“There are two ways for a government to be pro-business”

The Economist blogger/podcaster of EconTalk gets it:

There are two ways for a government to be ‘pro-business.’ 

The first way is to avoid interfering in capitalist acts among consenting adults – that is, to keep taxes low, regulations few, and subsidies non-existent.  This ‘pro-business’ stance promotes widespread prosperity because in reality it isn’t so much pro-business as it is pro-consumer.  When this way is pursued, businesses are rewarded for pleasing consumers, and only for pleasing consumers.

The second, and very different, way for government to be pro-business is to bestow favors and privileges on politically connected firms.  These favors and privileges, such as tariffs and export subsidies, invariably oblige consumers to pay more – either directly in the form of higher prices, or indirectly in the form of higher taxes – for goods and services.  This way of being pro-business reduces the nation’s prosperity by relieving businesses of the need to satisfy consumers.  When this second way is pursued, businesses are rewarded for pleasing politicians.  Competition for consumers’ dollars is replaced by competition for political favors.

This gives us simple test.

When a politician proposes or enacts a a policy in harmony with the first way, I can support that.

When a politician proposes or enacts a a policy in harmony with the second way, that policy and it supporters  must be ruthlessly exposed, ridiculed, opposed, repealed, undone…you get my point.

Advertisements