Lessons for dumb politicians

Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.

-George Washington

For all the vilification of businesses and corporation in popular culture today, primarily led by the President and his progressive allies, business has a very powerful check on its influence-profits.


Profits are derived by providing a product or a service which some party is willing to pay for. Cease to provide a good product or service or to do so inefficiently and a business is, well out of business. This simple truth is the basis of the free enterprise system.


There are only a few ways to circumvent this simple formula. Either a single company must have a complete monopoly or a group of companies must collude to "fix" prices. It is  the responsibility of government to guard against this and as a practical matter neither of these is much of a concern in modern day America. This is particularly true with a global economy where competition is far more widespread and less easily manipulated.


But there is another way to circumvent the simple an efficient free market system with its self-regulating profit motive incentives, the introduction of government into the equation. Once government becomes a player rather than a watchful umpire, then a new and dangerous component is added.


There are as many ways for the government to corrupt the free market system as there are politicians with a power trip. The easiest to understand and the most diabolically destructive of course is the subsidy. A subsidy is given to an industry for a motive. The motive may seem to be worthy and usually though not always was intended to be for some "greater good". But as most people eventually learn, though seemingly not politicians, things done for the "greater good" inevitably leads to the greatest harm.


The subsidy is given to industries to promote some "greater good", but in practice all subsidies accomplish is a corruption of the very thing which allows the free market system to work effectively.  The subsidy distorts the primary free market "motive", the most important motive in the system, the profit motive.


Once you begin to mess with the profit motive, you mess up the entire system. If there are subsidies given to industries for any reason then they become to some degree , sometime to a great degree, free from needing profits to survive. If you don't need profits to survive or your survival is "cushioned" by subsidies, then what happens? The enterprise is no longer as dependent on the quality of their product or service for their survival. Worse still subsidies breed inefficiency within the enterprise.


Rather than promoting some "greater good" subsidies end up rewarding less efficient enterprises at the expense of the more efficient and productive ones. They accomplish this after first creating them and then sustaining them for some purpose which has little or nothing to do with market forces and much to do with political power.


As in almost all cases where government is involved, it promotes mediocrity and sloth at the expense of innovation and ambition. Nowhere is this more evident than in government subsidies.