Monday, July 21, 2014

Middle Ground, Higher Goals

It's not easy being 'tween

At times I struggle finding new topics to blog on without going negative on other people's work. Since the scope of this blog is "government, politics, and economics" (though not always in that order) and I have an established point of view, some of my posts come out as different hues of the same color.

So when E.J Dionne Jr. offered the label "pro-business populist" in a recent column, it raised one eyebrow – you know, Spock style. Then Mr. Dionne offered up "pro-business moderates".

By my definition moderates are agnostic, disinterested, and uninterested in conferring favor or advantage; conservatives hold the ground for maintaining the status quo; and progressives plump for progressively more government involvement in economic and social matters.

Let's go back to this notion of "pro-business populist". I guess with sufficient glad-handing and public relations the populace could become less self-interested and increasingly pro-business. But that's not healthy for either consumers or business.

Rentiers or rent-seeking parties refers not specifically to property owners but more generally to political and economic favor seekers who look to protect previous gains with barriers to newcomers. As I have written previously, Mancur Olson laid out a framework for rent-seeking's negative effects in The Decline of Nations.

Free markets favor no one and take no prisoners. As a businessman I don't like a competitive market because it's uncomfortable and I can't rest solely on past efforts. I have to "deliver the goods" every day; there's always another business trying to better my efforts and take my clients. As a consumer competitive markets in all products and services (including healthcare) mean I have to research and decide among many providers looking for my money.

But competitive markets also prove beneficial for both businesses and consumers. Without competitive markets my business is at a disadvantage, always fighting against the tide of incumbents bent on protecting their turf; my only chance for success would be risky markets for new products and services where the goal would be invention rather than innovation and improvement on existing products and services. As a consumer I want a variety of choices and price points. Consumers, not providers, rule in competitive markets. Yes, sorting out the choices may take a little effort, but give me 100 choices rather than one or two any day.

Senator Elizabeth Warren (D-MA) seems to back a progressive agenda: consumers need protection from unsavory business practices through government action and institutions. The U.S. Chamber of Commerce seems to back a conservative agenda: the status quo and business interests need protection from the heavy hand of government and (dare I say) newcomers.

Government should be an agnostic, disinterested, decidedly pro-market champion that never picks winners or losers; Financial Times columnist Janan Ganesh wrote a good piece about this. The tenets of this pro-market policy result in a democratic economy where no one and no party is favored, where barriers to market entry and exit are low, where the costs of products and by-products of production and consumption (e.g., pollution and trash) are captured in the cost of goods and services, and where consumers and business all have the same information so as to act in their own best interests within this framework.

The middle ground of promoting competitive and free markets can be a tough sell; its invisible hand isn't immediately felt and may not reflect our individual best interests. But it is vital to our collective best interests so that no single player or group of players gains advantage and leverage on competitors.

Sometimes it feels that the middle is between a rock and a hard place, where choices and decisions are decided by the free market. But for peoples controlled by central authorities and oligarchs, the middle looks mighty warm and comforting.