Most who consider themselves conservative, even many with
libertarian leanings, are comfortable with describing themselves as
pro-business.
Not me.
Don’t get me wrong. Just because I’m not pro-business doesn’t
mean I’m anti-business. I’m pro-free enterprise, but that’s different from
being pro-business.
Chambers of Commerce across the nation are pro-business.
They are established to represent their various business members, with large
corporations usually the most influential amongst their numbers. Chambers of
Commerce almost always favor measures that subsidize
businesses, give special tax breaks to businesses, or exempt businesses from
regulation, even when these measures favor only specific industries.
Here is one example. Pro-business interests favor special
discretionary funds at the state and local levels that are used to pay
businesses to locate within the government’s jurisdiction. Often called
“closing funds,” they allow the ruling class to take credit for creating jobs.
Businesses that benefit from these payoffs rarely change their plans as a
result of the payoffs. But, because different jurisdictions simultaneously bid
for the same business projects, big corporations that are the objects of
officials’ affections can pit communities and states against each other to
maximize the payoff in the jurisdiction where the corporations intended to
locate all along. That means closing funds, at best, make no
economic difference at all.
The pro-business crowd also loves to shower taxpayer money
on Hollywood, professional sports, tourism venues, renewable energy, and
high-tech, among others. These are all popular because, somewhere, one of these
industries has grown fast and driven a community’s high-paying jobs and
economic development. The pro-business crowd likes to sell the idea that with
the right government incentive every community can get in on the same economic boom.
It’s usually an easy sell since the jobs they supposedly create are easy to see.
The
damage, though, goes unseen. Unfortunately, subsidizing an attempt
to develop an existing, already-booming industry in a place where it has never
been before is like buying stocks when prices are high; the opportunity is actually
already gone.
But it’s worse than that. The value people place on goods
and services is subjective. Much (probably most, but not all) of the cost of
producing goods and services is objective, determined by technology and
physical laws. A complex interplay
occurs in a free-enterprise market system that transmits information through
prices to balance the allocation of resources (always limited, compared to
human wants) so that the most highly-valued goods and services are provided
(voluntarily, and without central direction), taking cost into consideration.
When politicians step in and artificially lower costs for favored industries or
businesses, the balance free enterprise produces is upset. Resources are
misallocated. Income and wealth is reduced compared to what it could have been.
And although the U.S. is a long way from becoming a Venezuela, that country
illustrates what happens when politics interrupts market mechanisms.
Being pro-business grants license to policymakers at all
levels of government to act like they are in favor of free markets when they
are actually
baby socialists, thinking they can centrally plan an economy into
prosperity. They enact laws and policies that actually make a mess of things. A
mayor in Goodyear, Arizona once told me that if they took care of the big
businesses (granted them special privileges), small business would take care of
itself. This was likely a common refrain at whatever mayors’ conferences she’d attended.
The idea is that when big businesses hire lots of people, there are plenty of
scraps for small businesses, like local restaurants and car repair, to get
along. Of course, the Goodyear mayor likely would not hesitate to favor big
corporations behind various restaurant and car repair franchises that compete
with truly local small businesses. The Goodyear mayor’s thinking discourages
the organic innovation and economic development that made big corporations grow
from once-small enterprises to the behemoths they’ve become.
Pro-business policies are inevitably crony
policies. They cement in place a privileged few, create inequality before the
law, and contribute to social unrest when people gain a sense that some count
for more than others in our government. So no, I’m not pro-business; I’m
proudly pro-free enterprise, where the economic playing field is level, and
government favors no one.
Byron Schlomach is Director of the 1889 Institute and can be reached at bschlomach@1889institute.org.
The
opinions expressed in this blog are those of the author, and do not necessarily
reflect the official position of 1889 Institute.