Economics

"No one said loving free markets was easy."

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Over at Bloomberg and National Review, Reason columnist and Mercatus Center economist Veronique de Rugy discusses how the very businessmen who benefit from capitalism often try to hamstring competition. A snippet:

The truth is there is nothing most business people like less than free markets.

Think about it. Competition is good for consumers because it keeps prices low while increasing the quality and choices of products and services. Yet competition is hard work for businesses. They have to fight for customers by innovating and evolving in ways that consumers demand.

To avoid the gritty work of fighting it out in a free market, organized private interests—such as Louisiana's licensed funeral directors—lobby the government for special regulations, preferential tax treatment and laws that keep out competition. They lobby lawmakers to constrain the same free markets in which they originally achieved success.

She got that right, sadly. De Rugy runs through the literature and gives example after appalling example, from coffin cartels to sugar barons to "small" businesses that are able to marshal millions of dollars to lobby the government for protection from competition. She also links to a Reason.tv video about Los Angeles' crackdown on mobile food trucks, which have been instigated by bricks-and-mortar restaurants. Milton Friedman put it this way in Reason in 1974:

The case for free enterprise, for competition, is that it's the only system that will keep the capitalists from having too much power. There's the old saying, "If you want to catch a thief, set a thief to catch him." The virtue of free enterprise capitalism is that it sets one businessman against another and it's a most effective device for control.

A few years back economist Luigi Zingales and Raghuram Rajan wrote Saving Capitalism from the Capitalists, a book-length treatment of the subject that provides one of the best histories of the rise of capitalism and classical liberal political economy I've encountered. I highly recommend it.