How Big Business Uses Big Government To Kill Competition
Corporations can afford robots. Their competitors often cannot.
Politicians say they pass laws to "protect Americans from big business."
People like hearing that. Many don't like big business.
Unfortunately, most people don't realize that those laws often help big business while hurting consumers.
"Big business and big government are not enemies like a lot of people think they are," says American Enterprise Institute fellow Tim Carney in my new video. "When government gets bigger, whether it's through spending or taxes or regulation, the big guys, big business benefits."
Consider the $15 minimum wage. People think of that law as pro-worker. But big companies like Walmart, Costco, and Amazon lobby in favor of it. Why?
Because big business can afford robots. Their competitors often cannot.
"Capitalism is a cutthroat thing," says Carney. "But this isn't capitalism. When you turn to government to regulate your competitors out of business, that's where we need to say this is wrong."
"Maybe you're too cynical," I suggest. "Maybe [Amazon founder Jeff] Bezos really just does want people to be paid more."
"If Jeff Bezos wants people to be paid more," Carney responds, "he can pay people more! But what Bezos is trying to do is outlaw competing business practices."
He's not alone.
When the big toymaker Mattel was caught selling toys that contained lead, its lobbyists got Congress to force all toymakers to do expensive lead testing.
That sounds like they just want to protect children, I tell Carney.
"If you're trying to test 1,000 Barbie dolls," he replies, "that might be fairly efficient. But if you are a grandpa making little wooden handmade toys, you'd have to hire some third-party tester. That could cost you $1,000, and you're not going to sell your wooden toy for $1,000. It effectively outlawed handmade toys."
After small toymakers screamed about that, Congress exempted toymakers that make fewer than 7,500 toys per year. So small toymakers must stay small.
"Maybe what [Mattel] did," says Carney, "is say, 'This is our opportunity through regulation to kill some of our competitors!'"
Facebook tries to do that, too.
At an international conference, Facebook founder Mark Zuckerberg said, "We don't want private companies making so many decisions about how to balance social equities without a more democratic process."
In other words: "Government, please regulate all of us."
That sounds noble.
Carney points out the catch.
"He's calling for a mandate that platforms impose some sort of artificial intelligence to weed out misinformation or hate speech. Facebook can afford that, but Zuckerberg's smaller competitors [like Odysee, Rumble, Parler]…would struggle to pay the thousands of content moderators and the expensive artificial intelligence that Congress may require. New social media sites may never even start."
That last sentence is a key point that we often miss.
"Regulation doesn't just kill existing businesses," says Carney. "It keeps new businesses from ever entering."
Big business has always pushed for regulation.
More than 100 years ago, Henry Heinz, founder of Heinz Ketchup, started using refrigerated rail cars because, says Carney, "he could get fresher tomatoes, and therefore he could make a ketchup that didn't rely on sodium benzoate as an artificial preservative."
"Everybody loved Heinz ketchup, and it rose up to be about half of the market," Carney continues. "But sometimes people who are half of the market want to be all the market. So Heinz himself started lobbying to outlaw sodium benzoate."
Sodium benzoate is a preservative that Heinz's competitors used. Heinz claimed it wasn't safe, but it is safe. It's still used in Sprite, Jell-O Kool-Aid Gels, and other foods.
Henry Heinz almost got those products banned, says Carney. "He almost got Teddy Roosevelt on board, which would have outlawed all of his competition. Sometimes businessmen hate nothing more than competition."
Not "sometimes." Usually. Almost all businesses hate competition.
But competition is what helps us consumers most.
When big government colludes with big business to kill competition, we all pay the price.
COPYRIGHT 2021 BY JFS PRODUCTIONS INC.
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Speaking of which, this is the ad Facebook is currently running, demanding more internet regulation.
Those tech companies, just libertarian cowboys trying to sell you widgets without interference from government in a free, open market.
Did you see his Hydrofoil video, with John Denver playing in the background?
Denver was a critic of censorship, especially when government and private industry were acting in concert. His testimony at the PMRC hearings in the ’80s make that clear. Pretty sure he wouldn’t have been a big fan of Faceplant’s censorship. I wonder if Zuck knows that.
Zuck gave a hundred million + to Newark. I don’t think he knows anything outside of Facebook.
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Twitter now liable for users’ posts in India.
Words are so dangerous.
Jack Dorsey agrees.
Well, if we’ve learned anything since the safe space thing on colleges a couple of years ago, it’s that words are “violence.”
Sounds dangerous to me.
As far as India is concerned, words are as dangerous as methyl isocyanate.
I’m going to guess what you can’t get to Twitter from India right now.
I don’t think that’s the case. I believe that as of this moment, Twitter is wide open for prosecution in India’s courts for anything currently being posted. But you could be right.
India is run by crazy autocrats and has been that way for years. Heck they are lionizing the guy who shot Ghandi. Nothing they do makes a lot of sense. Thank god they are so poor and incompetent that they are no threat to anyone else but themselves.
India still has the plague……..
https://www.youtube.com/watch?v=_sUMtHcUMWo
Trillion dollar multi national corporations run by amoral billionaires acting as quasi governmental spy rings who aren’t beholden to any laws if they wish to avoid them. Why do so many of their CEOs have citizenship in other countries is a good question.
Private companies, move along, nothing to see there.
Yet another good article, Mr. Stossel.
I find it amusing that this article hits on a good point (regulation can stifle competitors) yet are the same ones arguing that facebook and others shouldn’t be broken up.
So you want competition or not Reason?
Breaking up companies doesn’t create new competition.
Facebook has plenty of competition. They all compete for your time and eyeballs whether it is video games, Netflix, or Facebook.
“a good point, uetvare thebsame ones”
WTF are you babbling about, mushbrain?
Facebook founder Mark Zuckerberg said, “We don’t want private companies making so many decisions about how to balance social equities without a more democratic process.”
Zuckerburg translated:
“Please, big government don’t let anyone do to me what I did to MySpace.”
We won’t even talk about corporate tax deductions, green-energy subsidies, foreign shipping subsidies and hundreds of other Gov-Gun Theft of citizens going directly to “Big Business” in this ever-growing National Socialist (acronym: Nazism) nation..
I am always amused by politicians who talk about helping small mom and pop businesses and then pass legislation that actually helps the big businesses. This in-turn allows those big businesses to force out the mom and pop outlets. Just a twist on bait and switch.
Stossel really hits a home run on this one. I agree that laws and subsequent regulations often accomplishes the opposite of what they say they intend.
But, watch me take this idea and go in a completely different direction.
Since we know that big businesses often engage in unfair competitive processes, and sponsor regulations that screw their smaller competitors, why don’t we tax them at a higher rate? Or, give a tax reduction to smaller businesses to help them survive in this world that is dominated by 800 pound gorillas.
Of course, that will never happen.
“why don’t we tax them at a higher rate?”
As-if that hasn’t already been done – ENTER more tax-deductions.
Nazism (def; National Socialism) is the ‘root’ of the problem; always has been, always will be, and is the very ‘regulation’ favoritism mechanism. The very ‘idea’ that *stealing* more is exactly what disconnected the idea that wealth had to be *earned* and taking wealth out of envy wasn’t *theft*.
The problem isn’t going to be fixed by adding MORE problem to it.
Hint, hint; Where in the U.S. Constitution was the Union of States (United States gov) even given the authority to regulate “Big Business”. They only have authority to regulate state-to-state trade deals. It’s not a “Union” of Businesses or People it’s a Union of States created to regulate State to State affairs and a strong Union of States defense.
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