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August 20, 2002
R21 Update 8.20.02
Jason Pontin, former editor of Red Herring and a frequent R21 contributor, likes to accuse me of being reflexively pro-business and anti-government. The reflexive charge is mildly irritating since it implies a lack of thought, though reflexes are useful when they are based on principles. So what about the principles? I’m not sure the first charge is really an insult—if the choice is between pro- or anti-business then guilty as charged. But of course the charge is really that I favor business interests to the extreme over other societal interests. The anti-government charge is also on the face of it absurd—I am not an anarchist. But again, the real charge is that I oppose government regulation in nearly all of its manifestations.
I raise this issue because, in fact, the pro-business/anti-government separation is a false dichotomy. In fact, one of the biggest problems, in my view, is how business—usually big business—uses government to its advantage.
I’ve touched on this in the past when dealing with steel tariffs and farm subsidies and of course with the ongoing battle, on many fronts, between Silicon Valley and Hollywood (http://www.r21online.com/archives/000016.html, http://www.r21online.com/archives/000225.html, http://www.r21online.com/archives/000083.html, & http://www.r21online.com/archives/000055.html). Tech isn’t immune from this behavior either.
The justification for such intervention is always something noble sounding—protect the consumer, save the worker, stop piracy—but of course these are usually merely cover for the real goal of protecting existing businesses from competition to allow then to extend the status quo as long as possible, resisting disruptive change. The big problem with all of this, of course, is that in these instances, government, with the encouragement of big business, acts as a major barrier to innovation. The big losers: entrepreneurs who challenge existing business models and consumers who want new products and services.
Consider the whining (and suing) of the entertainment industry over PVRs. Is skipping a commercial theft? Is going to the bathroom between innings? It never occurred to me to sue Red Herring readers who skipped the ads and only read the editorial—freeloaders. Ah, the entertainment industry warns us, if there were no commercials there would be no entertainment! Nonsense. Commercials are only one way that content is paid for—there are other business models (e.g. HBO). This is not about theft at the end of the day, but rather about resisting the difficult and risky transformation of an industry’s business model. But, like it or not, due to the ingenuity of the tech industry, the consumer’s wants and needs have changed. Government isn’t serving anybody by protecting the entertainment industry from modernizing.
A profound example of industry manipulating government, regulatory abuses, unintended consequences, and consumers missing out is the absurdity of the broadcast DTV mandates. Thomas Hazlett wrote about this in a recent WSJ piece and it is a must read. In brief, the government, successfully lobbied by TV broadcasters, has reserved massive amount of wireless spectrum for services that hardly anybody wants—HDTV via broadcast (90% of us get TV through cable or satellite, not broadcast)—and therefore prevented that spectrum from being used in ways society might actually want—such as wireless services. What exactly is the justification for federal involvement in this matter? Is this what the framers of the Constitution meant when they wrote “promote the general welfare”? Hardly. And these examples show that the federal government can’t figure out what’s in the common good when it comes to rapidly advancing technology—they can only figure out what’s in the best interests of influential industries.
So, Jason, I am neither pro-business nor anti-government, in the sense you mean. What I am is pro-freedom and through that pro-innovation, pro-growth, and pro-consumer, and pro-worker. Thanks for being my straw man.
I’ll end by quoting SF writer Robert A. Heinlein (thanks to Alex Lloyd for spotting this one): "There has grown up in the minds of certain groups in this country the notion that because a man or a corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary public interest. This strange doctrine is not supported by statute nor common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back, for their private benefit."
I am in Greece, on holiday, and would otherwise reply to this posting at length. But I am glad to hear that our years of debate are tempering your "reflexiveness:" I never thought the day would come when you would add "pro-worker" to your list. Now, the next stage is when you admit that just as large government subsidies to businesses are not in the interests of the commonwealth, so sometimes regulation of business by government is justified. Government is meant to represent our common will, and to balance all the interests in a society.
“Government regulation of business”...in an attempt to ... “balance all the interests of a society” has been largely disastrous and can often create the dysfunctional situations as the one I cite in my piece—which serve the interest of the few, not “society.” This language reminds me of the language of the French, who feel that the government should get involved in the corporate sector in whatever way serves some politician's notion of the “interests of society”—limiting work hours, high-minimum wages, picking winners & losers, etc. Government is usually quite bad at fine tuning business and often substitutes political decisions for needs-based (i.e. market) decisions on how to allocate resources. The activist role that you urge government to play in business may serve the politicians, special interests, and to an extent big business, but it doesn’t, it hasn’t and can’t, serve “all the interests of a society” and especially not the people who depend on growth—entrepreneurs, investors, consumers, and workers. The notion that government can even play such a role effectively is contradicted by the record and is as flawed the notion that the government can micro-manage individual human behavior.
In the same way that Republicans are falsely identified as being "anti-environment" (as if most are for pollution, etc.), the notion of the GOP being pro-business at the expense of employees is off base and misguided. Most Republicans reflexively trust individuals and businesses to do the right thing, and government to spoil any and all broth it touches.