General Electric, the largest corporation in America, paid no taxes for 2010. According to a recent New York Times article, General Electric claimed a tax benefit of $3.2 billion.
Conservatives might understand the problem as one of high taxation causing capital flight, while liberals might understand the problem as one of wealthy politicians benefiting wealthy friends. However, both miss the greater issue: the more power the government exerts within the economy, the more involved economic interests will be in the political system.
If economic interests can make a profit buying and selling political favors as opposed to buying and selling goods and services, it is only natural that the largest economic interests will focus on the political system, gaining some at the detriment to all.
Instead of demanding a greater tax burden or more regulation over corporations, eliminating the use of the political system for economic gain might be the most effective measure for the country, as well as the market.
Rather than burdensome and complicated regulations that corporations skirt — or write themselves — corporate influence might be lessened when the political system is separate from the economy.
As the General Electric example unfortunately illustrates, government intervention in the economy provides a foundation for corporate favoritism that insulates them against competitive pressures. A politically unconnected business must satisfy the demand of fickle market forces or fail; a politically connected corporation avoids the market for the certainty of government benefits.
The greatest protection and benefit for the individual does not derive from well-intentioned bureaucrats but market competition with the rule of law. When political protection — in the form of subsidies, tax exemptions and restricting competition — perpetuates politically connected economic interests, it eliminates market competition.
Decentralized actions and voluntary exchanges produce a spontaneous order that efficiently allocates resources to fulfill the supply and demand of an impersonal market order.
Our economic system is an institution that, in the words of Adam Ferguson, “is the result of human action, but not the execution of any human design.” In other words, the market order is a continually evolving institution that, when left free to develop, provides a coordinating structure to create wealth and satisfy desires.
Of course, such an analysis runs counter to the typical narrative; the narrative usually consists of greedy and selfish businessmen pitted against selfless and compassionate public servants — that is, an idealistic portrayal of government intervention against caricatures of market forces. To be sure, greedy and selfish businessmen exist.
However, three points are often overlooked: Government intervention does not perfectly translate from its theoretical effects, public servants can be just as greedy and selfish as businessmen, and the greedy and selfish businessmen must produce wealth for consumers if they want to stay in business.
The only way to avoid satisfying consumer demands is harnessing political power. If the political system remained relegated to its proper realm in the economy, economic interests could not exploit the system at the expense of society at large.
Demonizing the market while idealizing the government and extolling the virtues of non-markets may provide material for lofty and self-gratifying speeches, but it fails to mitigate the problem and presents only a red herring for the cure.
Anthony Hennen is a junior studying journalism and a columnist for The Post. Do you have a sob story about greedy businessmen? Email Anthony at ah316808@ohiou.edu.
