Another conversation with my brother

In case you missed it on the George Bush & Aids post, my brother and I had another exchange, in the course of which I formulate what I consider a truly conservative economic ideology:

He says: OK. I (“Dr. Veith’s” younger brother who is still and always will be a Democrat) hereby give George Bush credit for saving millions of lives as a result of his AIDS initiative. Hey, that felt kind of good!

Now for you conservatives, isn’t it about time to give President Obama credit for the bailout of General Motors?

I say: Jimmy (my brother) @3: Thank you for that concession. That was all I wanted. But what you want from conservatives shows that liberals do not understand the many different ideologies that they lump together under that label. Most people on this blog, I daresay, are suspicious of BOTH big government AND big business.

We do believe in free markets. To return to your earlier illustration, if doctors and pharmaceutical companies and everyone else in the health care professions could not make a lot of money from their work, we soon would be back to what you decried in the primitive health care endured by Adam Smith back in 1776.

However, the really big companies hate free markets. They don’t want competition that brings prices down and increases supply. This is the lesson of Monopoly, at which I beat you so many times, the object of which is not prosperity and abundance for everybody, but one person putting everybody else out of business and getting–with the state-run socialist bank–ALL of everyone’s money.

And even worse for us crunchy-conservatives or front-porch conservatives or social conservatives or whatever you want to call us than big government and big business is when both of those behemoths combine together into something that so gargantuan that it crowds out everybody! This is why we don’t like Obama’s bailout of the big banks and his merger with General Motors. This is also why we don’t like Obama’s health care system, which is a marriage of big government with the big insurance companies.

Then he says:

To my big brother,”Dr. Veith”. Thanks for reminding me how often you beat me at Monopoly.

I agree with much of what you said in your comments at #26. I agree that the individual can be harmed by both BIG government and BIG business. My question for you is how can we check the powers of BIG business?

Historically, it has been done in two ways, with unions and government. With the decline of unions, government is the principal way we can check the powers of big business. When conservatives reject any government role in a “free market system” as a mater of ideology, they are left with nothing to check the powers of big business.

I don’t think that a corporation should be allowed to make money any way it pleases. Corporations are fictional “persons” created under the law. Corporations exist to serve the people, we do not exist to serve the corporation. It is perfectly appropriate that the government that created corporations can and should regulate its activites. For example, the government should prohibit companies from selling dangerous products to the public, and should protect the safety of the company employees. I acknowledge that rules and regulations imposed by government on business can be too burdensome and heavy handed. So the rules and regulations imposed by government should be smart and pragmatic. But I think it is insane to reject the role of government in a modern free market economy on purely ideological grounds.

This is why I support Obama’s health care, because I think it is perfectly appropriate for government to prohibit insurance companies from denying people coverage for a pre-existing condition. Allowing insurance companies to only insure healthy people is a business model that does not benefit the public and is not sustainable in the long run.

Now I don’t want to start another debate on the wisdom or lack of wisdom of Obama’s health care. Time will tell. My point is that we should not reject the power of government to regulate the health care insurance industry as a matter of principal.

Does this make me a soci@list? I don’t think so.

I repost these exchanges because my brother is actually very perceptive, liberal though he is, and because they demonstrate the lesson I have been trying to impose on you all, that it is possible to disagree without being disagreeable, to remain one big happy family through it all, and that it is possible to use discussions consisting of different opinions to come to actual insights.

Anyway, who is with me in this suspicion of big government and big business and, especially, their marriage with their hideous spawn?

And can anyone answer Jimmy?  What can limit both big government and big business?

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • Porcell

    One example of a way to limit big government and big business would be to eliminate the FCC, which is promoting the anti-competitive fiction of net “neutrality” that just now is in the business of protecting Google, Comcast, Verizon Wireless and ESPN.

    For a cogent article on this see Andy Kessler’s WSJ, Time to Shut Down the FCC including this summary bit:

    The FCC can apply more Band-Aids to its broken scarcity-based regulatory model. Or we can close the agency and let consumers allocate capital efficiently.

    Caving to big business special interests that essentially bribe the Beltway political class, government badly distorts the allocation of capital. Instead of the beneficial economic law of creative destruction, we get severe big business sclerosis. Had Fan and Fed, cesspools of political corruption, not existed the recent economic meltdown would likely not have occurred.

  • Porcell

    One example of a way to limit big government and big business would be to eliminate the FCC, which is promoting the anti-competitive fiction of net “neutrality” that just now is in the business of protecting Google, Comcast, Verizon Wireless and ESPN.

    For a cogent article on this see Andy Kessler’s WSJ, Time to Shut Down the FCC including this summary bit:

    The FCC can apply more Band-Aids to its broken scarcity-based regulatory model. Or we can close the agency and let consumers allocate capital efficiently.

    Caving to big business special interests that essentially bribe the Beltway political class, government badly distorts the allocation of capital. Instead of the beneficial economic law of creative destruction, we get severe big business sclerosis. Had Fan and Fed, cesspools of political corruption, not existed the recent economic meltdown would likely not have occurred.

  • http://www.cumberlandisland.blogspot.com Adrian Keister

    I’m not so sure I agree that big businesses are so dangerous. True, there have to be laws about truth in advertising (otherwise, you don’t have a free market), as well as anti-theft laws, etc.

    However, take the case of Rockefeller oil. There was a big business if ever there was one. What were the pressures on that big business? Well, mostly small entrepreneurs who went out and started loads of small oil companies and sold out at ridiculous prices to Rockefeller. Rockefeller definitely got the bad end of those bargains.

    In a market that is free enough, big businesses inevitably have too much inertia to compete with small startups. So what about Walmart, you might ask? Walmart, the claim goes, has consistently lowered local prices in an effort to price local “mom and pop” stores out of business. Check out this link for a perfectly adequate defense of Walmart:

    http://www.leedberg.com/2006/02/in-defense-of-walmart.html

    Cheers.

  • http://www.cumberlandisland.blogspot.com Adrian Keister

    I’m not so sure I agree that big businesses are so dangerous. True, there have to be laws about truth in advertising (otherwise, you don’t have a free market), as well as anti-theft laws, etc.

    However, take the case of Rockefeller oil. There was a big business if ever there was one. What were the pressures on that big business? Well, mostly small entrepreneurs who went out and started loads of small oil companies and sold out at ridiculous prices to Rockefeller. Rockefeller definitely got the bad end of those bargains.

    In a market that is free enough, big businesses inevitably have too much inertia to compete with small startups. So what about Walmart, you might ask? Walmart, the claim goes, has consistently lowered local prices in an effort to price local “mom and pop” stores out of business. Check out this link for a perfectly adequate defense of Walmart:

    http://www.leedberg.com/2006/02/in-defense-of-walmart.html

    Cheers.

  • Rich Shipe

    I am suspicious of large government too. I consider myself a “crunchy-con” in a lot of ways (which really is a traditional conservative in my view). But big business is not inherently bad. People are inherently bad which is why we conservatives want checks and balances on human nature.

    I think the modern rise of big business is ironically the result of big government. For two reasons I can think of off the top of my head:

    1. The larger the government the smaller the profit margin. The mom and pop hardware store who makes a profit margin of pennies on the dollar can barely get by. Add inheritance taxes, annual property taxes, now health-care, and on and on and that little business can’t survive over generations. Forget about starting that business today. Home Depot on the other hand can survive because the same margin equals significant profits. Economies of scale allows for survival as the profit margin goes down.

    Home Depot could/would still exist if the government were vastly smaller, but I think that most would prefer getting that particular item at the mom and pop hardware store because of better service. Home Depot would be forced to compete in the area of service which would require them to hire more and pay better.

    The above scenario is happening all over the country.

    2. Lobbying. Everyone lobbies in order to help their interest. Every large corporation is lobbying Congress. Mom and pop hardware store can’t and isn’t. When the congressman is seating at the bill drafting table surrounded by lobbyist, who has the little guy’s interests in mind?

    The city of Detroit is a testament to the failures of big business, big government, and unions. Human nature combined with power resulted in Detroit as it is today.

  • Rich Shipe

    I am suspicious of large government too. I consider myself a “crunchy-con” in a lot of ways (which really is a traditional conservative in my view). But big business is not inherently bad. People are inherently bad which is why we conservatives want checks and balances on human nature.

    I think the modern rise of big business is ironically the result of big government. For two reasons I can think of off the top of my head:

    1. The larger the government the smaller the profit margin. The mom and pop hardware store who makes a profit margin of pennies on the dollar can barely get by. Add inheritance taxes, annual property taxes, now health-care, and on and on and that little business can’t survive over generations. Forget about starting that business today. Home Depot on the other hand can survive because the same margin equals significant profits. Economies of scale allows for survival as the profit margin goes down.

    Home Depot could/would still exist if the government were vastly smaller, but I think that most would prefer getting that particular item at the mom and pop hardware store because of better service. Home Depot would be forced to compete in the area of service which would require them to hire more and pay better.

    The above scenario is happening all over the country.

    2. Lobbying. Everyone lobbies in order to help their interest. Every large corporation is lobbying Congress. Mom and pop hardware store can’t and isn’t. When the congressman is seating at the bill drafting table surrounded by lobbyist, who has the little guy’s interests in mind?

    The city of Detroit is a testament to the failures of big business, big government, and unions. Human nature combined with power resulted in Detroit as it is today.

  • ELB

    The Constitution.
    The constitution limits the power of the federal government to side with or support corporations, as well as others not on the short list of delineated powers. They are permitted to regulate corporations as necessary to avoid the usual: Fraud, misrepresentation, collusion in trusts, and predation of various sorts.
    The founders knew we are in a sinful, broken, world, and they had seen government as the power behind corporations like the India companies (parliament was practically their creature) and they limited the power of the federal government because of that.
    Most of the huge regulatory agencies, it turns out, foster one industry or corporation over others. Better for the fedgov to stay out altogether.

  • ELB

    The Constitution.
    The constitution limits the power of the federal government to side with or support corporations, as well as others not on the short list of delineated powers. They are permitted to regulate corporations as necessary to avoid the usual: Fraud, misrepresentation, collusion in trusts, and predation of various sorts.
    The founders knew we are in a sinful, broken, world, and they had seen government as the power behind corporations like the India companies (parliament was practically their creature) and they limited the power of the federal government because of that.
    Most of the huge regulatory agencies, it turns out, foster one industry or corporation over others. Better for the fedgov to stay out altogether.

  • SKPeterson

    The biggest check on “big” business is more “big” business. All monopolies that have persisted over time have the explicit or implicit imprimatur of government. Either explicitly, through specific legislation that bans competition, or implicitly, by big businesses encouraging various forms of legal anti-competitive protection via legislation and regulation. Ironically, these actions are often part of “anti-trust” laws and rules.

    The solution is complex. Part of the problem is political entrepreneurship, or rent seeking behavior, on the part of businesses who seek to channel tax dollars and subsidies to their businesses. Think here not only of GM or Goldman Sachs, but primarily of entities such as Archer Daniels Midland. This then leads to calls for further taxation and subsidy spending programs which gain a special interest constituency. This is coupled with a vast amount of expensive and expansive regulation by the government which can (rather too easily) be co-opted by business or by unions, to the detriment of economic competitiveness and efficiency. If I can capture a government subsidy revenue stream and regulate competitors at a relatively low cost (in terms not only of capital, but actual effort), then I am incentivized by the system to engage in anti-competitive behavior and to support those entities, private and public, that also support such behavior. Campaign finance laws won’t eliminate this – removing and reducing the financial and regulatory influence of government and the incentives created thereby just might.

    Finally, I would say that big business is far less evil than government in a head-to-head comparison. In general any big business that is not involved in obtaining subsidies etc, does not threaten people with violence if they don’t purchase the firm’s goods or services. Try not paying for government services you don’t want, don’t use, and don’t support — sooner or later you’ll have some armed yahoo showing up at your door demanding compliance and threatening to seize you and/or your property.

  • SKPeterson

    The biggest check on “big” business is more “big” business. All monopolies that have persisted over time have the explicit or implicit imprimatur of government. Either explicitly, through specific legislation that bans competition, or implicitly, by big businesses encouraging various forms of legal anti-competitive protection via legislation and regulation. Ironically, these actions are often part of “anti-trust” laws and rules.

    The solution is complex. Part of the problem is political entrepreneurship, or rent seeking behavior, on the part of businesses who seek to channel tax dollars and subsidies to their businesses. Think here not only of GM or Goldman Sachs, but primarily of entities such as Archer Daniels Midland. This then leads to calls for further taxation and subsidy spending programs which gain a special interest constituency. This is coupled with a vast amount of expensive and expansive regulation by the government which can (rather too easily) be co-opted by business or by unions, to the detriment of economic competitiveness and efficiency. If I can capture a government subsidy revenue stream and regulate competitors at a relatively low cost (in terms not only of capital, but actual effort), then I am incentivized by the system to engage in anti-competitive behavior and to support those entities, private and public, that also support such behavior. Campaign finance laws won’t eliminate this – removing and reducing the financial and regulatory influence of government and the incentives created thereby just might.

    Finally, I would say that big business is far less evil than government in a head-to-head comparison. In general any big business that is not involved in obtaining subsidies etc, does not threaten people with violence if they don’t purchase the firm’s goods or services. Try not paying for government services you don’t want, don’t use, and don’t support — sooner or later you’ll have some armed yahoo showing up at your door demanding compliance and threatening to seize you and/or your property.

  • Abby

    “What can limit both big government and big business?”

    As a little, little person out here–I’m taking the Dave Ramsey approach: get out and stay out of debt. Live within my means. The cries about the economy seem to me to be about being a bigger consumer. Even if, ultimately, you get in trouble with incurred debt. I can’t see the government living within its means. And the word “means” to them is a relative term.

    “Try not paying for government services you don’t want, don’t use, and don’t support — sooner or later you’ll have some armed yahoo showing up at your door demanding compliance and threatening to seize you and/or your property.”

    Years ago I used to love the TV series “Little House on the Prairie” because of the simplistic happiness of it. The very last episode showed a government IRS agent coming to the little town and going house to house detailing to everyone how much they owed in taxes. Everyone tried to figure out how they could generate this revenue and none could come up with the funds to pay. So the IRS agent told them that the government would now own everything in the community–all buildings and property. At the very end of the show everyone was gathered together (I think near the church) and they all watched as suddenly every building and home blew up. Then they all walked away to go somewhere and start a new life, again.

    We just never learn from history. God tried to dissuade Israel from wanting a human King instead of Him. And the reasons God sighted were the slavery and taxes the King would impose on them!

    Our true freedom won’t come until we’re finally firmly planted in heaven for eternity.

  • Abby

    “What can limit both big government and big business?”

    As a little, little person out here–I’m taking the Dave Ramsey approach: get out and stay out of debt. Live within my means. The cries about the economy seem to me to be about being a bigger consumer. Even if, ultimately, you get in trouble with incurred debt. I can’t see the government living within its means. And the word “means” to them is a relative term.

    “Try not paying for government services you don’t want, don’t use, and don’t support — sooner or later you’ll have some armed yahoo showing up at your door demanding compliance and threatening to seize you and/or your property.”

    Years ago I used to love the TV series “Little House on the Prairie” because of the simplistic happiness of it. The very last episode showed a government IRS agent coming to the little town and going house to house detailing to everyone how much they owed in taxes. Everyone tried to figure out how they could generate this revenue and none could come up with the funds to pay. So the IRS agent told them that the government would now own everything in the community–all buildings and property. At the very end of the show everyone was gathered together (I think near the church) and they all watched as suddenly every building and home blew up. Then they all walked away to go somewhere and start a new life, again.

    We just never learn from history. God tried to dissuade Israel from wanting a human King instead of Him. And the reasons God sighted were the slavery and taxes the King would impose on them!

    Our true freedom won’t come until we’re finally firmly planted in heaven for eternity.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Regarding the GM bailout, what really happened is that the UAW’s pension fund got bailed out by the taxpayers directly instead of indirectly, that’s all. GM would have gone through bankruptcy reorganization either way, and what Obama achieved is the postponement of the bankruptcy of UAW pensions and medical benefits.

    Not a bit deal, and I would, ahem, have expected a bankruptcy lawyer to have known this instinctively. It’s also worth noting that the ordinary hierarchy of creditors would have been observed had Mr. Obama not stepped in.

    The antidote to big business is also…..government NOT stepping in per the Constitution. The ugly reality is that big business loves big government–that’s why Wal-Mart promotes things like increased minimum wages.

    If ya don’t like monster business, then ya gotta listen to that pesky 10th Amendment and take it seriously.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Regarding the GM bailout, what really happened is that the UAW’s pension fund got bailed out by the taxpayers directly instead of indirectly, that’s all. GM would have gone through bankruptcy reorganization either way, and what Obama achieved is the postponement of the bankruptcy of UAW pensions and medical benefits.

    Not a bit deal, and I would, ahem, have expected a bankruptcy lawyer to have known this instinctively. It’s also worth noting that the ordinary hierarchy of creditors would have been observed had Mr. Obama not stepped in.

    The antidote to big business is also…..government NOT stepping in per the Constitution. The ugly reality is that big business loves big government–that’s why Wal-Mart promotes things like increased minimum wages.

    If ya don’t like monster business, then ya gotta listen to that pesky 10th Amendment and take it seriously.

  • Eric

    “What can limit both big government and big business?”

    My brother, a successful internal medicine doctor, told me the only way to survive is to get bigger. His rationale is that, as government regulation becomes more onerous, the only way to be in compliance is to be big enough to absorb the additional infrastructure costs that go along with regulation (for example legal, technology and reporting costs.) From this point of view, big government begets big business. It does not seem that government can be relied upon to curb abuses in entities it fosters.

    I once heard a constitutional law professor make an argument that some forms of speech, those which assault free speech, should be regulated to protect the First Amendment. I am not sure he convinced many of us. However, in a different context, the logic of his argument may define a possible role for government in the economy. It may be that, to ensure free markets, the only legitimate role of government is to monitor and curb business practices that interfere with free markets. Stated another way, consistent with its role as protector, government should protect the free market.

    Defining “interference with free markets” may be the problem. To the extent it is politically defined, we may end up with the same problems we have today. Any other government intervention in an economy, however, just seems to profit some and make the rest worse off.

  • Eric

    “What can limit both big government and big business?”

    My brother, a successful internal medicine doctor, told me the only way to survive is to get bigger. His rationale is that, as government regulation becomes more onerous, the only way to be in compliance is to be big enough to absorb the additional infrastructure costs that go along with regulation (for example legal, technology and reporting costs.) From this point of view, big government begets big business. It does not seem that government can be relied upon to curb abuses in entities it fosters.

    I once heard a constitutional law professor make an argument that some forms of speech, those which assault free speech, should be regulated to protect the First Amendment. I am not sure he convinced many of us. However, in a different context, the logic of his argument may define a possible role for government in the economy. It may be that, to ensure free markets, the only legitimate role of government is to monitor and curb business practices that interfere with free markets. Stated another way, consistent with its role as protector, government should protect the free market.

    Defining “interference with free markets” may be the problem. To the extent it is politically defined, we may end up with the same problems we have today. Any other government intervention in an economy, however, just seems to profit some and make the rest worse off.

  • Neal

    You are right, I think, to focus on establishing and protecting free markets rather than specific business interests. A key factor in that is having wise regulation, not having “less” regulation.

    To get there, we need to have a better and broader understanding of the proper role of Governments (essentially the vehicle of collective action by a society) in regulating markets. This includes controls for negative externalities, preventing asymmetric information (think different scales in Proverbs), providing for common use infrastructure (for example, road systems). One common framework offers two other areas, but I forget the details off the top of my head. I can look it up if someone is interested.

    By defining and debating proposed regulations based on these core principles, we can have a more constructive dialog than we currently do and hopefully a better shot at developing wise regulations. Perhaps this would replace the name calling (er, big-business, big-government, for example) with concrete issues that can be realistically addressed.

    Two caveats. First, people have to have a more informed understanding (and shared acceptance) of the role of government. That should be the role of civics classes, but we certainly didn’t cover that in mine. Second, the debate and resulting policy needs to be conducted with a very healthy respect for the unintended consequences that flow from any policy decision.

  • Neal

    You are right, I think, to focus on establishing and protecting free markets rather than specific business interests. A key factor in that is having wise regulation, not having “less” regulation.

    To get there, we need to have a better and broader understanding of the proper role of Governments (essentially the vehicle of collective action by a society) in regulating markets. This includes controls for negative externalities, preventing asymmetric information (think different scales in Proverbs), providing for common use infrastructure (for example, road systems). One common framework offers two other areas, but I forget the details off the top of my head. I can look it up if someone is interested.

    By defining and debating proposed regulations based on these core principles, we can have a more constructive dialog than we currently do and hopefully a better shot at developing wise regulations. Perhaps this would replace the name calling (er, big-business, big-government, for example) with concrete issues that can be realistically addressed.

    Two caveats. First, people have to have a more informed understanding (and shared acceptance) of the role of government. That should be the role of civics classes, but we certainly didn’t cover that in mine. Second, the debate and resulting policy needs to be conducted with a very healthy respect for the unintended consequences that flow from any policy decision.

  • http://theobservationtree.blogspot.com Louis

    Neal – amen and amen.

  • http://theobservationtree.blogspot.com Louis

    Neal – amen and amen.

  • http://facebook.com/mesamike Mike Westfall

    Lying, cheating and stealing is what should be regulated. And by that, I mean outlawed, rather than selectively supported according to who ponies up the best political contributions.

    But I think it’s futile to think there is somehow to limit both Big Government and Big Business. The two are married into an unbreakable bond of co-dependence.

  • http://facebook.com/mesamike Mike Westfall

    Lying, cheating and stealing is what should be regulated. And by that, I mean outlawed, rather than selectively supported according to who ponies up the best political contributions.

    But I think it’s futile to think there is somehow to limit both Big Government and Big Business. The two are married into an unbreakable bond of co-dependence.

  • http://theoldadam.wordpress.com Steve Martin

    ‘Big Business’ will not come knocking on your door in the middle of the night.

    ‘Big Government’ just might. Look at big, overbearing governments just in the last hundred years and tell me it’s not possible.

    I’m no fan of big business, but it is not freedom threatening, or life threatening the way big government can be.

  • http://theoldadam.wordpress.com Steve Martin

    ‘Big Business’ will not come knocking on your door in the middle of the night.

    ‘Big Government’ just might. Look at big, overbearing governments just in the last hundred years and tell me it’s not possible.

    I’m no fan of big business, but it is not freedom threatening, or life threatening the way big government can be.

  • http://facebook.com/mesamike Mike Westfall

    > ‘Big Business’ will not come knocking
    > on your door in the middle of the night.

    No, Big Business won’t do it themselves.
    They’ll have their dogs in Big Government do that bidding.

  • http://facebook.com/mesamike Mike Westfall

    > ‘Big Business’ will not come knocking
    > on your door in the middle of the night.

    No, Big Business won’t do it themselves.
    They’ll have their dogs in Big Government do that bidding.

  • Peter Schellhase

    Yes, as a conservative I am suspicious of both Big Government and Big Business–most of all when both are allied in mutually supportive activity. The recent Dodd-Frank bill is an example of this. Compliance is relatively easy for the Goldman Sachs and other large investment firms. Meanwhile small or independent banks and financial services providers struggle to comply with the increasingly Byzantine codes.

  • Peter Schellhase

    Yes, as a conservative I am suspicious of both Big Government and Big Business–most of all when both are allied in mutually supportive activity. The recent Dodd-Frank bill is an example of this. Compliance is relatively easy for the Goldman Sachs and other large investment firms. Meanwhile small or independent banks and financial services providers struggle to comply with the increasingly Byzantine codes.

  • Neal

    @Steve You don’t think that bad behavior by businesses can have an adverse impact on people’s lives and freedoms? I’d be willing to bet that there are a large number of Oyster fishers who’d beg to disagree, to pick a recent example.

  • Neal

    @Steve You don’t think that bad behavior by businesses can have an adverse impact on people’s lives and freedoms? I’d be willing to bet that there are a large number of Oyster fishers who’d beg to disagree, to pick a recent example.

  • SKPeterson

    @Neal – this is an interesting issue which involves attenuated property rights and public property. Who’s property are the oyster beds? How have the oyster fisher’s property rights been violated? If the government issues licenses to drill for oil and to fish for oysters, is the government then responsible for regulating means of production and extraction for both resources? What happens when Big Oil and Big Oyster come into conflict over the extraction of resources on and under public lands/waters? Who decides and on what grounds?

  • SKPeterson

    @Neal – this is an interesting issue which involves attenuated property rights and public property. Who’s property are the oyster beds? How have the oyster fisher’s property rights been violated? If the government issues licenses to drill for oil and to fish for oysters, is the government then responsible for regulating means of production and extraction for both resources? What happens when Big Oil and Big Oyster come into conflict over the extraction of resources on and under public lands/waters? Who decides and on what grounds?

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    How is it liberal to support big government teaming up with big business to tell us all how to live and confiscating our property to pay for it?

    How is that liberal?

    It isn’t.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    How is it liberal to support big government teaming up with big business to tell us all how to live and confiscating our property to pay for it?

    How is that liberal?

    It isn’t.

  • DonS

    I posted on the “George Bush & AIDS” thread last night about this topic, in response to Jimmy’s post @ 43 on that thread. This is what I said, in part:

    …Actually, my view is that big government abets big business, and vice-versa. Government likes big business because it is willing to be regulated as long as it has a hand in crafting the regulations. Big business likes government because regulation throws up roadblocks to competition — barriers to entry into the marketplace are good from keeping smaller competitors from rising up. We have larger clients who work hard with friends in their particular regulatory agencies to “spec” their products into law, thereby preventing competitive products from getting approved. Similarly, we have smaller clients who get “specked (sp)” out, so that they cannot compete. This kind of activity is particularly rampant in the medical device industry, for example.

    So if you really want to fight big business, which tends to be sclerotic and slow to innovate, take down the regulatory barriers to competition by small business. Less government, not more, is the ticket.

    SKPeterson did a good job of giving a similar message above @ 5, as did Neal @ 9. To directly answer the question in this post, the answer is more competition from smaller businesses, so that big business cannot dominate the marketplace. The citizens need to understand that the answer to every problem is not more government regulation, because that regulatory activity makes it harder and a lot more expensive for new small businesses to get started.

  • DonS

    I posted on the “George Bush & AIDS” thread last night about this topic, in response to Jimmy’s post @ 43 on that thread. This is what I said, in part:

    …Actually, my view is that big government abets big business, and vice-versa. Government likes big business because it is willing to be regulated as long as it has a hand in crafting the regulations. Big business likes government because regulation throws up roadblocks to competition — barriers to entry into the marketplace are good from keeping smaller competitors from rising up. We have larger clients who work hard with friends in their particular regulatory agencies to “spec” their products into law, thereby preventing competitive products from getting approved. Similarly, we have smaller clients who get “specked (sp)” out, so that they cannot compete. This kind of activity is particularly rampant in the medical device industry, for example.

    So if you really want to fight big business, which tends to be sclerotic and slow to innovate, take down the regulatory barriers to competition by small business. Less government, not more, is the ticket.

    SKPeterson did a good job of giving a similar message above @ 5, as did Neal @ 9. To directly answer the question in this post, the answer is more competition from smaller businesses, so that big business cannot dominate the marketplace. The citizens need to understand that the answer to every problem is not more government regulation, because that regulatory activity makes it harder and a lot more expensive for new small businesses to get started.

  • Neal

    @SK – Yes, it is an interesting issue. Sorting out those competing interests is a complex question.

    Aside from the specifics of oil and oysters though, my point is that large corporations (or small businesses for that matter) can deprive people of their freedom and safety as quickly as governments can. I think the premise that governments are the only force (or even the most likely force) to deprive people of their rights is mistaken. Both need to fulfill their responsibilities responsibly.

    Abstract references to ‘Big Business’ or ‘Big Government’ and what they may or may not do to me in the middle of the night doesn’t do much to advance the public discourse over how they should best fulfill their responsibilities. Question like “If the government issues licenses to drill for oil and to fish for oysters, is the government then responsible for regulating means of production and extraction for both resources?” do.

  • Neal

    @SK – Yes, it is an interesting issue. Sorting out those competing interests is a complex question.

    Aside from the specifics of oil and oysters though, my point is that large corporations (or small businesses for that matter) can deprive people of their freedom and safety as quickly as governments can. I think the premise that governments are the only force (or even the most likely force) to deprive people of their rights is mistaken. Both need to fulfill their responsibilities responsibly.

    Abstract references to ‘Big Business’ or ‘Big Government’ and what they may or may not do to me in the middle of the night doesn’t do much to advance the public discourse over how they should best fulfill their responsibilities. Question like “If the government issues licenses to drill for oil and to fish for oysters, is the government then responsible for regulating means of production and extraction for both resources?” do.

  • SKPeterson

    Neal, thanks for the response. I don’t have definite positions on the questions I brought up, but I wanted to begin to tease out some of the issues that surround the intertwining of private and public interests. This often occurs in situations in which public lands (or waters) are being used for resource extraction and subject to competing and overlapping activities. Another area of recent interest here in Appalachia is mountaintop removal coal mining. This brings to bear big business (mining) which is a long running economic engine but is also heavily mixed in with state and local government (in particular excise taxes, property taxes and their assorted exemptions) up against small property owners who face soil and water pollution from such activity. Similar activity existed in the Intermountain West where both mining and cattle industries dictated government policy and were able to bring the full force of the law down on small farmers, ranchers, and loggers in order to violate private property rights with relative impunity.

  • SKPeterson

    Neal, thanks for the response. I don’t have definite positions on the questions I brought up, but I wanted to begin to tease out some of the issues that surround the intertwining of private and public interests. This often occurs in situations in which public lands (or waters) are being used for resource extraction and subject to competing and overlapping activities. Another area of recent interest here in Appalachia is mountaintop removal coal mining. This brings to bear big business (mining) which is a long running economic engine but is also heavily mixed in with state and local government (in particular excise taxes, property taxes and their assorted exemptions) up against small property owners who face soil and water pollution from such activity. Similar activity existed in the Intermountain West where both mining and cattle industries dictated government policy and were able to bring the full force of the law down on small farmers, ranchers, and loggers in order to violate private property rights with relative impunity.

  • Jimmy Veith

    To Neal at 9, 15 & 19. I agree with you 100%. Well said.

    As a lifelong Democrat it pains me to say this, but over the years I’ve gained an appreciation for the presidency of Dwight Eisenhower. It seems that he had a pretty good appreciation for the proper role of government. He recognized how government can benefit society with such programs as the interstate highway system , but also warned us against the dangers of government and big business with his military industrial complex speech.

    WOW! I just read Eisenhower’s farewell speech. I urge everyone on this blog to read it now. http://coursesa.matrix.msu.edu What a great speech. Let me know what you think.

  • Jimmy Veith

    To Neal at 9, 15 & 19. I agree with you 100%. Well said.

    As a lifelong Democrat it pains me to say this, but over the years I’ve gained an appreciation for the presidency of Dwight Eisenhower. It seems that he had a pretty good appreciation for the proper role of government. He recognized how government can benefit society with such programs as the interstate highway system , but also warned us against the dangers of government and big business with his military industrial complex speech.

    WOW! I just read Eisenhower’s farewell speech. I urge everyone on this blog to read it now. http://coursesa.matrix.msu.edu What a great speech. Let me know what you think.

  • SAL

    “What can limit both big government and big business?”

    Family, Tribe (loosely speaking), village/town/ward government, Civic organizations, Churches, Guilds, Labor Unions, Mutual Aid Societies

    In healthy societies power isn’t concentrated in one or two spheres like Government and Corporation while the rest of our civilization withers. It creates a dull, gray, society lacking in creativity and vigor.

    Eliminating the incestuous relationship between government and the big corporations is a prerequisite for reviving the ailing spheres of American life (Family, Tribe, Civic life, etc).

  • SAL

    “What can limit both big government and big business?”

    Family, Tribe (loosely speaking), village/town/ward government, Civic organizations, Churches, Guilds, Labor Unions, Mutual Aid Societies

    In healthy societies power isn’t concentrated in one or two spheres like Government and Corporation while the rest of our civilization withers. It creates a dull, gray, society lacking in creativity and vigor.

    Eliminating the incestuous relationship between government and the big corporations is a prerequisite for reviving the ailing spheres of American life (Family, Tribe, Civic life, etc).

  • Jimmy Veith

    Oops! I just clicked on the website that I gave you for Eisenhower’s farewell speech and it didn’t work. Just google it.

  • Jimmy Veith

    Oops! I just clicked on the website that I gave you for Eisenhower’s farewell speech and it didn’t work. Just google it.

  • Booklover

    Gene and Jimmy Veith: May you always treasure one another in your hearts and never allow politics to hurt your relationship. Some families forget that.

  • Booklover

    Gene and Jimmy Veith: May you always treasure one another in your hearts and never allow politics to hurt your relationship. Some families forget that.

  • http://theobservationtree.blogspot.com Louis

    Good discussion!

    DonS is entirely correct that big business and big government abet each other. Big agrifood is a perfect example. Thus my comment that unless we stifle this relationship, we will end up as oligarchies. Maybe we are already there in some aspects.

    The difference between oligarchies and facism? Depends who is in the saddle, and who is the horse.

  • http://theobservationtree.blogspot.com Louis

    Good discussion!

    DonS is entirely correct that big business and big government abet each other. Big agrifood is a perfect example. Thus my comment that unless we stifle this relationship, we will end up as oligarchies. Maybe we are already there in some aspects.

    The difference between oligarchies and facism? Depends who is in the saddle, and who is the horse.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “big business and big government abet each other. Big agrifood is a perfect example.”

    Yup.

    Also interesting is the strong growth in small farms.

    Louis, if you are concerned about agribusiness/gov’t alliance, you will appreciate this video.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “big business and big government abet each other. Big agrifood is a perfect example.”

    Yup.

    Also interesting is the strong growth in small farms.

    Louis, if you are concerned about agribusiness/gov’t alliance, you will appreciate this video.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg
  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg
  • Porcell

    At the risk of being a skunk at this lawn party, I should say there is nothing inherently wrong with big business, technically defined as companies employing over 500 people. There are plenty of such companies that don’t go after an iota of rent-seeking government favors, nor do they overly rely on friendly contacts that distort the marketplace. They simply strive to provide a first-rate product or service with a decent or better capital base along with motivated, hard-working, and ethical employees.

    The idea that “big-business” in itself is wrong is a conceit of crunhy-conservatives and other romantics who wish to drive the economy toward some imagined past or future age. It is, also, a dangerous and righteous anti-capitalist populist notion.

  • Porcell

    At the risk of being a skunk at this lawn party, I should say there is nothing inherently wrong with big business, technically defined as companies employing over 500 people. There are plenty of such companies that don’t go after an iota of rent-seeking government favors, nor do they overly rely on friendly contacts that distort the marketplace. They simply strive to provide a first-rate product or service with a decent or better capital base along with motivated, hard-working, and ethical employees.

    The idea that “big-business” in itself is wrong is a conceit of crunhy-conservatives and other romantics who wish to drive the economy toward some imagined past or future age. It is, also, a dangerous and righteous anti-capitalist populist notion.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Yeah, I agree Porcell. The point is that large businesses and institutions have more power because of their size and there is the potential for more corruption than just a small business. A big corrupt organization can do more damage than a small one.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Yeah, I agree Porcell. The point is that large businesses and institutions have more power because of their size and there is the potential for more corruption than just a small business. A big corrupt organization can do more damage than a small one.

  • Jimmy Veith

    I also agree that there is nothing inherently wrong with big business. It takes a big business to build large or complex things like ships, airplanes, cars and computer chips. By the same token, I would add that there is nothing inherently wrong with big government. For example, it took big government to bring electricity to rural America during the Great Depression. During WWII, it took a big government to convert our peace time economy into the “arsenal of democracy” to defeat Hitler. It was a big government that built our interstate highway system. (Again, thank you President Eisenhower – see my comments at 21.)

    So to be more precise, we need to have a check on the power of both big business and big government when they do things that are not in the public interest. That is why I think we should avoid generalizations when we say things like “all we need to do is get the government off the backs of business”. Well that all depends on what the government is doing. If government imposes burdensome rules and regulations on a business that don’t actually promote the stated public policy, then I agree. However, I think the government ought to be on the backs of business if it sells unsafe food. (I think we already have a sufficient number of bug parts in our peanut butter, thank you very much.)

    I also agree with SG that large businesses and institutions have more power because of their size. In order to be true to my assertion that we need to be specific when addressing the issue of what government should or should not do, I would like to pose the following questions.

    Wal-Mart has a policy that they will match the price of any product from any other store. Let’s suppose that a small Mom and Pop store next to Wal-Mart purchased a large amount of widgets for $8.00 each, so they advertise in the newspaper that they will sell these widgets for $10.00, which is a great price for the consumer and gives them a modest profit. A potential customer sees the newspaper add and decides that they would like to purchase a widget for $10.00, but decides to go to Wal-Mart and get it there because it is more convenient. It cost Wal-Mart $12.00 for the widget, but they honor their policy and sell it for $10.00. They can do so because they are so big they can absorb the loss and they know that while you are there, it is likely that you will buy a gadget which they can sell to you for a big profit because it was built buy children in China.

    From the point of view of the consumer, one might think that there is no problem. However, look it from the point of view of the small Mom and Pop store trying to compete with Wal-Mart. They are too small to sell things for less than it cost. They used their limited advertising budget to pay for an ad that ultimately benefited Wal-Mart. My questions are as follows:

    1. Should the government impose a law that prohibits this kind of anticompetitive practice of price matching?

    2. Even if it is not against the law, should we refuse to participate in the scheme and always pay the regular price when we shop at Wal-Mart?

    3. What would Jesus do?

  • Jimmy Veith

    I also agree that there is nothing inherently wrong with big business. It takes a big business to build large or complex things like ships, airplanes, cars and computer chips. By the same token, I would add that there is nothing inherently wrong with big government. For example, it took big government to bring electricity to rural America during the Great Depression. During WWII, it took a big government to convert our peace time economy into the “arsenal of democracy” to defeat Hitler. It was a big government that built our interstate highway system. (Again, thank you President Eisenhower – see my comments at 21.)

    So to be more precise, we need to have a check on the power of both big business and big government when they do things that are not in the public interest. That is why I think we should avoid generalizations when we say things like “all we need to do is get the government off the backs of business”. Well that all depends on what the government is doing. If government imposes burdensome rules and regulations on a business that don’t actually promote the stated public policy, then I agree. However, I think the government ought to be on the backs of business if it sells unsafe food. (I think we already have a sufficient number of bug parts in our peanut butter, thank you very much.)

    I also agree with SG that large businesses and institutions have more power because of their size. In order to be true to my assertion that we need to be specific when addressing the issue of what government should or should not do, I would like to pose the following questions.

    Wal-Mart has a policy that they will match the price of any product from any other store. Let’s suppose that a small Mom and Pop store next to Wal-Mart purchased a large amount of widgets for $8.00 each, so they advertise in the newspaper that they will sell these widgets for $10.00, which is a great price for the consumer and gives them a modest profit. A potential customer sees the newspaper add and decides that they would like to purchase a widget for $10.00, but decides to go to Wal-Mart and get it there because it is more convenient. It cost Wal-Mart $12.00 for the widget, but they honor their policy and sell it for $10.00. They can do so because they are so big they can absorb the loss and they know that while you are there, it is likely that you will buy a gadget which they can sell to you for a big profit because it was built buy children in China.

    From the point of view of the consumer, one might think that there is no problem. However, look it from the point of view of the small Mom and Pop store trying to compete with Wal-Mart. They are too small to sell things for less than it cost. They used their limited advertising budget to pay for an ad that ultimately benefited Wal-Mart. My questions are as follows:

    1. Should the government impose a law that prohibits this kind of anticompetitive practice of price matching?

    2. Even if it is not against the law, should we refuse to participate in the scheme and always pay the regular price when we shop at Wal-Mart?

    3. What would Jesus do?

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Okay, I will play devil’s advocate.

    What if Walmart can afford to give its employees benefits, like health insurance, that a small inefficient store can’t?

    There is nothing wrong with economies of scale in principle. Maybe even Mom and Pop would get a better deal as managers working at Walmart because they would get more days off and better pay and less risk.

    I am not against small business. I am just throwing out some other stuff to consider.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Okay, I will play devil’s advocate.

    What if Walmart can afford to give its employees benefits, like health insurance, that a small inefficient store can’t?

    There is nothing wrong with economies of scale in principle. Maybe even Mom and Pop would get a better deal as managers working at Walmart because they would get more days off and better pay and less risk.

    I am not against small business. I am just throwing out some other stuff to consider.

  • Porcell

    Jimmy I agree that there is nothing inherently bad about big government. In fact, the founders, reacting to the powerless federal government of The Articles of Confederation deliberately set up a strong federal government with checks and balances that in recent years that have been ineffective.

    Jefferson, who before taking office was concerned about too much federal government power, made the Louisiana Purchase for a song, a decision that ended very much in the nation’s vital interest.

    The trouble is that both big government and a few big businesses have developed inordinate power that needs to be checked. We have some evidence that the royal American people have caught on to this and are in process of electing leaders who will do something about bot big business and big government excesses, though, of course, men being sinful creatures principalities and powers will have their inevitable sway.

  • Porcell

    Jimmy I agree that there is nothing inherently bad about big government. In fact, the founders, reacting to the powerless federal government of The Articles of Confederation deliberately set up a strong federal government with checks and balances that in recent years that have been ineffective.

    Jefferson, who before taking office was concerned about too much federal government power, made the Louisiana Purchase for a song, a decision that ended very much in the nation’s vital interest.

    The trouble is that both big government and a few big businesses have developed inordinate power that needs to be checked. We have some evidence that the royal American people have caught on to this and are in process of electing leaders who will do something about bot big business and big government excesses, though, of course, men being sinful creatures principalities and powers will have their inevitable sway.

  • Jimmy Veith

    To SG @ 31, I agree that it is unlikely that Mom and Pop can afford health insurance if they own a small business. However, if they can keep their store open long enough for health care reform to kick in, they will then be able to buy insurance from a large insurance pool at reasonable rates (even if Mom happens to become afflicted with a chronic illness in the mean time.)

    To Porcell. Good point. Thomas Jefferson was anti-federalist and was philosophically opposed to big government. Yet, when the opportunity arose, he did a very big government thing with the Louisiana purchase because it was in the greater national interest. Was he ideologically inconsistent? Maybe so.

    But remember the words of Ralph Waldo Emerson: “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.“

  • Jimmy Veith

    To SG @ 31, I agree that it is unlikely that Mom and Pop can afford health insurance if they own a small business. However, if they can keep their store open long enough for health care reform to kick in, they will then be able to buy insurance from a large insurance pool at reasonable rates (even if Mom happens to become afflicted with a chronic illness in the mean time.)

    To Porcell. Good point. Thomas Jefferson was anti-federalist and was philosophically opposed to big government. Yet, when the opportunity arose, he did a very big government thing with the Louisiana purchase because it was in the greater national interest. Was he ideologically inconsistent? Maybe so.

    But remember the words of Ralph Waldo Emerson: “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.“

  • DonS

    Porcell @ 28: You are correct. A business becomes big because it did a lot of things well when it was small, and grew as a result. So, a big business was, at heart, a successful one. Success is to be applauded, not scorned.

    What has been discussed here is the tendency of some big businesses to become sclerotic and defensive — seeking to maintain their dominant positions in their particular marketplaces through uncompetitive practices, rather than continuing to simply do those things which caused them to grow in the first place.

  • DonS

    Porcell @ 28: You are correct. A business becomes big because it did a lot of things well when it was small, and grew as a result. So, a big business was, at heart, a successful one. Success is to be applauded, not scorned.

    What has been discussed here is the tendency of some big businesses to become sclerotic and defensive — seeking to maintain their dominant positions in their particular marketplaces through uncompetitive practices, rather than continuing to simply do those things which caused them to grow in the first place.

  • DonS

    Jimmy @ 30: The successes of Big Government which you cite in the first paragraph of your comment are all related to public works. That is what Big Government does well. Creating a robust public infrastructure which helps all Americans improve their standard of living and transport their goods, services, and families more efficiently.

    The problem, of course, is that our federal Big Government no longer focuses on these things. Instead, it is consumed with the notions of transfer payments and social engineering. Pitting one group of people against another. Putting roadblocks in the way of our businesses with oppressive regulation. Building little or nothing, and, in fact, tearing down much of what has been built at the behest of powerful special interests such as the environmental lobby. It’s a very different world than it was in the days of Dwight D. Eisenhower.

  • DonS

    Jimmy @ 30: The successes of Big Government which you cite in the first paragraph of your comment are all related to public works. That is what Big Government does well. Creating a robust public infrastructure which helps all Americans improve their standard of living and transport their goods, services, and families more efficiently.

    The problem, of course, is that our federal Big Government no longer focuses on these things. Instead, it is consumed with the notions of transfer payments and social engineering. Pitting one group of people against another. Putting roadblocks in the way of our businesses with oppressive regulation. Building little or nothing, and, in fact, tearing down much of what has been built at the behest of powerful special interests such as the environmental lobby. It’s a very different world than it was in the days of Dwight D. Eisenhower.

  • DonS

    Jimmy @ 30: In answer to your three questions, I offer the following answers:

    1. Absolutely not. How is this practice “anticompetitive”? First of all, I highly doubt that a small store could obtain the same widget for $8 that WalMart obtained for $12, so I’m not sure how realistic the scenario is. I think WalMart’s buyers are better than that. But, the bottom line is that WalMart sold the item for the same price as the other store. The consumer at WalMart chose to go there of his/her own free will, and saved some money because of the policy. That’s a win for consumers. And, truth be told, WalMart has been a huge win for consumers during its existence, as its effect is to hold prices down substantially over what they would be otherwise, thus affording its customers a significantly better standard of living.
    There is room for successful Mom & Pop shops in the economy. However, they should not, in general, locate themselves next to a WalMart and carry the same items. They need to distinguish themselves from WalMart in terms of quality or uniquness of their stock and/or their personal service, and they will be fine. They need to be smart competitors. That is a far better solution than employing an army of government busybodies looking for illegal price matching practices.

    2. Absolutely not! That would be the height of stupidity, and very poor stewardship of the money God has given us. Moreover, all that would serve to do is benefit WalMart. It would not gain Mom and Pop one additional sale.

    3. What would Jesus say? I’m not sure He’d say anything, since the circumstances as portrayed don’t seem to involve sin on the part of any party. Perhaps He’d say “Render unto WalMart …..”

  • DonS

    Jimmy @ 30: In answer to your three questions, I offer the following answers:

    1. Absolutely not. How is this practice “anticompetitive”? First of all, I highly doubt that a small store could obtain the same widget for $8 that WalMart obtained for $12, so I’m not sure how realistic the scenario is. I think WalMart’s buyers are better than that. But, the bottom line is that WalMart sold the item for the same price as the other store. The consumer at WalMart chose to go there of his/her own free will, and saved some money because of the policy. That’s a win for consumers. And, truth be told, WalMart has been a huge win for consumers during its existence, as its effect is to hold prices down substantially over what they would be otherwise, thus affording its customers a significantly better standard of living.
    There is room for successful Mom & Pop shops in the economy. However, they should not, in general, locate themselves next to a WalMart and carry the same items. They need to distinguish themselves from WalMart in terms of quality or uniquness of their stock and/or their personal service, and they will be fine. They need to be smart competitors. That is a far better solution than employing an army of government busybodies looking for illegal price matching practices.

    2. Absolutely not! That would be the height of stupidity, and very poor stewardship of the money God has given us. Moreover, all that would serve to do is benefit WalMart. It would not gain Mom and Pop one additional sale.

    3. What would Jesus say? I’m not sure He’d say anything, since the circumstances as portrayed don’t seem to involve sin on the part of any party. Perhaps He’d say “Render unto WalMart …..”

  • http://steadfastlutherans.org/ SAL

    Proving something is moral or immoral is a far step from demonstrating the government should be involved in the matter.

    The government is blunt instrument. The government doesn’t work through gentle persuasion but ultimately through the threat of violent force. Before the government regulates a matter we ought to consider whether the matter is serious enough to justify using force.

    If not we probably ought to leave the matter for an entity besides the government to address.

  • http://steadfastlutherans.org/ SAL

    Proving something is moral or immoral is a far step from demonstrating the government should be involved in the matter.

    The government is blunt instrument. The government doesn’t work through gentle persuasion but ultimately through the threat of violent force. Before the government regulates a matter we ought to consider whether the matter is serious enough to justify using force.

    If not we probably ought to leave the matter for an entity besides the government to address.

  • Jimmy Veith

    OK, DonS and SAL, I understand that in my specific example, you do not think that it is appropriate for the government to prohibit companies from price matching. I guess you believe the “invisible hand” of the market place should be allowed to work its magic, even if the result is the demise of small retail stores.

    But I think you would agree that there are certain business practices used by large businesses which give them an unfair advantage over small businesses. Are there any of these practices that you think should be illegal? Or is there no such thing as “unfair” when it comes to the market place?

  • Jimmy Veith

    OK, DonS and SAL, I understand that in my specific example, you do not think that it is appropriate for the government to prohibit companies from price matching. I guess you believe the “invisible hand” of the market place should be allowed to work its magic, even if the result is the demise of small retail stores.

    But I think you would agree that there are certain business practices used by large businesses which give them an unfair advantage over small businesses. Are there any of these practices that you think should be illegal? Or is there no such thing as “unfair” when it comes to the market place?

  • Jimmy Veith

    Also,DonS, you stated: “There is room for successful Mom & Pop shops in the economy. However, they should not, in general, locate themselves next to a Wal-Mart and carry the same items.”

    Have you been to a Wal-Mart lately? They now sell almost everything. What “items” are left for the small business?

  • Jimmy Veith

    Also,DonS, you stated: “There is room for successful Mom & Pop shops in the economy. However, they should not, in general, locate themselves next to a Wal-Mart and carry the same items.”

    Have you been to a Wal-Mart lately? They now sell almost everything. What “items” are left for the small business?

  • DonS

    Jimmy @ 38 & 39: Well, to be frank, I don’t think the practice of price matching is a significant factor in the demise of small retail. To the extent that big box stores like WalMart cause nearby small retailers to close, it is more because they flat out offer significantly better prices on a day-to-day basis. In fact, I see price-matching being used more in the other direction — to allow small retailers to compete with the big boxes in selective product areas or for limited promotional periods. For example, our local dealership wants to sell more tires, so they advertise that they will beat Costco prices.

    Moreover, I don’t see how the practice could be successfully prohibited through regulation without a very heavy hand and a significant intrusion into the constitutional rights of retailers (I’m thinking of the First Amendment). Would the prohibition be broad-based, or would it require Sherman Act-type inquiries into market power and intent? You know how well those have worked, and how complicated it is to bring such a case. And if the prohibition applies to all retailers, it would hurt the little guy substantially more than the big box retailers, for the reason I stated above. Regulations meant for a perceived good almost always have unintended negative effects in practice.

    “Are there any of these practices that you think should be illegal? Or is there no such thing as “unfair” when it comes to the market place?” — Yes. I think antitrust laws are a good thing. Also, I think lobbying a government agency to specify your product to the exclusion of others, especially when your product is protected in some way, such as through one or more patents, is unfair. Another practice I have frequently seen is that of large retailers demanding that local jurisdictions or shopping centers exclude other competitors from certain areas, or demanding significant tax concessions in exchange for their locating in a specific place. That is unfair as well.

  • DonS

    Jimmy @ 38 & 39: Well, to be frank, I don’t think the practice of price matching is a significant factor in the demise of small retail. To the extent that big box stores like WalMart cause nearby small retailers to close, it is more because they flat out offer significantly better prices on a day-to-day basis. In fact, I see price-matching being used more in the other direction — to allow small retailers to compete with the big boxes in selective product areas or for limited promotional periods. For example, our local dealership wants to sell more tires, so they advertise that they will beat Costco prices.

    Moreover, I don’t see how the practice could be successfully prohibited through regulation without a very heavy hand and a significant intrusion into the constitutional rights of retailers (I’m thinking of the First Amendment). Would the prohibition be broad-based, or would it require Sherman Act-type inquiries into market power and intent? You know how well those have worked, and how complicated it is to bring such a case. And if the prohibition applies to all retailers, it would hurt the little guy substantially more than the big box retailers, for the reason I stated above. Regulations meant for a perceived good almost always have unintended negative effects in practice.

    “Are there any of these practices that you think should be illegal? Or is there no such thing as “unfair” when it comes to the market place?” — Yes. I think antitrust laws are a good thing. Also, I think lobbying a government agency to specify your product to the exclusion of others, especially when your product is protected in some way, such as through one or more patents, is unfair. Another practice I have frequently seen is that of large retailers demanding that local jurisdictions or shopping centers exclude other competitors from certain areas, or demanding significant tax concessions in exchange for their locating in a specific place. That is unfair as well.

  • DonS

    Jimmy @ 39: I forgot to address your question in my last post.

    Yes, I recognize that Wal-Mart sells many types of items. But, they aren’t everywhere, so a smart small business person should locate their retail store a distance away from a Wal-Mart. That addresses the convenience factor, at least to some extent. Why be right next door? Also, Wal-Mart sells mostly imported, lower cost goods. They have a market niche, and it is middle class and lower income shoppers. So another option is to sell better made, domestic goods. Also, as I said above, a small retailer can offer service that a Wal-Mart cannot. Local hardware stores still exist because you cannot go into a big box hardware retailer and get specialized advice concerning a home repair project, for example.

    The bottom line is that big boxes like Wal-Mart have provided access to a whole host of goods that previously were unavailable to those of modest means. That should not be overlooked or discarded when calculating whether they are, in aggregate, a good or a bad thing. Those who pine for “the good old days” where everyone shopped in local stores in the downtowns of small town America tend to be relatively well off white Americans with roots in this country that go back generations. Lower income people are just glad to have a place to shop where they can afford more of life’s necessities.

  • DonS

    Jimmy @ 39: I forgot to address your question in my last post.

    Yes, I recognize that Wal-Mart sells many types of items. But, they aren’t everywhere, so a smart small business person should locate their retail store a distance away from a Wal-Mart. That addresses the convenience factor, at least to some extent. Why be right next door? Also, Wal-Mart sells mostly imported, lower cost goods. They have a market niche, and it is middle class and lower income shoppers. So another option is to sell better made, domestic goods. Also, as I said above, a small retailer can offer service that a Wal-Mart cannot. Local hardware stores still exist because you cannot go into a big box hardware retailer and get specialized advice concerning a home repair project, for example.

    The bottom line is that big boxes like Wal-Mart have provided access to a whole host of goods that previously were unavailable to those of modest means. That should not be overlooked or discarded when calculating whether they are, in aggregate, a good or a bad thing. Those who pine for “the good old days” where everyone shopped in local stores in the downtowns of small town America tend to be relatively well off white Americans with roots in this country that go back generations. Lower income people are just glad to have a place to shop where they can afford more of life’s necessities.

  • Jimmy Veith

    Your primary justification to allow price matching is that it helps the consumer in that it results in lower prices. I ran across this article that makes the opposite argument. It explains how companies that engage in price matching will not lose their market share, so they have no incentive to keep their prices low.

    http://www.associatedcontent.com/article/165409/price_matching_hurts_consumers_by_creating_pg2.html?cat=3

  • Jimmy Veith

    Your primary justification to allow price matching is that it helps the consumer in that it results in lower prices. I ran across this article that makes the opposite argument. It explains how companies that engage in price matching will not lose their market share, so they have no incentive to keep their prices low.

    http://www.associatedcontent.com/article/165409/price_matching_hurts_consumers_by_creating_pg2.html?cat=3

  • http://www.geneveith.com Gene Veith

    I would just like to remind my brother @21 that when I was just a little tyke, I wore an “I like Ike” button, to the consternation of the rest of the family.

  • http://www.geneveith.com Gene Veith

    I would just like to remind my brother @21 that when I was just a little tyke, I wore an “I like Ike” button, to the consternation of the rest of the family.

  • Tom Hering

    I’ve worked in retail most of my life, and here’s a little secret of big box stores that sales reps let me in on. The can of Brand A primer you buy at a paint store for $20.00 is of the superior quality that made Brand A famous. But that “same” can of Brand A primer you buy at a big box for $15.00 is of lower quality – part of a special run manufactured just for the big box. And it has to be lower quality, so the manufacturer can meet the price point the big box demands. Otherwise, the big box won’t carry it.

    Is this legal? Sure. Though the primer looks the same when you pour it out, and the label on the can you pour it out of looks the same too, the manufacturer’s product number on the label is BAP1234567B instead of BAP1234567A. Or, the label carries a product number that the big box has assigned it from its own stock keeping system.

    So don’t just compare prices. See if the product number on the item sold at the big box store is the same as the product number on that item at the specialty store.

  • Tom Hering

    I’ve worked in retail most of my life, and here’s a little secret of big box stores that sales reps let me in on. The can of Brand A primer you buy at a paint store for $20.00 is of the superior quality that made Brand A famous. But that “same” can of Brand A primer you buy at a big box for $15.00 is of lower quality – part of a special run manufactured just for the big box. And it has to be lower quality, so the manufacturer can meet the price point the big box demands. Otherwise, the big box won’t carry it.

    Is this legal? Sure. Though the primer looks the same when you pour it out, and the label on the can you pour it out of looks the same too, the manufacturer’s product number on the label is BAP1234567B instead of BAP1234567A. Or, the label carries a product number that the big box has assigned it from its own stock keeping system.

    So don’t just compare prices. See if the product number on the item sold at the big box store is the same as the product number on that item at the specialty store.

  • http://facebook.com/mesamike Mike Westfall

    It seems to me that where ever there is a Wal-Mart, there are numerous other businesses nearby, both big and small, benefiting from the presence of the Wal-Mart and the traffic it brings to the area. If Mom and Pop are forced out of business due to competition from the Big Box, it’s because Mom and Pop need to face modern reality and quit trying to make a living manufacturing buggy whips.

  • http://facebook.com/mesamike Mike Westfall

    It seems to me that where ever there is a Wal-Mart, there are numerous other businesses nearby, both big and small, benefiting from the presence of the Wal-Mart and the traffic it brings to the area. If Mom and Pop are forced out of business due to competition from the Big Box, it’s because Mom and Pop need to face modern reality and quit trying to make a living manufacturing buggy whips.

  • Tom Hering

    From what I’ve seen, all those big and small businesses surrounding Wal-Marts are national and regional franchises. Not small businesses (though they’re owned by someone local). The real reason why small, independent businesses aren’t competitive (and close at an astonishingly high rate) is that most of the people who open them never get any business training. Seriously.

  • Tom Hering

    From what I’ve seen, all those big and small businesses surrounding Wal-Marts are national and regional franchises. Not small businesses (though they’re owned by someone local). The real reason why small, independent businesses aren’t competitive (and close at an astonishingly high rate) is that most of the people who open them never get any business training. Seriously.

  • DonS

    Jimmy @ 42: The article you cited seems to be merely the author’s opinion. I don’t see any cites at all to anything other than his own Cartel Max hypotheticals. The flaw, of course, is in assuming that the two retailers will get the same product at the same price. In practice, big boxes get their products for substantially lower costs, because of volume. That is why price matching really isn’t an issue with big boxes. They naturally undercut the smaller retailer anyway.

    As I noted in my earlier post, my personal experience with price matching runs the other way. Smaller retailers use it to try to tackle the reputation of big boxes having lower prices. A specific recent example was my local auto dealer. Because of the reduced sales of new cars, they are focusing on driving business to their service department. One thing they have done is try to sell tires, and have begun a policy of promising to beat Costco prices. To ban price matching would be to take this competitive tool away from the local business, in favor of the big box chain.

    One thing we need to remember is that when we ask government to act to address a perceived injustice, we are giving up a bit of our liberty. Government can only act coercively. Therefore, those advocating regulation carry a strong burden of proof that the proposed regulation is necessary and can be enforced without undue burden on the people. I don’t think this idea meets either test.

  • DonS

    Jimmy @ 42: The article you cited seems to be merely the author’s opinion. I don’t see any cites at all to anything other than his own Cartel Max hypotheticals. The flaw, of course, is in assuming that the two retailers will get the same product at the same price. In practice, big boxes get their products for substantially lower costs, because of volume. That is why price matching really isn’t an issue with big boxes. They naturally undercut the smaller retailer anyway.

    As I noted in my earlier post, my personal experience with price matching runs the other way. Smaller retailers use it to try to tackle the reputation of big boxes having lower prices. A specific recent example was my local auto dealer. Because of the reduced sales of new cars, they are focusing on driving business to their service department. One thing they have done is try to sell tires, and have begun a policy of promising to beat Costco prices. To ban price matching would be to take this competitive tool away from the local business, in favor of the big box chain.

    One thing we need to remember is that when we ask government to act to address a perceived injustice, we are giving up a bit of our liberty. Government can only act coercively. Therefore, those advocating regulation carry a strong burden of proof that the proposed regulation is necessary and can be enforced without undue burden on the people. I don’t think this idea meets either test.

  • DonS

    Tom @ 44: Good point. I didn’t realize that.

    This is all the more reason why smaller retailers will always survive — quality. Those who care about it are willing to pay a bit more to ensure they get it. That’s why, even though Wal-Mart sells cookware and hardware, high end retailers like Williams-Sonoma and Restoration Hardware remain in business.

    It seems to me that manufacturers willing to sacrifice brand quality to make short-term sales are playing with long-term fire. A reputation once lost is difficult to recover.

  • DonS

    Tom @ 44: Good point. I didn’t realize that.

    This is all the more reason why smaller retailers will always survive — quality. Those who care about it are willing to pay a bit more to ensure they get it. That’s why, even though Wal-Mart sells cookware and hardware, high end retailers like Williams-Sonoma and Restoration Hardware remain in business.

    It seems to me that manufacturers willing to sacrifice brand quality to make short-term sales are playing with long-term fire. A reputation once lost is difficult to recover.

  • Tom Hering

    “It seems to me that manufacturers willing to sacrifice brand quality to make short-term sales are playing with long-term fire. A reputation once lost is difficult to recover.”

    True, but this takes longer than we think. The higher quality product sold in specialty stores can maintain the image of a brand, in spite of the lower performance of the version sold in big boxes. And then, brand image can continue long past the loss of quality in a brand as a whole. Example: Sherwin-Williams buys up a lot – a lot – of national and regional paint brands, but doesn’t stop making and selling them. It just moves their production to one giant plant, reformulates them, and then uses the same stock of raw materials for every brand it owns. Example: Dutch Boy was a top-of-the-line paint when SW bought it, but SW reformulated it to be their low line. When consumers see it in a big box, they still think it’s top-of-the-line, but available at a super price. Nope. You get what you pay for, and it’s always wise to remember there’s no way around that. Sold cheap is made cheap.

  • Tom Hering

    “It seems to me that manufacturers willing to sacrifice brand quality to make short-term sales are playing with long-term fire. A reputation once lost is difficult to recover.”

    True, but this takes longer than we think. The higher quality product sold in specialty stores can maintain the image of a brand, in spite of the lower performance of the version sold in big boxes. And then, brand image can continue long past the loss of quality in a brand as a whole. Example: Sherwin-Williams buys up a lot – a lot – of national and regional paint brands, but doesn’t stop making and selling them. It just moves their production to one giant plant, reformulates them, and then uses the same stock of raw materials for every brand it owns. Example: Dutch Boy was a top-of-the-line paint when SW bought it, but SW reformulated it to be their low line. When consumers see it in a big box, they still think it’s top-of-the-line, but available at a super price. Nope. You get what you pay for, and it’s always wise to remember there’s no way around that. Sold cheap is made cheap.

  • Jimmy Veith

    To all those who posted a comment on the “price matching” issue, I have given this matter a great deal of thought, and so I would like to make the following points:

    1. I admit that even if “price matching” was made illegal, I don’t think that it would have a significant impact on the ability of small retail stores to compete with large box retail stores. Large retail stores would still purchase inventory at a greater volume and so will have a smaller cost per unit, and would be able to undercut the prices of the smaller retailer.

    2. The only way a small retail business can compete, is to sell better quality products and provide better personal service, as suggested by DonS @ 41. Also, a small retail store can provide a better shopping environment, preferred by people like myself. Too many colors, noises and choices freak me out. (Although I do like large grocery stores. You can’t get too much food.)

    3. A more effective way to preserve main street America is with zoning laws, which keep the big box stores at a reasonable distance.

    4. I agree that I may have not met the burden of proof to justify a new government regulation as DonS suggested @41.

    5. I am still not convinced that price matching results in lower prices for the consumer. (See my post @ 42.) I also think that price matching is another example where the “invisible hand” slaps Mom and Pop in the face. However, it is not a perfect world, and I think that small retail stores that try to sell the same thing as the big box stores are probably a thing of the past.

    6. In order to placate my populist liberal guilt, I will continue to refuse to play the price matching game as a matter of principle. When I really need a good bargain, I will send my wife to Wall-Mart as she seems to have no problem with it.

    I think that any time we discuss the role of government in a free market economy we should avoid dogmatic proclamations that suggest that all regulation or government interference in the free market is a bad thing as a matter of some strict ideology. I think it is better that we go through the following analytical process. First, what is the perceived problem, and is it real or imagined? Second, what is the specific rule or regulation that is proposed to address the problem? Third, would the proposed rule or regulation solve or help solve the perceived problem? Fourth, what are the direct and indirect costs of the rule or regulation and do those costs outweigh the benefits of imposing the rule or regulation? Fifth, is the proposed rule or regulation constitutional?

    I concede that with respect to the issue of price matching, reasonable people can disagree. Thanks for the discussion.

  • Jimmy Veith

    To all those who posted a comment on the “price matching” issue, I have given this matter a great deal of thought, and so I would like to make the following points:

    1. I admit that even if “price matching” was made illegal, I don’t think that it would have a significant impact on the ability of small retail stores to compete with large box retail stores. Large retail stores would still purchase inventory at a greater volume and so will have a smaller cost per unit, and would be able to undercut the prices of the smaller retailer.

    2. The only way a small retail business can compete, is to sell better quality products and provide better personal service, as suggested by DonS @ 41. Also, a small retail store can provide a better shopping environment, preferred by people like myself. Too many colors, noises and choices freak me out. (Although I do like large grocery stores. You can’t get too much food.)

    3. A more effective way to preserve main street America is with zoning laws, which keep the big box stores at a reasonable distance.

    4. I agree that I may have not met the burden of proof to justify a new government regulation as DonS suggested @41.

    5. I am still not convinced that price matching results in lower prices for the consumer. (See my post @ 42.) I also think that price matching is another example where the “invisible hand” slaps Mom and Pop in the face. However, it is not a perfect world, and I think that small retail stores that try to sell the same thing as the big box stores are probably a thing of the past.

    6. In order to placate my populist liberal guilt, I will continue to refuse to play the price matching game as a matter of principle. When I really need a good bargain, I will send my wife to Wall-Mart as she seems to have no problem with it.

    I think that any time we discuss the role of government in a free market economy we should avoid dogmatic proclamations that suggest that all regulation or government interference in the free market is a bad thing as a matter of some strict ideology. I think it is better that we go through the following analytical process. First, what is the perceived problem, and is it real or imagined? Second, what is the specific rule or regulation that is proposed to address the problem? Third, would the proposed rule or regulation solve or help solve the perceived problem? Fourth, what are the direct and indirect costs of the rule or regulation and do those costs outweigh the benefits of imposing the rule or regulation? Fifth, is the proposed rule or regulation constitutional?

    I concede that with respect to the issue of price matching, reasonable people can disagree. Thanks for the discussion.

  • DonS

    Jimmy @ 50: You are a very gracious man, and provide a valuable insight from a different point of view than many of us in the Christian world, especially, typically hear. One of the reasons I enjoy participating on this blog is to have lively discussions with smart liberals. Because, as you’ve demonstrated in your post, even when we are vigorously asserting our points, we are wise to carefully consider the opposing points being offered in the discussion.

    Thank YOU for the discussion and for guiding it so well.

  • DonS

    Jimmy @ 50: You are a very gracious man, and provide a valuable insight from a different point of view than many of us in the Christian world, especially, typically hear. One of the reasons I enjoy participating on this blog is to have lively discussions with smart liberals. Because, as you’ve demonstrated in your post, even when we are vigorously asserting our points, we are wise to carefully consider the opposing points being offered in the discussion.

    Thank YOU for the discussion and for guiding it so well.

  • collie

    Jimmy @50: If we could only elect the right politicians who would take the time to do the analysis you’ve suggested before imposing new regulations, we would be all right.

    “(Although I do like large grocery stores. You can’t get too much food.)”

    You funny ;-)

  • collie

    Jimmy @50: If we could only elect the right politicians who would take the time to do the analysis you’ve suggested before imposing new regulations, we would be all right.

    “(Although I do like large grocery stores. You can’t get too much food.)”

    You funny ;-)


CLOSE | X

HIDE | X