Tuesday, January 5, 2010

Big Business Hearts Big Government

Per the CATO blog:

The late George Stigler, winner of the Nobel Prize in economics, is famous in part because of his work on “regulatory capture,” which occurs when interest groups use the coercive power of government to thwart competition and undeservedly line their own pockets. A perfect (and distasteful) example of this can be found in today’s Washington Post, which reports that the IRS plans to impose new regulations dictating who can prepare tax returns. Not surprisingly, the new rules have the support of big tax preparation shops such as H&R Block and Jackson Hewitt, which see this as an opportunity to squeeze smaller competitors out of the market. The IRS and the big firms claim more regulations are needed to protect consumers from shoddy work, but this is the usual rationale for licensing laws and other government-imposed barriers to entry and the Institute for Justice has repeatedly shown such rules are designed to benefit insiders rather than consumers.
When governments and corporations proclaim they have come up with a win-win them, you can almost be certain the average citizen is the loser.

Human nature is the same whether we talk about governments, corporations, organizations, or individuals - even if one's optimal role, size and limitations could be known and defined, there remains the ever-present temptation to go a littler further, wield a bit more influence, gain a bit more control, tweak the rules in one's favor, and/or grow a little richer. When governments are not involved, and no laws are broken, we call this competition, which is great. When businesses lobby/buy the use of government force, however, we should call it for what it is, corruption.

26 comments:

Lumbee said...

I am disgusted.

Anonymous? said...

ah, the government. Making things better since 1776

Anonymous? said...

I read the Post article kind of quickly, but if I read it correctly, the large companies like H&R block are exempt from the rules, yet when there was a field test they performed very poorly.

"In a 2006 study in which employees of the Government Accountability Office posed as taxpayers and visited outlets of tax prep chains, all 19 preparers made mistakes, the IRS reported. Only two of the 19 arrived at the correct bottom line."

I hope the lobbyist for H&R Block gets a raise.

Anonymous? said...

And while I'm thinking of it, I actually called the IRS last year to get some assistance on a tax question. I wasn't on hold as long as expected, but they need to audit their own people. Every time I asked a question, the tax "specialist" just read to me word for word from the back of the tax form. Thank you, because it was my illiteracy causing the issue not the convoluted tax policy.

Professor J A Donis said...

Read at your own risk:
http://aynrandlexicon.com/lexicon/economic_power_vs_political_power.html

Justus Hommes said...

?, I always said you needed a refresher course of Hooked on Phonics.

Professor, I agree with Rand's comments in the link that you posted. In the abstract, free markets, as long as they are both free and clear (no hidden information), are the ideal.

Professor J A Donis said...

Read at your own risk, Justus. The following discussion is the reason why I disagree with your statement about "it works in theory, but not in practice."

http://aynrandlexicon.com/lexicon/analytic-synthetic_dichotomy.html

http://aynrandlexicon.com/lexicon/theory-practice_dichotomy.html

Professor J A Donis said...

In essence there is only one institution that can use force legally--the government. The market cannot use force legally, even more so if it were separate from the state. Therefore, ever since around 1890s, these inefficient business fools who could not compete decided that the best way is to use the government to coerce it to pass laws so that they can compete or limit competition (e.g., in some states, only a handful of insurance companies are allowed to compete), and in some cases, the government helps these inadequate jokers build monopolies (e.g., Comcast, Southern Bell). The common denominator here is "the government." They are the only ones who may use legal force, exercise legal force, and will it onto the people--all of whom are allowing themselves to be coerced by those inefficient, inadequate fools who line the government officials' pockets with more money than you can imagine. The market simply cannot do it on its own. Blame the government, not the businesses. It is bad in theory, it is bad in practice--and the results prove it.

Professor J A Donis said...

Someone please stop me!

This one is for you, Lumbee:
http://aynrandlexicon.com/lexicon/businessmen.html

Justus Hommes said...

OK Professor, allow me to rephrase. I agree that many of Rand's ideals are noble in the abstract, and they would theoretically work were it not for the inability of humans to be perfect, or for nature to treat every human equally.

And Professor, while you are throwing all blame for economic problems at the institution of government, you can not escape that there is no government action that is not human action. The "inefficient business fools" and "inadequate jokers" (I love those terms, by the way) are lobbying inefficient, inadequate, and incompetent government fools. And those government jokers are elected by inefficient, inadequate, gullible and uninformed citizens that are fools. The common denominator is not "the government" but "fools." Guess what - WE ARE ALL FOOLS! (mwah haw hah ha ~evil laugh~)

Professor J A Donis said...

Uh oh, you are starting to sound like the members of my college committees. If there is a hint of an issue with any idea I or any another member comes up with, then they simply want to throw it all away. Capitalism is not perfect, I never said it was, neither did Ms. Rand. But it is WAY BETTER than any economic system to date. And when it was actually practiced in this country just prior to the invention of the Antitrust laws in the 1890s, this country had seen the biggest rise in the average human lifespan, production, and recreational time. There are issues with capitalism, but just like humans, capitalism can be sculpted so that it can achieve greatness, not perfection. Perfection cannot be attained by any human, only greatness can. Once everyone knows that, then we can proceed toward greatness.

"We are all fools!" That's just God's way of making things interesting and humorous on Earth. (Now do you hear an evil laugh?)

Professor J A Donis said...

This Ayn Rand lexicon is just so chock-full of information:

http://aynrandlexicon.com/lexicon/capitalism.html

Justus Hommes said...

Ah, I am glad to see we are coming to some sort of agreement.

"Capitalism is not perfect...but it is WAY BETTER than any economic system to date."
WE AGREE!

"There are issues with capitalism, but just like humans, capitalism can be sculpted"
WE AGREE, although unlike humans, governments, corporations, and economic systems don't have a distinct identity with personality or conscience, so it must be sculpted in a different manner. I know we disagree with the amount and types of sculpting, but I assume we would both have a preference for an environment with the maximum free exchange of information, ideas, and property.

In the link you provide, Ayn Rand does stress for a "pure" capitalism, in which "all" property is privately owned. I do disagree with this extreme view. I would rather not nuclear (or nucular) weapons be privately owned.

Also, you may want to look at how the nature of the corporation changed around the same time as those pesky anti-trust laws:

http://www.reclaimdemocracy.org/corporate_accountability/history_corporations_us.html


And finally, as for your comment about God, that was good for a great laugh. Well done! Perhaps the funniest thing about the comment, even though you meant it sarcastically (as an atheist), is that many Christians would fail to come up with a better explanation!

Professor J A Donis said...

Now we are beginning to see eye to eye.

Ms. Rand did not mention nuclear weapons, and I'll bet she would say that nuclear weapons are property of the armed forces, only to be used in retaliation. Besides, I don't think any healthcare plan would cover taking care of the medical expenses of removing the shrapnel from the nuclear missilehead stuck in my arse.

Lumbee said...

Professor,
In response to the link that you directed toward me, I say bravo.
Here here!
I do have one question though! How about the businessmen that traffic in the immaterial, such as insurance?
Is their lieutenant-commander in chief the scientist? and who is the commander in chief?

Professor J A Donis said...

I don't know what you are asking, so I'm just going to smile and nod my head at you.

Lumbee said...

How is the scientist the lieutenant-commander in chief of the business man that sells the immaterial? And who is the commander in chief?
This is from the first part of the link you referred directly to me!

Professor J A Donis said...

She was speaking figuratively, not literally. It's her style.

Lumbee said...

Answer my question punk.

Professor J A Donis said...

Um, ok, but I can't seem to figure out why you are confused. "Figurative" means metaphorical or symbolic. We humans are perhaps the only beings on this Earth who can think, speak, and write in such a manner. A good example can be found in the writings of the early Sumerian culture. Perhaps their most famous story is that of King Gilgamesh. Now, you as well as everybody else knows that Gilgamesh did not actually do those things, nor did those gods. However, the symbolism in those very acts are universal in the sense that just about any reader can relate to the plight of King Gilgamesh. That is what is meant by figurative. I hope this clears any confusion you may have had about Ms. Rand's figurative (metaphorical, symbolic) meaning behind "lieutenant-commander-in-chief."

If you are still confused, then please refer to:
Atlas Shrugged
The Fountainhead
The Ayn Rand Lexicon
Capitalism: The Unknown Ideal
The Virtue of Selfishness
For the New Intellectual

As for the immaterial, we have just purchased an ADT security system for our home. We pay a monthly fee so that IN THE CASE that something happens, we will have coverage. Isn't that the same as insurance? Here's another example: People pay higher learning institutions so that they can receive knowledge. Knowledge is immaterial and can only be effective WHEN IT IS APPLIED.

Let me know if I have answered your question. If not, then reword your question so that I know what exactly it is you are asking.

Lumbee said...

How is the scientist in a supervisory or authoritative position over the businessman that traffics in the immaterial? You know what I am asking and are being burritoesque.

Professor J A Donis said...

OK, you are questioning the following excerpt:
"The professional businessman is the field agent of the army whose lieutenant-commander-in-chief is the scientist. The businessman carries scientific discoveries from the laboratory of the inventor to industrial plants, and transforms them into material products that fill men’s physical needs and expand the comfort of men’s existence."

I believe Ms. Rand is saying that the scientist is basically second in command in the sense that without him, there is no discovery whatsoever. But he has a boss. Now that boss is his "commander-in-chief" so to speak. That person may be the owner of the corporation. Given that, it is easy to see that the businessman is obviously the field agent. The one who takes the product of the scientist and sells it. Now supplant the word discovery for computers. The lieutenant or scientist is the geek (no offense, Justus) working in a lab. The commander in chief is Steve Jobs or Bill Gates. The field agent is the businessperson taking that discovery--the computer--and selling it in a franchise COMP USA or BEST BUY in Tallahassee. Without the scientist who discovers and concretizes the idea, there can be no businessman. It is possible to have the owner, scientist, and businessman all in one person, it does not necessarily need to be three different folks. Now supplant computers for insurance.

I hope this helps.

Lumbee said...

Computers cannot be supplanted for insurance. It violates logic.

Is concretizes a word?

Professor J A Donis said...

Lumbee,
The point is not the computers and insurance, it's the whole hierarchy of business and the market. She was talking about the businessman and his/her role in the market. I used computers as an example of that which is created/discovered/invented, just like insurance. In the abstract, you could just say "X" rather than computers or insurance.

Here is a list of online dictionaries defining "concretize."
http://www.google.com/#hl=en&source=hp&q=concretize&aq=f&aqi=g5&oq=&fp=4b0e053116aeea03
It is usually used in philosophy, namely aesthetics.

Lumbee said...

Thanks, I truly had never heard of that word before.
"X" cannot be computers or insurance in that example. Think professor. Her arguement does break down a little or at the very least is dated.

Professor J A Donis said...

Lumbee,
Did you ever take Algebra in high school or college? Guess what X stands for? We ought to thank that 8th Century Muslim for inventing that math!

We cannot discuss this anymore until you are fully versed in abstract thought. You are too concrete-bound.