This post is partly cribbed from a talk given by Guido Hülsmann at the Property and Freedom society which I linked to a while back.
Pervasive and ongoing expropriation by the progressive state motivates a small elite to work much harder than they would otherwise. Because income, capital gains, and effective regulatory taxation creates so much waste on each marginally profitable dollar, it creates conditions of more rigorous competition than might otherwise exist.
Competition in markets in turn creates signalling waste, as companies then need to spend more in advertising, marketing, and financial expenses in order to gain the same level of earnings which they’d be able to in a less democratic, more private order.
This is readily observable in any highly competitive market in which there are few qualitative differentiators among firms. This can even extend down to floral shops, which sell a mostly perishable commodity below a certain price point. When products are urgently needed and there are few providers, those providers need to spend less in market signalling to earn a profit. Instead, they can invest more into long term improvements, product quality, staff retainment, and other areas.
Long term investment — in a society which expropriatory legal norms — is an invitation to expropriation. This is one of the reasons why many third world societies have trouble igniting lasting economic growth: pockets of wealth will tend to get looted rather than respected.
When the state effectively takes half of every dollar that a company brings in, the short term needs of the enterprise become more acutely felt, especially because it’s harder to accumulate funds. In turn, the state creates vast classes of exceptions for its favored friends — the ‘corporate class’ in modern America falls under this umbrella. For example, a pharmacy conglomerate like CVS is in part more able to crush its local competitors in most markets because it’s more capable of negotiating tax credits, regulatory compliance, and supplier deals.
This fear of expropriation tends to keep what mercantile elites there are in modern democracies in line — or at least busy corrupting legislators and bureaucrats to respect their interests. In states with secure and absolute property rights, the laws are relatively simple. In states with arbitrary and shifting property rights, the people who can pay the bribes can keep their property, and those who can’t cannot.
This creates a social divide between the small business classes, the higher end corporate classes, and the slightly larger welfare-bureaucratic classes. The former two pay for the latter third, but both are subordinate to the bureaucracy. The bureaucracy plays the two groups of the productive against one another, with the corporates having an upper hand over the former thanks to their regulatory advantages.
What is gradually happening is that the higher end corporate entities are being slowly gobbled by the state bureaucracy, with the former’s interests being suborned to the latter’s. Starbucks enourages all its baristas to ‘have a chat about race,’ in return for some unspecified favors down the line. This sort of thing is a violation of the previously established line between state and private propaganda — you could get the same sort of ‘chat about race’ in any public school, but for the most part, ignoring the occasional HR initiative and casting calls in advertisements, the link was kept subtle.
Now, not so much.
Similarly, ‘Google Doodles’ were once subtle accents on the homepage. Now they are as didactic as any public school curriculum with a parade of featured (mostly invented) heroes of the United Soviet States of America.
president barbicane says
Competition may introduce signalling waste, but competition generally improves the quality of service. If a company has a de facto monopoly, it doesn’t need to improve it’s quality of service. I’ve seen this many times before.
Let’s say it’s a pharmaceutical — innovating on quality often illegal, so they have to compete on snazzy ads and doctor bribery (neither of which I have problems with).
Andy H says
I’ve got a friend who’s on the Google Doodle team. It’s a small team–less than ten full-timers, I think–and he’s proud of the fact that they’ve maintained editorial independence. As I understand it, the only outside interference has come from the marketing department, which sees the space as a potential opportunity to push new Google products. The Doodle team has so far fought off this attempt to commercialize their product.
If the doodles seem to push a certain ideological worldview, it’s simply a function of the worldview of their creators and the Bay Area culture in which they marinate. That plus a healthy dose of self-censorship, for fear of giving offense to any of the countless interest-groups likely to see their art.The “American Soviet” position is simply the perceived least-offensive remainder that’s left once all the other possibilities have been eliminated.
This is how The Cathedral operates. No commissar will come down to Mountain View and tell Google that they have to put Susan B. Anthony’s birthday into the Google Doodle queue. But we all know what would happen if they decided to put, say, Nathan Bedford Forrest’s birthday into it. When there is heavy negative reinforcement for deviation in one direction and no enforcement whatsoever for deviation in the other, it is obvious in which direction things will go.
Even one of the Masters of Wall Street is now mentioning a coming Financial Crisis like of 2008, the vulture Paul Singer is singing about the “Big Short” or something…