intrinsically. Only in a free market are these *not* intrinsic problems.

        • Jump

          Curt,

          Let me add a few comments on greed.

          1. Greed is not a property of money; it is a property of persons. You’re thus going to have it in any economic system you please. Plausibly more so in those systems in which those with less wealth cannot create it.

          2. Wealth accumulation is neither a necessary nor sufficient condition for greed. It isn’t necessary: poor people can be greedy. It isn’t sufficient: rich people can be stewardship-minded in excelsis. Thus, the fact that there might be a bunch of rich people (or poor people) in a free market implies zero about the condition of their hearts over and above what is true about people in general. Thus, that there is greed is consistent with any economic system.

          3. Greed is not identical with self-interest: greed is a vice whereas self-interest is not. Therefore, merely having a system that uses morally neutral human self-interest to incentivize wealth creation–indeed accumulation–does not thereby make it vicious or even more likely to encourage vice. I’m far more inclined to think it reduces it, actually. Thus, it is false that, “[the market's] primary energy source is…greed.”

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