(From the One-Minute Liberty Tip section in Volume 19, No. 9 of the Liberator Online. Subscribe here!)
Libertarians enormously appreciate the positive contributions so many businesses have made to our
Because of this, libertarians are sometimes labeled “pro-business.”
But this is incorrect — and misleading.
Libertarians are not “pro-business.” We are “pro-market” — a very different thing.
The distinction is a vital one.
Libertarians support a free market where businesses are free to enter a field and offer their goods and services, in competition with any and all others who wish to do the same.
The resulting competition brings ever-better goods and services. Lower prices. Innovation. More convenience and more choice.
The companies that succeed in this free market competition do so by doing the best job of pleasing customers. Those that fail to sufficiently please consumers go out of business. The consumer is king.
This is the market process that libertarians strongly support.
But being “pro-business” is an entirely different thing. Politicians, lobbyists, economists, pundits and others who are pro-business — or who favor a particular business entity — may lobby for special favors for a particular business or area of commerce.
This may be pro-business. But it is anti-market.
Many who are pro-business want government to help particular businesses or industries that are unable to compete effectively. Sometimes they want government to use political power and tax dollars to entice a business to locate in a particular area.
Pro-business forces may want to prop up a favored business with bailouts of tax dollars or with other tax grants. They often call for punitive taxes on competition that challenges the favored business (especially if that competition is foreign). They may offer special zoning privileges to favored businesses. They may call on the government to seize private property through eminent domain and give it to a favored business.
Pro-business forces may endorse licensing, education requirements, regulations and other obstacles that protect favored businesses from competition. It often surprises people to learn that many large businesses love government regulation because it limits their competition. But as Nobel Prize winning economist George Stigler wrote: “…as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit.”
Governments may declare a business is “too big to fail” and thus deserves a huge taxpayer bailout. Or that a field is crucial to the “public interest,” and thus deserving of subsidies and special treatment; agriculture is a prime example.
You get the picture. All of this is done by pro-business people. And all of it is deeply, profoundly, anti-market.
In an excellent article on this topic, “‘Free Market’ Doesn’t Mean ‘Pro-Business‘“ economist Art Carden quotes a great passage from the book The Rational Optimist by Matt Ridley:
“I hold no brief for large corporations, whose inefficiencies, complacencies, and anti-competitive tendencies often drive me as crazy as the next man. Like Milton Friedman, I notice that ‘business corporations in general are not defenders of free enterprise. On the contrary, they are one of the chief sources of danger.’ They are addicted to corporate welfare, they love regulations that erect barriers to entry to their small competitors, they yearn for monopoly and they grow flabby and inefficient with age.”
The fruits of the pro-business mindset — taxes, unfairness, lack of competition and choice, over-priced goods and services, unemployment — are often the things that people hate most about our economic system. People naturally blame this on free enterprise, on the market system. Yet it is the pro-business mindset — not the market — that is responsible for these ills.
Let me give Art Carden the (almost) final word:
“In a free market, you are welcome, and indeed encouraged, to enter the mousetrap industry if you think you can build a better mousetrap or find a way to make similar mousetraps more efficiently. The other side of that coin is that you will be encouraged to leave the mousetrap industry if it turns out that your mousetraps are not better, but inferior.
“A ‘free market’ agenda is not the same thing as a ‘pro business’ agenda. Businesses should not be protected from competition, losses, and bankruptcy when they fail to deliver for the customer. All three are essential to truly free markets and free enterprise.”
Don’t use the label “pro-business.” And politely but firmly reject it if someone attempts to label you that way. Respond that you are pro-market, not pro-business. And explain the difference.