Business

If the business world were purely competitive, costs could (in some sense) be said to determine market prices. But the actual business world is not, and cannot, be purely competitive ... The existence of product differentiation, transactions costs, changing information, and uncertainty ... all prevent the realization of any static competitive equilibria. And in [such] a world ..., all cost-determining-price rules ... become irrelevant for policy purposes. Yet most of the criticisms of firm predation and of business "excess capacity" are deeply rooted in static equilibrium welfare analysis.

[A] bourgeois virtue is the Temperance to save and accumulate ... But it is also the temperance to educate oneself in business and in life, to listen to the customer ... [Another] is the Courage to venture on new ways of business. But it is also the courage to overcome the fear of change, to bear defeat unto bankruptcy, to be courteous to new ideas, to wake up next morning and face fresh work with cheer, resisting the despairing pessimism of the clerisy ... Another is the Faith to honor one's community of business. But it is also the faith ... to sustain traditions of commerce ...

Should the businessman as businessman even get involved in the struggle [to save capitalism]? ... To begin with, the businessman is not typically hired by the stockholders to carry on programs of social reforms; he is hired to add to the net worth of the company ... The fact is that there is hardly a businessman in this country who is not receiving favors from government in one way or another ... In other words, his very position may seem to require of the businessman that, in the struggle against government intervention, he be as often a part of the problem as of the solution.

Today, people must answer to hundreds of thousands of arbitrary, unclear edicts from the politicians and bureaucrats ... For example, take the rules against "unfair business practices." If a businessman sells his product at a price lower than his competitors, he is subject to being prosecuted for predatory business practices. If he sells his product at the same price as others, he can be prosecuted for antitrust violations. Thus, since every businessman is always subject to a criminal prosecution ..., he must always kowtow to his political and bureaucratic masters.

It is plain that this confiscatory tax exacted a fearful toll on the holders of those estates–if they deserve the name–rich in tangible assets but poor in cash–farmers, ranchers, convenience store owners, fast food operators, contractors, auto dealers, and all the enterprising members of the minor bourgeoisie ... If these toilers in the business world failed to plan for the payment of high death taxes, they often had to sell part or all of their assets in order to pay ... They were either ruined by the rapacity of the Treasury or they were put to desperate ... stratagems to make the payments.

I think investing in defense stocks is a terrible idea ... The answer is to divest. Stop investing in the military ... Divestment worked for the civil rights movement in the 1960s. Americans stopped investing in companies that supported the Jim Crow system of racial discrimination. Companies got the picture, and stopped being racist, or went under. Divestment worked for the anti-apartheid movement in the 1980s. Americans and people around the world stopped investing in South African companies, and in those doing business there. The South African government ended its racist policies.

The story might have ended there, as the groceries ... and the farmers looked more carefully ... and otherwise sought to fix the problem. And why wouldn't they? They are all in business to make money. You can only make money by selling things that people want, and this much is absolutely certain: people don't want spinach that makes them sick ... Whenever government demonizes merchants, it encourages the view that we must be forever on the lookout for dishonest business people who are seeking to make us sick, and from whom only the great civil servants in government can protect us.

He was not one of those MBAs whose closest contact with the gritty business world was going down to the corner newsstand to purchase a copy of The Wall Street Journal. The year he got his doctorate he started and operated his own business, a mail-order firm that sold quality teas, coffees, and a book on how to make beer at home. The enterprise was successful enough, but not so much as the book he later wrote about it, How to Start and Operate a Mail-Order Business (McGraw-Hill, 1965), still in print and currently in its fifth edition.

Wilting under heavy government regulation and their own ineptitude, the major steel companies again have sought a scapegoat in foreign steelmakers ... Textile and apparel imports have been under quotas for 25 years, refuting arguments about temporary relief ... This administration's distinctive mark in world-trade matters is a churlish jingoism, epitomized by Commerce Secretary Malcolm Baldridge, who during the auto-import debate sniffed, "Secretary Lewis and I are the businessmen in the Cabinet; we know what it's like to trade with the Japanese."

The temptation to play the political game as a means to increasing profits has long attracted people in business ... Today, nearly every business, either on its own or through a trade association, employs lobbyists who try to steer government policy in a "favorable" direction. Sometimes, the political game is played defensively ... Often, however, businesses seek to use governmental power to raise prices, stifle competition, and obtain inputs it needs at artificially low prices. This is usually done very quietly, so as to maintain the illusion that business is interested in protecting the free market.

In Europe today, an airport is seen as a business: an enterprise run by qualified (and highly paid) professionals, serving a number of different customers, and expected to make a profit (and pay taxes!) by doing so. Since ... 1987 ... 17 U.K. airports have shifted into the private sector. ... the corporate model has led to more professional management and increased resources for meeting customer needs--including security. By contrast, the United States is still stuck with the old model: the airport ... Run by civil servants, it is not expected to take (entrepreneurial) risks, or to take major responsibilities ...

What of the businessman? ... There is not one piece of lunacy put on paper by some academic scribbler or spoken by some public demagogue that is not to be found in at least one, if not more, of the ... self-designated spokesmen for the business community ... [I]t is also clear that the larger the firm, the more certain is its leaders' commitment or at least lip service to the philosophy of statism ... Yes, even the businessman is more likely to be a part of the problem ... [T]here is no reason to expect the businessman to be more committed to the system of economic freedom than anyone else.

So far, Cuban ... is not playing the role that the feds expect American businessmen to play. He's not confessing, expressing remorse, calling himself a bad person, seeking forgiveness, and offering to rat out other people. Instead, he's telling it like it is ... The value of thousands of federal rules and regulations governing American companies and banks is that they ensure submissiveness, compliance, and obedience. If a businessman doesn't toe the line, they'll just go after him [or a family member] for violating some regulation, even while claiming that freedom of speech is alive and well in America.

Advocates of deregulation are typically dismissed as flaks for corporate interests. But that conclusion crumbles when we realize that businessmen historically have opposed laissez faire ... Businessmen, going back at least to the era of mercantilism 400 years ago, have typically embraced government as an effective tool to protect themselves from competitors. The word "protectionism" is usually restricted to business-supported barriers to cheap imports. But ... [b]usiness interests have long favored all kinds of regulations and taxes to hamper existing and potential competition.

If someone believes that a $10.10 hourly wage wouldn't throw vulnerable people out of work ... — and that, indeed, it would even be good for business — the advocate of the higher minimum ought to explain why the wage hasn't already risen to that level through normal market forces. Why is it stuck at $7.25? ... This question is even more interesting when you consider that the higher-minimum lobby points to Costco's success in paying its starting workers $11.50 an hour. Why isn't self-interest driving other employers to offer the higher wage? Their alleged stubbornness contradicts the self-interest model of business owners.

Another very significant pressure group preventing progress are the businessmen themselves. This is because those persons who are successful under the current system are not anxious to see things change. They instinctively perceive that their talents or connections, which have brought them riches or power, might not be the same ones to succeed if the rules of the game should change. They have the know-how and the know-who. If the economies were suddenly freed, their world might fall apart; any upstart could try to do better than they, and might even displace them.

Have you ever heard of a private firm proposing to "solve" a shortage of the product it sells by telling people to buy less? ... Private firms welcome customers, and expand when their product is in heavy demand—thus servicing and benefiting their customers as well as themselves ... Why don't TV firms or steel companies have trouble finding capital for expansion? Because consumers pay for steel and [TVs], and savers ... can make money by investing in those businesses. Firms that successfully serve the public find it easy to obtain capital ...; unsuccessful, inefficient firms ... go out of business.

Insurance emerged long ago to protect one's assets against the risk of rare but catastrophic events that one cannot prevent, such as a house fire ... [The insurer is] in business to make a profit. He doesn't exist to pay other people's bills ... Traditional insurance is viable when the pool of policyholders is sufficiently large and so constituted that the expected payoff for the covered rare event is a small enough percentage of the premiums collected to make the profit greater than the opportunity cost. If the covered event were a volitional act, the business plan would be fatally flawed.

During the 1940s and 1950s, most Americans held business as an institution in high esteem ... Aristotle wrote about trading and business profits in his Nicomachean Ethics and Politics. Major portions of Old Testament books such as Deuteronomy contain rules for ethical business practice. Adam Smith's The Wealth of Nations ... also discusses in depth the social context and impact of commercial activity. Smith was ... a theologian and ethicist, not a businessman or economist. Karl Marx was no economist, either, and had never set foot in a factory, but his critical analysis of business behavior changed the course of history.

Why would anyone want inflation? Because, the Times says, "Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly." ... The advocates of inflation say it will raise business profits. Aside from the fact that raising profits is not the government's job, does that really make sense? While businesses will be able to charge more for their goods during an inflation, they will also have to pay more for the things that they buy, including labor. Where's the real gain?

Things that we may not think of as targeting the freedom of the most vulnerable people nevertheless do so. Taxes and regulations may formally apply across the board, but they take a greater toll on microbusinesses than on big businesses, which have accounting and legal departments expert at dealing with government-imposed burdens. As a result, small businesses remain small and people with good ideas may not get them to the marketplace. Government should never protect the market share of established firms.

Every day, there are countless businessmen who are planning to expand or contract their firms, who are planning to introduce new products or discontinue old ones, planning to open new branches or close down existing ones, planning to change their methods of production or continue with their present methods, planning to hire additional workers or let some ... go. And every day, there are countless workers planning to improve their skills, change their occupations or places of work, or to continue with things as they are; and consumers, planning to buy homes, cars, stereos, steak or hamburger ...

By contrast, businesses that achieve total—or almost total—market share of what they produce are not protected from competition by laws. Such businesses depend entirely on customer satisfaction that comes from the business's successfully fulfilling the wants of consumers. Such success is often short-lived ... Neither Microsoft nor Wal-Mart, for example, can legally force a consumer to buy its products. Today these are large companies. But 10 or 20 years from now, they may well have gone the way of F.W. Woolworth's. The latter was once a strong retailer.

While the immigrants themselves bear the brunt of U.S. immigration policy ... they are not the only victims. Additional victims are to be found among ... business owners who are threatened with huge fines and imprisonment for hiring workers not approved by the government ... They have violated no one's person or property. All they have done is engage in voluntary exchange with workers who do not have government permission to be here. Big deal! I thought we believed in free enterprise in this country. That the political party which claims to embrace free markets countenances employer sanctions ... speaks volumes.

The Schechters ... ran a kosher poultry butchering business ... and were put on trial for criminal offenses against regulations ... the NRA rules forbade customers to select individual chickens they wanted, demanding that customers select a coop of birds for killing ... Both Jewish tradition and common-sense business practices had to be abandoned to conform to the authoritarian regulations ... Willkie pointed out that the New Deal had created enormous uncertainty for business and investors. If there was "idle money" in the country, the reason was ... in the hostility the administration constantly exhibited toward business.

A modern business can no longer be run by a few people who think and many people who merely do what they are told—the traditional, military, command-and-control model. Today, organizations require not only a higher level of knowledge and skill among all those who participate in the process of production, but also ... of independence, self-reliance, self-trust, and initiative. In a word, self-esteem. This means that in the process of wealth-production, people with a decent level of self-esteem, who embody key Objectivist virtues (at least while on the job), are now needed in large numbers.

A company that runs ports for profit is not the same as a mish-mash of international travellers coming through an airport for a variety of different reasons. ... we have a very good idea as to why Dubai Ports company wants to run these six ports — it thinks it can make money doing so! As said before, companies have every interest in protecting their investments, and they do this most obviously by turning a profit.

When the private sector seeks to ferret out bad guys, it goes overboard to make life wonderful and non-humiliating for the good guys. This is the difference between the public and private sector. The private sector is always seeking and soliciting the affections of the people, in the hope that the people will deign to part with their money in exchange for the good or service the firm provides. That's not an easy thing to do. You have to be pretty wonderful in order to get people to voluntarily purchase your stuff as versus save the money or spend it elsewhere.

These kinds of incentives and constraints help explain a strange anomaly that many have noticed — big corporations contributing much more to left-wing causes than to conservative or libertarian causes. 'For every $1.00 major corporations gave to conservative and free-market groups, they gave $4.61 to organizations seeking more government,' according to a study ... Why? ...: 'Many advocacy groups win corporate funding by threatening lawsuits and boycotts and by petitioning government regulatory bodies. Regulatory policies, in particular, give corporations a built-in incentive to pay-off left-wing activists.'

Several students play the role of commuters and, at first, one student plays the role of a filling station owner. In the first round ... I allow the ... owner to buy a supply of gasoline and then sell it ... During round one, the station owner sold her gasoline for $2 per gallon, giving her a healthy profit of $1 per gallon sold. In round two, I allowed a volunteer ... to open a second gas station and charge whatever price ... This was repeated a third time until three competing stations were jockeying for the commuters' dollars and gasoline was selling for an average of $1 per gallon ...

The discount industry creates problems for regular retailers ... [I]magine two electronics stores, a full-service retailer and a discounter ... Since the full-service retailer has higher costs to recoup, it charges more for its products ... Obviously, the full-service store is at a disadvantage ... But the retailer can act to minimize the disadvantage ... It can seek contracts with its suppliers to reduce the discounters' and customers' free riding on its services ... Many consumers sample the products at the retailer ... Then ... buy the same product at a lower price from the discounter.

I had envisioned the government as just being part of a huge collection of enterprises, producing its own wealth ... [T]hen I discovered that the federal government acquired its money ... from taxes ... That is obviously very different from how people in the private sector get their money. Microsoft, for example, depends on offering products that induce people to voluntarily trade their money for a particular piece of software. If people decide to hold on to their money instead of buying the software, there is nothing that Microsoft can do ... Microsoft cannot force anyone to hand over his money.

[T]he stakes are not what they are represented to be, and the differences are not fundamental ... [D]espite appearances, Obama the government man and Romney the business man share common ground. Romney says, "Washington has to become an ally of business, not the opposition of business" (as though those were the only alternatives), and Obama would not disagree. Ask Jeffrey Immelt of GE, Jim McNerney of Boeing, and other beneficiaries of the Export-Import Bank. Or ask the principals of Bank of America. Obama would just want government to be the more dominant voice in any dispute.

The idea that businessmen have been the free markets chief antagonists should cause no surprise. As a group, businessmen tend not to be philosophical or theoretical; they pride themselves on being practical ... [B]usinessmen tend to see nothing wrong with using the government to hedge against uncertainty. Nothing is more uncertain than what the market will bring tomorrow ... The people who run big companies have always been prominent and influential. The affinity between them and political leaders is more or less natural, as business stability is usually associated with national well-being.

[These academicians] do not want to enter the market place where their income would have to be obtained solely from willing customers. That kind of dealing—such commercialization—offends them, makes them think they are no better sorts than, say, people who sell shoes, cars, life insurance, mutual funds, or kitchen utensils. No. Let these other blokes cope with the burden of having to convince customers of the value of what they have to offer them ... [Academicians] need not sweat the possibility of their customers' choosing to go elsewhere for their higher educational services.

Perhaps worst of all, as is the case with economic crimes in such countries as China and Russia, the arbitrary and discretionary manner in which this regulatory law is enforced provides the perfect vehicle for ensuring that business community does not get too far out of line ... by openly dissenting against government policies ... what business that might be hiring illegal immigrants, either knowingly or unknowingly, wants to make waves ...? With the federal sword of Damocles hanging over its head ..., the American business community is as likely to go along to get along with the feds as its counterparts in China and Russia ...

At the time I started my business, the Left had taught me that business and capitalism were based on exploitation: exploitation of consumers, workers, society, and the environment ... The most important thing I learned about business in my first year was that business wasn't based on exploitation or coercion at all. Instead I realized that business is based on voluntary cooperation. No one is forced to trade with a business; customers have competitive alternatives in the market place; employees have competitive alternatives for their labor; investors have different alternatives ...

Newt [Gingrich] is still the classic Laundromat small business person. It's a huge problem. All the jobs are not created by small businesses–all the jobs are created by a small number of small businesses that become growth companies. We have this terrible bifurcation between big business Republicanism or Democraticism and small business Republicanism, and it still doesn't have anything to do with how the economy works. I adore the people who have the nerve to start Laundromats, too, but the truth of the matter is, they're not the engines of the economy.

Reason: How do you respond to the criticism that giving speeches to business or free market groups creates a conflict of interest?
Stossel: I think it's good it's being brought up ... I now speak for absurdly high honoraria ... All the money goes directly to charity... [B]ut consumer activists still write articles implying that I am keeping [it] ... I think what happens is that once you start saying on TV that markets work, that business is not evil, then more businesses want to invite you to speak, because people like to be told they are good guys.

Rockwell: ... [Mises] took it for granted that huge sectors of the intelligentsia and media are deeply ignorant of economics. In [The Anti-Capitalistic Mentality] he addresses the problem not of ignorance but hate: hatred of the businessman and entrepreneur, and the assumptions that the business class is secretly criminal, that the rich never deserve what they own, that businesses that rake in profits by serving others through enterprise somehow "owe" something to the "community," so, if they don't give it up voluntarily, it should be taken from them.