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  • There is no excuse for (purportedly) being surprised by this.

    Posted by Chicago Boyz Archive on January 27th, 2011 (All posts by )

    Progressives laudably seek to oppose injustice by deploying government power as a countervailing force against the imagined oppressive and exploitative tendencies of market institutions. Yet it seems that time and again market institutions find ways to use the government’s regulatory and insurer-of-last-resort functions as countervailing forces against their competitors and, in the end, against the very public these functions were meant to protect.
     
    We are constantly exploited by the tools meant to foil our exploitation. For a progressive to acknowledge as much is tantamount to abandoning progressivism.

    The Economist, Democracy in America blog Via Mickey Kaus, via Instapundit.

    Kaus’s proposed reforms can’t hurt. But the mindset has to change. Conservatives will have to figure out that being “pro business” and being “pro market” and “pro freedom” will often be in opposition. Big Business wants a regulatory state to insulate it from competition. That is rational self-interest. And it is anti-market.

    Corporate capture of state power is the inevitable and (should be) well-known consequence of creating state power in the first place. Edmund Burke and Adam Smith and Thomas Jefferson warned about this in the late 1700s, and the liberal thinkers throughout the 19th Century were acutely aware of this problem. (See, e.g., this book) The Founders knew this, and built a central government of limited powers for exactly this reason, with the mercantilist, politically-connected monopolies of Britain very much in mind. In the mid-20th Century, Mancur Olson, James Buchanan and George Stigler, among many others, documented and demonstrated that the regulatory state will be in the hands of the supposedly regulated parties based solely on the incentives and knowledge of all the parties.

    Regulatory capture is folk wisdom, not arcane knowledge. It is inevitable.

    No one can honestly smack their forehead and say “d’oh!”

    There is no excuse for being surprised by this.

    UPDATE: Our Nomenklatura, Via Instapundit.

     

    8 Responses to “There is no excuse for (purportedly) being surprised by this.”

    1. Michael Kennedy Says:

      Fascism was very much in vogue until Hitler spoiled the brand. That is what we are seeing now. Even Hitler started out by rewarding industrialists like Fritz Thyssen and Krupp. I’m not saying that Obama and the Progs are interested in world conquest but they like the power. So did Woodrow Wilson. One of the reasons that the country rebounded so quickly from the post war deep recession was that Harding and Coolidge ended a lot of Wilson programs quickly. I wonder if it would work now ?

    2. J. Scott Says:

      Lex and Michael,

      Both spot-on. A smidgen of our problem(s) lies in the utter lack of seriousness of our body politic. Those in the political class, which at the national level become increasingly difficult to distinguish in deed, have applied the “scientific method” to their “message” dilemma using Madison Ave/K Street focus groups/marketing types. Never mind the merits or efficacy of the message; package the message with just enough to get folks to follow along. Part of the appeal of the Tea Party movement for me is a refreshing lack of this ultimate polish most national politicians use—and I suspect, Palin’s popularity has some traction in this phenom as well. For better or worse, she doesn’t “sound” focus grouped, and people recognize there is something different; perhaps intangible to many but reassuring, and to others an absolute threat.

      Our politics is increasingly rigged by these “professionals” (witness the GOP stooge Cantor inviting the reviled and repugnant Pelosi to sit with him—what the hell was he thinking; a focus group must have to Boehner & Co. that the gesture would play well) and the sooner we neuter the political class, the better. The Several States will have to do this, and it won’t be easy. Stay tuned.

    3. Walking Horse Says:

      “Equality before the law” is a concept that needs decisive revival. A full application of that as an axiom of government effectively precludes perversion of the law to benefit some at the expense of others, such as rent-seeking, regulatory exclusion of potential competitors, ad nauseum. A government powerful enough to facilitate rent-seeking and regulatory exclusion is illegitimate on its face, an emergent kakistocracy. Good article.

      v/r,

      — WH

    4. jos Says:

      Agree with most of this, except for (as usual) sentiments like the last sentence, “We are constantly exploited by the tools meant to foil our exploitation. For a progressive to acknowledge as much is tantamount to abandoning progressivism.” Would there be any number of progressive/liberal commentators I could cite to decrying the Orzag move and supporting the sentiment of the overall theme here to disprove that this is a facet of the Left, progressives, etc.? How many former GOP administration officials doing the same?

      I think both parties and both sides of the political aisle need to figure out “that being “pro business” and being “pro market” and “pro freedom” will often be in opposition.”

    5. sol vason Says:

      “Yet it seems that time and again market institutions find ways to use the government’s regulatory and insurer-of-last-resort functions as countervailing forces against their competitors and, in the end, against the very public these functions were meant to protect.”

      If the government hands out lemons, it is human nature that some one will find a way to get rich by making lemonade. For all of recorded history rulers have worked to distort market forces. The rulers have always been effective and for all of history the peasants have been poor and sickly and downtrodden.

      Only once in all of history has a civilization grown so fast that its rulers could not control it. As a result the pesants got rich, went to college, and decided they needed rulers to tell them what to do. Soon things will be back to normal. The peasants have found the road to serfdom.

    6. onparkstreet Says:

      Lex, I posted this at another thread but it fits in here as well:

      By the way, one reason people are so distrustful of the “free market” is that they conflate it with the corporate b.s. and management mumbo-jumbo they are exposed to in their daily lives.

      Dilbert = “free market” to a lot of people and so they think you are crazy to champion it.

      To be fair, our politicians are pretty confused as well.

      – Madhu

    7. Lexington Green Says:

      Dilbert depicts a real pathology.

      Everything that can become bureaucratic will do so unless countervailing forces prevent it.

      Everything tends toward cartelized monopolistic power unless there are strong forces in opposition to it.

      We cannot romanticize business. Or, I should say, people who do so tend to be free-lance writers and intellectuals who do not actually work in them. Ayn Rand comes to mind.

      The point is not that private business is some kind of utopia.

      The point is that free enterprise, market determination of prices and allocation of resources, widely dispersed decision-making, innovation and creative destruction — this approach is superior to all the alternatives as a matter of principle and as a means of creating wealth, freedom and happiness.

      Like all human things the American style of free enterpris is not and cannot be perfect in the real, existing world.

    8. onparkstreet Says:

      Agreed. The problem is some people see only the negative and don’t see all the positive the market brings them. They take it for granted.

      – Madhu