To be a mega crook, you need the governments help
Over a decade ago, Teddy Forstmann, known for his private investment firm, authored an article called The Paradox of the Statist Businessman. In the article, Forstmann distinguished between true enterprising capitalists and those that are statist businessmen, often cloaked as a capitalist. In a prior post, we noted Warren Buffet’s “sweetheart” deals with too big to fail entities such as Goldman Sachs and Bank of America. Similarly, Forstmann wrote:
My first point is that the statist businessman is a conservative in the most literal sense of the word. He is a caretaker, not a risk taker. Rarely the owner of his own enterprise, he places a premium on permanence over growth. In his mission to preserve and protect, he seeks state shelter against what Schumpeter called “the perennial gale of creative destruction.” Put simply, he wants government to guarantee him security without risks, the opportunity to succeed without the possibility of failure.
The taxicab driver, the dry cleaner, and the barber can’t operate that way. They don’t have accounting departments; they can’t afford to hire lawyers and lobbyists. The small businessman is close to the ground while the big businessman is flying at 50,000 feet above it–and at that altitude you don’t see individuals, you see aggregates. The barber doesn’t deal with aggregates; he deals with electricity bills and supplies and customers. As George Burns once said, “It’s too bad that the only people who know how to run the country are too busy driving cabs and cutting hair.”
Forstmann could have just as easily been writing this today. While Buffet may see built in protection from the government, he also has the tenacity to tell folks that the government should be confiscating even more of the earnings of the “rich.” One must ask, just because the government has the legal authority (although with some dispute regarding income tax), why does it suddenly have the moral authority? Suppose I point a gun at a rich person and demand their money, telling them its okay because I will give it to that guy over there, the one with the ragged clothes. Precisely how is this distinction made?
Why does the amorphous blob of government know more and have more moral authority than I do? Or Buffet for that matter, so quick to relinquish his freedom. It gets worse. Boeing Co, one of the most venerable of U.S firms and the essence of American know how, is reprimanded by the National Labor Relations Board (NLRB) over its plan to produce 787 Dreamliners in South Carolina. With an nearly complete $2 billion plant, the NLRB and statist unions charged that it violated labor rights in Washington, where some Dreamliners will be produced. What right do they have to tell a company that they cannot hire workers of their own free will?
It’s a wonder more companies don’t go to China. Oh yeah, the do. GE and its CEO Jeffrey Immelt, so close with the Obama administration that they might as well be in a common law marriage, is moving more infrastructure to China. This is led by a man on Obama’s “Jobs Council.” Its no wonder that “slasher” movies compete with business television programs as one can barely recognize the difference in the feeling of horror. Did Boeing simply forget to throw some fundraisers? Apparently you get away with anything with some targeted dollars to some selfless politicians doing the “peoples work.”
Meanwhile, GM, still 29 percent government owned, spent $3.58 million lobbying in the first quarter of 2011. Its almost like lobbying itself. I suppose one must buy a certain amount of protection if you want to violate contract law and screw some bondholders over in the future. They can buy themselves insurance against the market that say’s that the Chevy Volt sucks. Maybe someday you will be compelled to buy this car.
Returning to Forstmann about GM,
The quote that’s always trotted out to indict capitalism is from Thomas Murphy, former chairman of GM. “General Motors is not in the business of making cars. General Motors is in the business of making money.” In a truly free market, you wouldn’t be able to make money without making a quality product. But the bureaucratic businessman is constantly finding ways around that difficulty. For instance, he can lobby the government for trade sanctions against Japan. He can lobby the government for subsidies. He can lobby the government for a taxpayer-paid publicity campaign. There are all sorts of ways that one can subvert the free market and still make a buck–all in the name of capitalism!
See, you don’t need a good product. So much for capitalism, so vilified. If you really want profits, have the government help you steal it. Recall that one of the first postings in this blog was regarding Atlas Shrugged. The story was a recognition of statist busisnesmen using government power to destroy competitors. That story is happening today don’t you think? In Kill Bill Vol 2, as Bill said to Beatrix Kiddo after injecting her with a dart of serum, “Do you feel anything?”