George Rebane

The greatest weakness of capitalism is that it will game whatever system it finds itself in.  And that is also its greatest strength.

Viewed with a discerning eye, the above cartoon by liberal cartoonist Matson says it all about the state of our country’s markets.  But I don’t think it’s the message Matson and other left-wing critics of free markets want to convey.

Through a combination of expert and patient lobbying, inflicted on greedy politicians of mostly middling intelligence, markets have been bent by governments for as long as history records.  The American experiment has taken this dance to new heights of sophistication.  The result is a system of corporate welfare set up through byzantine laws, not to help out businesses in dire straits, but to insure that ‘them that got will keep getting’.  When we apply the above principle, the result is what we have today.

Matson’s cartoon tells the story of a government already firmly entrenched in the operation of the markets.  The reader may judge how well it has done in the areas indicated.  The remarkable thing is that, when things go wrong, our politicians can always blame business for doing what it does naturally in the system that government sets up.  The usual remedy is to reign in business within an even more complex environment that stifles innovation, competition, and productivity – the three requirements of a free market that keeps every surviving enterprise beneficially on track.

Capitalism by its nature can not be allowed to operate unbridled, for then the best, brightest, and luckiest will quickly devolve into a society of monopolies and oligopolies.  But putting the regulation reigns in the hands lifelong politicians (or wannabes) and government bureaucrats gives rise to another pernicious society that also benefits the few.  (My own search for a solution has not been able to better that of our Founders – no professional politicians.)

Enlightened government involves itself minimally in setting up minimalist regulatory environments that take advantage of the ability and propensity of businesses to game the system.  Years ago political philosopher Garrett Hardin gave an example of such a solution in terms of Mississippi River cities using and discharging river water.  All such cities place their drinking water intake and purification plants upstream of their communities.  They are then supposed to clean up their sewage and discharge it back into the river, which, of course, they all do downstream of their city limits.  To make sure these regulations and standards are met, the government has set up and operates at great cost a system of inspectors and water test facilities.  Hardin suggested that a minimalist enlightened approach would be to change the regulation to simply require that every city’s intake be located downstream of its own sewage treatment and discharge facility.