The Problem with State-run Capitalism

These two articles highlight the problems with government interfering with the economy.

In his weekly radio address, President Obama said this:

“Countries around the world are upping their game and giving their workers and companies every advantage possible.”

The response should be to fight to eliminate the special advantages governments give to the private sector in their economies. Special subsidies, tax breaks, import restrictions are all examples of what to sweep away, because they distort the true value of the activity being affected. The players in the private sector, employers, employees, buyers, sellers, middlemen, etc need accurate information to make decisions on the merits.

Next, Obama said:

We just have to make sure we’re doing everything we can to unlock the productivity of American workers, unleash the ingenuity of American businesses and harness the dynamism of America’s economy.”

Politicians can enjoy the fruits of “unlocking” and “unleashing” by doing just that: unlock and unleash us from taxes, regulations, and other top-down controls. Then that last statement exemplifies the central planner: “harness”.  One does not harness dynamism.  Dynamism means ever-changing, and harnessing it would lead to less dynamism.  Dynamism requires openness and experimentation.  Harnessing implies the information to do something is known and can be utilized for a particular purpose.  We, as economic actors, need to be free so we can discover the way to do something.

By appointing  Jeffrey R. Immelt to a political position, we are moving towards more crony capitalism.  Every big deal, a sale, acquisition, etc, GE announces will be tinged with being suspected of political cronyism. 

Keith Olbermann’s departure from MSNBC is an example of this:

Many of Mr. Olbermann’s fans responded to the decision by accusing Comcast, the incoming owner of NBC Universal, of forcing him out for political reasons. Several of Comcast’s top executives have been financial supporters of Republicans; Mr. Olbermann is largely credited with establishing MSNBC’s liberal voice.

Get the government out of economic activity and this suspicion diminishes.


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