On being pro-business vs. pro-businesses

At Cafe Hayek, economist Don Boudreaux makes a distinction between two ways of being “pro-business.” His comments were prompted by a New York Times article about the economic element of President Obama’s his current trip to Asia, and how the visit may be a way for the White House to mend fences with Corporate America. But I highly recommend it to Republicans as well, both nationally and here in Georgia:

There are two ways for a government to be ‘pro-business.’ The first way is to avoid interfering in capitalist acts among consenting adults – that is, to keep taxes low, regulations few, and subsidies non-existent. This ‘pro-business’ stance promotes widespread prosperity because in reality it isn’t so much pro-business as it is pro-consumer. When this way is pursued, businesses are rewarded for pleasing consumers, and only for pleasing consumers.

The second, and very different, way for government to be pro-business is to bestow favors and privileges on politically connected firms. These favors and privileges, such as tariffs and export subsidies, invariably oblige consumers to pay more – either directly in the form of higher prices, or indirectly in the form of higher taxes – for goods and services. This way of being pro-business reduces the nation’s prosperity by relieving businesses of the need to satisfy consumers. When this second way is pursued, businesses are rewarded for pleasing politicians. Competition for consumers’ dollars is replaced by competition for political favors.

I’d say the first option is more pro-market, which is what politicians ought to — but don’t always — mean when they say “pro-business.” That’s the standard to which we should hold them.

103 comments Add your comment

Linda

November 8th, 2010
11:56 am

If Obama was pro-business, his first (& much cheaper) step would have been to walk across the street (& over the fence he built) to the US Chamber of Commerce.

j

November 8th, 2010
12:04 pm

If Americans want to be pro business they need to work for $10.00 day with no benefits and stop bitchin. :)

Jefferson

November 8th, 2010
12:07 pm

Business has the attitude that the country owes them a living.

carlosgvv

November 8th, 2010
12:24 pm

There was a time when America was so pro business we had 12 hour workdays six days a week, no sick leave, no overtime, no workman’s Comp., no vacations and child labor. If the Tea Party lug nuts have their way, we will go back to those good ole days.

JDW

November 8th, 2010
12:31 pm

Obviously the first is best…problem is what we have and continue to perpetuate is the second. Farm subsidies, tax credits, grants etc…and as much of this system has been built by the Republicans over the last 30 years don’t look for changes anytime soon.

On another subject:

“McConnell says Republicans are ready to cut federal spending but says banning earmarks is not a realistic way to do that.”

Let the waffling begin…that didn’t take long did it?

Roy-Is-A-Crook

November 8th, 2010
12:32 pm

Let me get this straight . . . .We’re going to be “gifted” with a health care plan we are forced to purchase and fined if we don’t, which purportedly covers at least ten million more people, without adding a single new doctor, but provides for 16,000 new IRS agents, written by a committee whose chairman says he doesn’t understand it, passed by a Congress that didn’t read it but exempted themselves from it, and signed by a President who smokes,with funding administered by a treasury chief who didn’t pay his taxes, for which we’ll be taxed for four years before any benefits take effect, by a government which has already bankrupted Social Security and Medicare, all to be overseen by a surgeon general who is obese, and financed by a country that’s broke!!!!! ‘What the hell could possibly go wrong?’

jconservative

November 8th, 2010
12:38 pm

“The first way is to avoid interfering in capitalist acts among consenting adults – that is, to keep taxes low, regulations few, and subsidies non-existent.”

“…subsidies non-existent.” Kyle you realize how many industries would like to eliminate the guy that proposes such “non-sense” as doing away with “their” subsidies?

Careful.

Road Scholar

November 8th, 2010
12:43 pm

JDW: And where are the jobs the repubs promised?

Lil' Barry Bailout

November 8th, 2010
12:44 pm

What your referring to Kyle is also known as “crony capitalism”. Which really is a misnomer as it includes the word “capitalism”.

Lil' Barry Bailout

November 8th, 2010
12:46 pm

j: If Americans want to be pro business they need to work for $10.00 day
———————-

If a business is willing to pay them that much, and they’re willing to work for that wage, what’s the problem?

Linda

November 8th, 2010
12:48 pm

Pro-business, in part, means creating conditions, fair tax incentives, transparency, unburdensom regulations, etc. that encourage businesses to stay in business, start new businesses, hire & maintain employees. It’s a win/win/win situation for govt., businesses & employees.

Obama does not know the difference between pro-businesses & pro-union bosses. Even union workers are beginning to turn away from their union bosses.

Southern Comfort

November 8th, 2010
12:49 pm

The first way is to avoid interfering in capitalist acts among consenting adults – that is, to keep taxes low, regulations few, and subsidies non-existent. This ‘pro-business’ stance promotes widespread prosperity because in reality it isn’t so much pro-business as it is pro-consumer.

Hee hee hee…. I’m glad you said that’s more pro-consumer. Neither party has any semblance of being pro-consumer. I’m assuming the “few” regulations you mean are the ones that keep e-coli out of your veggies and stuff like that, right?

Ayn Rant

November 8th, 2010
12:53 pm

Boudreaux’ alternative approaches to a “pro-business” environment are both unacceptable. The first, letting anyone get with everything leads to a sluggish, monopoly-bound economy where customers depend on foreign goods for innovation, quality, and fair price. Sound familiar?

The second strawman, favoritism to special interests, and corrupt political influence, leads to the same: a sluggish, monopoly-bound economy that cannot satisfy the needs of the customers. Sound familiar?

The proper “pro-business” approach is the one authorized by our Constitution: federal authority to exercise impartial regulation of interstate commerce to keep the markets free of monopolistic practices and political interference, and open to innovation and competition.

Unregulated enterprise, over time, coalesces into monopolies of various guises that kill freedom of enterprise.

Kyle, you need to find a better economist!

Lil' Barry Bailout

November 8th, 2010
12:53 pm

Product safety regulations are unnecessary and simply provide jobs to losers who otherwise couldn’t find work. I certainly wouldn’t buy veggies from a company found to have sold contaminated product, and neither would any other sane person. They’d soon be out of business. Problem solved, and no over-compensated government workers required.

Or are you under the impression that your veggies are actually certified by the government to be free of contaminants?

JohnnyReb

November 8th, 2010
12:54 pm

Re, option# 2. The solar cell manufacturer on which Obama bestowed a large fund from the stimulus, opened a new factory, closed their original factory, and is laying off employees. Seems they can’t compete in cost per watt (a measure of electricity for those electron challenged)with foreign manufaturers. If they go out of business, the taxpayers, i.e., the government will own the majority of the company. Yea, those green jobs are really the wave of the future.

I await the anti-free market, tree hugger replies!

Lil' Barry Bailout

November 8th, 2010
12:55 pm

Anyone who thinks the market for most products naturally tend toward monopoly is the one who “needs to find a better economist”.

songbird

November 8th, 2010
12:57 pm

Great editorial in Baltimore Sun Times the other day about what the voter’s want. I think he nailed.

After devoting long minutes to careful analysis of Tuesday night’s election returns, I now know what Americans want:
We want roads and bridges that are always in good condition but do not require tax money for upkeep.
We want world class schools with teachers who are so dedicated that they will work for minimum wage. (Note: the best one should be in my neighborhood)
We want 60-inch plasma TVs that cost $200 and are produced by workers in Ohio making at least $30 per hour.
We want our military to win every war, every heart and every mind, everywhere, at no cost in lives or money.
We want cheap, clean, efficient mass transit that goes through someone else’s neighborhood.
We want no-fat triple-decker hamburgers that are good for you and taste great.
We want fast, efficient, friendly government services provided by clerks who work happily for free.
We want “clean” coal and domestic crude that does not produce pollution or require digging or drilling.
We want SUVs that get 100 miles per gallon and produce jobs in Detroit.
We want Social Security benefits to go up and Social Security taxes to go down.
We want cheap labor from legal citizens who don’t mind living in poverty.
We want clean drinking water and pristine parks and the right to dump anything, anywhere.
We want colleges that are inexpensive and not too hard but produce world class leaders.
We want football where every hit is brutal but no one gets hurt and baseball where everyone hits 40 home runs but no one uses steroids.
We want government to deliver all these things — then cut taxes and then cut taxes some more. Mostly, we want what we want, and we want it now.
Personally, I want leaders who will tell us frankly that all these things are not possible, that the blessings of infrastructure and education given us by our fathers are wearing out. I want thinkers who can paint a picture of a greater America that could exist in 50 or 100 years, and then unite us with a roadmap to get there. I want America to have a shared vision and an understanding that we all benefit when we all contribute, and that we all suffer when we demand only for ourselves. I want leaders who will tell the truth: that there is no free lunch.
But then, I also want the World Series to end in early October, yet I know that some things are just too grand to even wish for.
Mac Nachlas, Baltimore

Ragnar Danneskjöld

November 8th, 2010
12:58 pm

No business monopoly can survive for a generation without the care and protective feeding of government.

Lil' Barry Bailout

November 8th, 2010
1:06 pm

songbird, that’s the kind of crap we hear any time Republicans win elections.

I don’t know anyone who wants or expects any of those things. But then, most of my friends are educated and/or conservative.

Southern Comfort

November 8th, 2010
1:06 pm

Product safety regulations are unnecessary and simply provide jobs to losers who otherwise couldn’t find work. I certainly wouldn’t buy veggies from a company found to have sold contaminated product, and neither would any other sane person. They’d soon be out of business. Problem solved, and no over-compensated government workers required.

Ok. Sounds like you’ve been licking some of those Chinese toys. :)

How do you know the company’s product is tainted? How do you know what contaminant is present? Are you expecting companies to be forthright and honest about their safety inadequacies? I’m sure you wouldn’t buy any tainted products, because you’d probably be one of the first casualties of any mass epidemic. It’s funny how you try to say that the jobs are for losers and overpaid government workers. In reality, those who do that kind of work for the government would and usually do go to the private sector and easily double or triple their salaries. Why do you think g’workers seem inept at jobs? Constantly re-hiring and re-training for the same position will do that.

Lil' Barry Bailout

November 8th, 2010
1:11 pm

How do you know the company’s product is tainted?
————————–

The same way I found out that the peanut products in that recent incident involving a peanut factory subject to the existing government regulation regime were tainted–somebody got sick or died.

Duh.

Southern Comfort

November 8th, 2010
1:15 pm

And how long before the first person got sick was it before anyone realized it wasn’t an isolated case? How many others got sick/died before the illness was linked to the products? You just can’t say that one person got sick or died and it’s a problem with a product. There’s all kinds of investigations by scientists and researchers that go on when events like that unfold. Without those investigations, you wouldn’t be able to link the illness to any particular product unless you personally interviewed everybody that got sick and family of those who died. Are you saying you’re going to do all the leg work yourself?

JDW

November 8th, 2010
1:16 pm

Damn good question Road Scholar…they have had long enough!

Not So Casual Observer

November 8th, 2010
1:19 pm

Greece has already demonstrated the Obama-led approach by Democrats is a loser and will push the US into economic ruin. Bigger government does not provide the utopia promised by socialists.

Then we have the “anti” business crowd ( j, jefferson and carlos) who treat business as some type of parasite. Exactly where do you three think employment will arise? In the public sector?

So are you going to work for government that will have to continually raise your income taxes in order to pay you to work at a job that is unnecessary but for the fact you need a job?

The federal government has failed at virtually everything other than “protect us from our enemies” and that, by the way, is the federal government’s primary purpose under the Constitution. Without the mutual protection provision there is no reason to have the federal government. Everything other than protection could be eliminated and left to the individual states.

The closer the government is to the people the more responsive that government will be to the desires of the voters.

At the very least the 17th Amendment should be repealed and a return to a system of checks and balances could be partially restored.

If Mitch McConnell will not eliminate ear marks then Mitch needs to begin planning for his next election and the Tea Party candidate he will face.

songbird

November 8th, 2010
1:20 pm

Sorry Lil’Barry, but I think that’s exactly what unrealistic Americans want. That’s why we have continual deficit spending in Congress. That’s why so many people have huge credit card debts. We think we are entitled to something for nothing.

No one wants to make the tough decisions on how to cut spending and raise taxes to get us out of this mess. Let’s see what the Repubs actually do this time because their track record stinks.

barking frog

November 8th, 2010
1:21 pm

I like capitalism and free markets, but
We deregulated airlines
We deregulated banks
We got:
fewer airlines
fewer banks, especially small banks
and Billions of taxpayer dollars involved.

JDW

November 8th, 2010
1:22 pm

Lil’ Barry Bailout

November 8th, 2010
1:06 pm
“I don’t know anyone who wants or expects any of those things. But then, most of my friends are educated and/or conservative.”

Actually that sounds remarkably like the ongoing Republican mantra of lower taxes and lower deficits or can’t you add 2+2?

CJ

November 8th, 2010
1:22 pm

For the record, the notion that “keeping regulations few” is “pro-market” is a myth.

Regulations to enforce transparency, for example, are pro-market (business people hate transparency, but it increases competition and is fundamental to a free exchange of goods and services). Regulations to improve wages, which grows purchasing power, which creates more customers, are pro-market. Regulations that prevent monopolies or oligopolies and, therefore, increase competition are pro-market. Regulations that require fair competition (e.g., a business can’t provide false information, at the expense of their competition, to induce somebody to sign a contract) are pro-market. Even regulations for worker, consumer, and environmental safety are pro-market, because all expenses are paid by the two parties to a business transaction (seller and buyer) rather than having expenses incurred parties not part of the transaction such as families poisoned by a manufacturer’s waste dumped into the air or river, killed by unsafe products such as an automobile or a baby crib, or killed on the job (or taxpayers having to clean up after corporate polluters).

Again, this “anti-regulation equates to pro-market” talking point is and always has been totally ridiculous. I’m pro-market. That’s one of the reasons why I vote against the conservatives.

JF McNamara

November 8th, 2010
1:25 pm

“The second, and very different, way for government to be pro-business is to bestow favors and privileges on politically connected firms. ”

This is the definition of the the Bush policy. He signed over the public lands to the oil companies because they were connected. He refused to enforce antitrust laws that led to Oligarchs in every major sector decreasing price competition and raising the price on consumers. If you couple that with deregulation, they essentially allowed a few large companies to own everything. We have fewer businesses because of that.

As brilliant as it sounds, the Republican solution to no rules won’t work either. We did that already and the result was monopolies and antitrust laws. We don’t need to live through that again as we can read about it in the history books.

At worst, he’s doing the same thing Bush did. Did Cafe Hayek say that too?

Not So Casual Observer

November 8th, 2010
1:30 pm

Southern @ 1:06,

“How do you know the company’s product is tainted?”

How do you know now? The information is far from timely.

I will concede our food supply must be regulated to an extent, however the proposal in Congress to eliminate personal gardens and the other proposal to eliminate from the market place all of the non-prescription supplements are well over-the-top.

There is personal responsibility to be considered and once a product or company is found to have skirted the safety of customers the market place should eliminate the company or product. No government can cover every contingency and to expect such is foolish.

Not So Casual Observer

November 8th, 2010
1:35 pm

songbird,

An editorial from the home of Nancy Pelosi is exactly what anyone would expect – nonsense.

Democrats simply do not understand.

songbird

November 8th, 2010
1:50 pm

Observer – and Republicans do? – I say nonsense to that too.

Port O'John

November 8th, 2010
2:03 pm

OK Lil Barry — lets get rid of all the bureaucrats who monitor food safety and notify the public (and the company) when food products are unsafe, and, while we are at it, let’s get rid of all those fool regulations that require companies to actually list what is in their food products.

So, how would you know if those tacos killed three people last week? You wouldn’t. But if you ate one and survived, you wouldn’t eat there again.

That’s how the market is supposed to work? We all know that corporations NEVER pass of shoddy product and hope they get away with it.

I would suggest that it is fear of government/public scrutiny that keeps many (but not all) companies take safety seriously.

And you call liberals stupid?

Jefferson

November 8th, 2010
2:08 pm

Stupid is thinking 55% of voters is “America’s Voice”.

Linda

November 8th, 2010
2:26 pm

Stupid is thinking voters who don’t vote is “America’s Voice.”

Lil' Barry Bailout

November 8th, 2010
2:31 pm

songbird
1:20 pm

We think we are entitled to something for nothing.
—————————–

A nice summation of the Democrat party raison d’etre.

Lil' Barry Bailout

November 8th, 2010
2:34 pm

Port O’John
2:03 pm

So, how would you know if those tacos killed three people last week?
—————————-

It’s too bad you don’t appreciate the irony of your cheerleading for the same failed government regulatory regime that allowed these three people to die.

songbird

November 8th, 2010
2:47 pm

So Lil’Barry – you’re telling me that the Repubs don’t give handouts to people? WTF are you smoking?

Southern Comfort

November 8th, 2010
2:50 pm

however the proposal in Congress to eliminate personal gardens and the other proposal to eliminate from the market place all of the non-prescription supplements are well over-the-top

Hence, not all regulation is good. I agree with you 100% on that. In relation to the timely notification, I don’t think we would have that problem if we had adequate enforcement of necessary regulation. When you have either a) too much regulation or b) regulation with too little enforcement, you end up in the situation that we’re currently in. I have no problem doing away with unnecessary regulations. However, to do away with enforcement just because you don’t like the regulation should not be tolerated.

Lil' Barry Bailout

November 8th, 2010
2:52 pm

You should re-read my post. Then show me where I said any such thing.

Jefferson

November 8th, 2010
3:03 pm

Linda, you misunderstood, the other 45% voted.

Lil' Barry Bailout

November 8th, 2010
3:13 pm

Jefferson

Stupid is thinking 55% of voters is “America’s Voice”.
————————–

Hmm…what percentage did the Idiot Messiah get in 2008?

Linda

November 8th, 2010
3:17 pm

What kind of regulation is this? Beginning in 52 days, people who have Health Savings Accts. & 3 other types of health care insurance will no longer be unable to walk into a store & purchase any of 15,000 different oral & topical medications (that are now over-the-counter) without a prescription from a doctor, if they want to include these medications on their insurance plans. They will have to go through doctors & pharmacists. People with health savings accounts pay for doctor visits & medications. They will no longer be free to buy aspirin, cold, cough, allergy medication or cremes & ointments for itching, burns or cuts.

What kind of regulation is this? In 2012, it will be illegal to buy a 25 cent incandescent light bulb. The last plant has already closed. Those CFLs are so full of mercury that they can’t be disposed of in the trash & the EPA has a long list of what to do in case one is broken. They will be in our schools, hospitals, workplaces & homes.

Lil' Barry Bailout

November 8th, 2010
3:21 pm

Linda, liberals can’t allow you to do as you wish because you might not do what they want you to do.

Liberals fear freedom. For others.

Southern Comfort

November 8th, 2010
3:29 pm

Linda

If your post was directed at me, I’ll repeat what I said earlier. “Hence, not all regulation is good. I agree with you 100% on that.” Or in other words, I think that is way-over-the-top, as Not So Casual described it.

Linda

November 8th, 2010
3:30 pm

A couple of yrs. ago, there was a contamination scare over tomatoes. I read several govt. websites & noticed that not one advised people to WASH their tomatoes & avoid those with broken skins.

This yr., there was a scare over eggs. Did the government advise people to COOK their eggs?

The terrorists mailed explosives to the US, so what did Homeland Security do about it today? Ban the shipment of certain printer cartridges.

Sandra

November 8th, 2010
3:34 pm

Lil’ Barry Bailout
You have got to be just about one of the dumbest jerks I have ever encountered on some of these postings. It seems if anyone doesn’t agree with you they must be ‘liberals’, (whatever that means to you idiots), they don’t work and are on welfare, or are uneducated. I am none of those things and I still think you are an idiot.

Lil' Barry Bailout

November 8th, 2010
3:38 pm

“To date, we have not seen a single instance where a human being made a conscious decision to favor dollars over safety,” said Fred Bartlit, the chief counsel for the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling
———————

Bummer, eh libbtards?

Lil' Barry Bailout

November 8th, 2010
3:40 pm

Sandra
3:34 pm

It seems if anyone doesn’t agree with you they must be ‘liberals’
———————–

Yes, that’s generally the case, or, more accurately, libtards.

Tommy Maddox

November 8th, 2010
3:43 pm

If you think that businesses are bad, then don’t go work for them. Take up your cot and walk i.e. become self-employed.