Business v Government. Which one should we fear the most?
Ever since the founding fathers debated and argued about this question, our country has wrestled with it. Historically, and still today, government has provided vital services, legal structures, and some sense of overall order, all of which is necessary to the American way of life.
At the same time, the government has been prone to corruption, waste, inefficiency, and cronyism. In short, democracy as practiced in America, has been messy, but it has been the best system ever devised and utilized in the history of the world in terms of improving the standard of living for even the poorest of its people.
Beginning with the industrial revolution, continuing through the explosion in economic growth during and after WWII, and then through the ongoing explosive era of information and technology, the economic achievement in the United States, under free-market capitalism, has no equal. It has been extraordinary by any measure. It saved the world from the evils of totalitarianism in the early 1940s and has led to more wealth creation than any other economic system ever devised or tried anywhere.
At the same time, the private sector has been prone to corruption, greed, exploitation, inequality, and boom and bust cycles. There has always been some level of argument for more regulation and more government control to lessen the harmful aspects of unfettered business pursuits. There have also always been arguments that business would be even more productive and successful if government played a lessor role. This debate will always exist.
Virtually all businesses have an incentive to conduct themselves in a manner that benefits diverse constituents – providers of capital, labor, customers, competitors, suppliers, and the communities in which they do business. No company does this perfectly and few do this well across every single constituent in all possible dealings all the time. But in the long run, the most successful businesses are the ones that do the best job serving all their constituents. This, in a word, is how free-market capitalism works, or is designed to work. Businesses are, in essence, ultimately accountable for what they do.
The question, therefore, becomes, what is the right balance between free-market capitalism and government regulatory control? How do we find the right balance? What would that right balance produce, or look like? Let’s start at the end…
It would produce an economy and society with these characteristics:
Ø An economy that maximizes the productive capacity of its workforce
Ø Low and consistent rate of inflation
Ø Ongoing innovation and scientific discovery
Ø A verifiable record of upward economic mobility in all socio-economic sectors
Ø Efficient access to credit and capital to drive new business formation.
Ø An inspirational record of philanthropy, mentorship, and community involvement led by and demonstrated by prominent business leaders.
Ø An efficient means to redeploy capital from unproductive and unsuccessful ventures into more productive and successful business opportunities.
Ø More economic and business success, and greater wealth creation, for those that are willing to work the hardest and take prudent risks to achieve uncommon goals.
Ø A disdain for crony capitalism, exploitation, and greed
Ø A commitment to integrity in every aspect of business dealings
Ø Uneven outcomes due to uneven factors – work ethic, ability, intellect, personality, temperament, and luck
Ø A chance for every individual to advance economically no matter where they started or whatever attributes, advantages, or disadvantages they bring to bear.
Ø From the advantaged and successful – empathy, civility, community commitment and philanthropy. The over-riding goal, or philosophy, will be to earn as much as you can, save as much as you can, and give as much as you can. Life’s full circle.
What it will not produce:
Ø Equal outcomes for all
Ø Equal opportunities for all – not everyone will be able to successfully pursue every dream imaginable. We all have limits, even if we don’t like it.
What would the right balance of government regulation be characterized by?
Ø Regulation to ensure public safety and to promote integrity in all aspects of business dealings.
Ø Regulations whose benefits to society are verifiable.
Ø Continual review of the efficacy of regulations
Ø Continual improvement, repeal, or replacement of ineffective regulations and policies
What it will not produce:
Ø Economic winners and losers due to favoritism, discrimination, or political agenda
Ø Barriers to free-market competition that has no verifiable benefit to society.
Ø Political corruption
Ø Career politicians
Summary:
We have nothing to fear from business or government that is led by individuals dedicated to integrity and the common good. We have everything to fear from businesses or government bureaucracies that are run by dishonest individuals, driven by greed and the unquenchable thirst for power.
Stay tuned to my next newsletter.
Michael Kayes
*These views are my personal opinions and are not the viewpoints of any company or organization.