Sirwin
Sirwin

"Pro-business" does not mean "pro-market." An overlooked distinction

By Rearden | CryptoPhilosophy | 22 Apr 2020


The distinction between "pro-market" and "pro-business" policies is fundamental. Pro-business capitalism is crony capitalism: a system in which government support for big business has supplanted the free market. Therefore, there are two opposite paths to regaining trust:

1° Reward effort and a sense of responsibility to ensure that those who make profits also bear the losses. This would involve abandoning the idea that every business is too "Too-Big-To-Fail" and instituting rules that prevent large financial firms from manipulating government to the detriment of markets. This is the "pro-market" approach.

2° The alternative path consists of appeasing popular anger with measures such as imposing limits on executive bonuses and strengthening the position of the major financial players by creating the conditions under which they depend on the government. These measures please the gallery, but in the long run they compromise the financial system and the public prestige of Western Capitalism. Moreover, they consolidate the same practices that led to the crisis. This is the "pro-business" approach.

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Big business capitalism does not like competition on the free market

It threatens established companies. So, they often use their political strength to limit new entry into their sector, but at the expense of the customers who pay a high price. 

The worst consequence of crony capitalism is political. In fact, the more a system is dominated by cronies, the more resentment it generates.

To maintain consensus, insiders must distribute privileges and subsidies, and the more they distribute, the stronger the demand becomes. And this is the path of weak economy, record government debt, record budget deficits.

"Don't feed the animals."

If you visit a national park, you can see a warning: "Thank you for not feeding the wildlife".

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If you feed the animals, they lose the habit of looking for food on their own, which is bad for their long-term survival.

The problem is that businessmen do not like to say: "Don't feed us." Though it would allow the free market system to survive in the long run. That is why, the tax code needs a revision that eliminates special treatment and prohibits any form of subsidy to businesses, starting with stopping bank bailouts.

We need to find ways to introduce more competition in sectors such as education and health care, while expanding economic opportunities for people at the lower end of the income scale.

And we need to limit the political power that the incumbents of big industry have over legislation. Not only do they distort legislation, but they also force new entrants to lobby instead of focusing on making more innovative and cheaper products.

And what about Bitcoin?

The United States has not had currency competition for about 160 years. The emergence of cryptocurrency could completely break this monopoly paradigm and tends to favour the free market.  Bitcoin could eliminate the Banking-Industrial Complex, the Federal Reserve, and the need for financial intermediaries. All predictions about the death of Bitcoin have been wrong. Bitcoin's competition with major government currencies is not only inevitable, but it can bring good to the global economy.

But that is not all. Bitcoin could also completely revolutionize industries outside of finance: Real Estate, Healthcare, Music Recording Industry and The Internet of Things. How? By bringing more privacy, resistance to censorship, competition, entrepreneurship, freedom, individual liberty.

The Free Market is like Bitcoin. It is not a centralized system, it is not a policy dictated by anybody, it is not something that Washington decides in an authoritarian way. That is what you get when people act on their own initiative, without central direction and with their own assets, in partnership, in their own interest. It is a self-organized order that emerges in the absence of control.

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Today Bitcoin is at a similar point to where the internet was in the early 1990s. But the next step for Bitcoin adoption, is when companies begin to do their business with Bitcoin rather than Dollar.

Thank you in advance for the TIP if you find this content useful. You can also follow me on my Facebook page: https://www.facebook.com/reardenbitcoin

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Rearden
Rearden

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CryptoPhilosophy
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