Friday, February 04, 2011

The Welfare State and Crony Capitalism

All monopolies and cartels (which act as monopolies, gaining monopoly prices) were and are created by government. But why would governments favor monopolies and cartels (other than for the bribes -- political contributions, etc. -- they get from potential monopolists to create monopoloy-creating rules)?

The advocates of government interference with business ascribe to the "State" the power to benefit certain groups within the framework of the market by a mere fiat. In fact, this power is the government's power to foster monopolistic combines. The monopoly gains are the funds out of which the "social gains" are financed. As far as these monopoly gains do not suffice, the various measures of interventionism immediately paralize the operation of the market; mass unemployment, depression, and capital consumption appear. This explains the eagerness of all contemporary governments to foster monopoly in all those sectors of the market which are in some way or other connected with export trade. -- Mises, Human Action, 236
And now you know why those in government -- left or right, Republican or Democrat -- are crony capitalists favoring monopoly-creating regulations. The monopoly prices that can be charged can also be taxed without causing too many economic problems (aside from those created by monopoly). But if that doesn't provide enough money, the welfare state will end up crashing the economy. Whatever power corporations have over anyone, it is given to them by our government, who wants them to have monopoly power in order to support their social programs designed to get them re-elected. If you want to break up the monopolies, you have to get rid of the welfare state; if you want the welfare state, you support the creation of monopoly. Those who are anti-monopoly and pro-welfare state want contradictory things.

No comments: