Sunday, January 19, 2014

Why Big Government is the Big Threat

A recent poll suggests that around 3/4 of Americans think Big Government is a bigger threat to the American way of life than Big Business or Big Labor. And they're right, if no other reason than because the threats posed by Big Business and Big Labor depend on using Big Government as their heavy. Whenever possible, Big Business and Big Labor buy favors from Big Government. Without Big Government, Big Business and Big Labor have a much harder time with competition.

For example, Patricia Woertz (CEO of Archer Daniels Midland) could hire privateers to blockade or sink sugar freighters from Australia, the Caribbean, and Latin America, leading American soda bottlers to use ADM’s corn syrup as a replacement. Or, she could hire lobbyists to drop $10k-$50k into the campaign chests of a few legislators on the House and Senate agriculture committees, and have them set legal import quotas, which has the exact same result, is a lot cheaper, and a lot more politically palatable. The congresscritters also get the public appreciation of American sugar cane and sugar beet farmers, who get to charge four times the world market price for their crops. And almost nobody ever notices when production of hard candy, which absolutely requires sugar, goes to Canada or Mexico, because they don’t have sugar import quotas.

Big Labor could send legbreakers to threaten poor, low-skilled workers who ask only for low wages, and the businesses that hire them, to keep those low-wage workers from competing for their jobs. Instead, they buy increases in the minimum wage with campaign contributions to legislators on Labor and Commerce committees, which has the same result (explanation here). It's also popular with union membership because their contracts specify wages not as $X/hr, but $(Minimum Wage + Y)/hr. As a side benefit, they can (falsely) claim that they are helping the poor, who find their jobs being automated out of existence because, once minimum wages rise high enough, it’s clearly cheaper to automate, or get customers to do the work, than hire the poor.

Big Labor and Big Business could not do these things without Big Government. Big Government is a cudgel that any pressure group, on any point in the political spectrum, can use to either extort an entitlement out of others, or regulate their competition out of business. If you want to cut down on extortion and increase competition, you have to cut down the size and scope of government. If there is any organization or pressure group that concerns you, your first priority should be to reduce the size and scope of government, because unless they can use the government to reach their ends, they cannot impose their will on you, and so they are no real threat.

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