This is a guest post from Sam Patterson over at economicfreedom.org. There is a big difference between being pro-business and being pro-market. Many people say they support businesses, especially small businesses. Unfortunately, many businessowners and employees are not “free-market”-that is, they believe it is OK and even justifiable to use the government for subsidies, lobbying, and to eliminate competition. For example, at a New Castle County Chamber of Commerce event a small business owner who sells solar panels justified his government handout by saying he “needed it to be competitive” with other types of industries. Or consider a large corporation using their power to pay off politicians and bureaucrats by lobbying them to help eliminate the competition (such as with expensive occupational licenses) or to allow them to skate by with violating rules (examples include Fanny and Freddy, Citigroup, AIG, Solyndra), often at our expense. Unions too often interfere with the process, when they demand the forbidding of workers from being employed unless they join a union, and in some cases they too move to restrict competition, such as if a businessowner wants to open a non-union business (closed-shop rules), instead requiring the owners to hire only unionized workers.
Without further ado…
Consider the following . . .
Because businesses provide jobs and make other positive contributions to communities, both “sides” agree that government should promote business. Where they differ is over how. Pro-business advocates believe the government should directly assist specific businesses or industries through subsidies, tax breaks, or other advantages. Pro-market supporters reject this. They argue that government should simply ensure a level playing field for competition.
The truth is that intervention in the marketplace harms everyone—except those directly receiving the benefits, of course. When the consumer is no longer the deciding factor in whether a business succeeds or fails, businesses direct more and more of their resources toward securing government favors and less and less on pleasing customers. Corruption and cronyism often result. And it’s always the taxpayers who end up having to pay for it all.
You know you’re “pro-business” rather than “pro-market” if you believe . . .
- government should make special tax provisions for specific industries
(pro-market position: equal tax rates for all)
- government should give out grants to individual businesses
(pro-market position: government shows no preference to individual businesses)
- government should use eminent domain to make way for private development
(pro-market position: eminent domain should never be used for private interests)
- government should make loans to businesses that can’t secure them in the private sector
(pro-market position: government should not be making loans to businesses at all)
- government should impose tariffs to protect domestic industries from global competition
(pro-market position: tariffs increase prices for consumers)
When the government supports certain companies or industries over others, the special interests unfairly benefit. Economic freedom is what can bring prosperity and opportunity to all. That’s why we must make sure we are not just “supporting business” but always upholding the virtues of the market.