Which Does the US Have: Free Markets Or Crony Capitalism

November 13, 2011 Posted by zachary

And Whatsoever nation shall uphold such secret combinations, to get power and gain, until they shall spread all over the nation, behold, they shall be destroyed… (Ether 8:22; Book of Mormon)

With the Occupy Wall Street movement having been in place for a number of weeks now, I have contemplated a number of issues that I think should be of primary focus of this movement and anyone who sympathizes with them. The Occupy movement has at its core the idea that the top 1% of the US control way too much power and wealth and are hindering the growth of the other 99%. In a way, they are right. There is a seemingly imbalance between the two groups.

However, I think the focus of the movement is a little out of whack. First, there is nothing wrong with being industrious and turning your talents into wealth. As the parable told by the Savior of the man who left varying number of talents with his servants with the commandment that they increase those talents shows. (Matthew 25: 14-30; Bible) The two who turned their 5 talents into 10 and 2 talents into 4, respectively, showed that the Lord looks with admiration and respect to those who are industrious with what they are given no matter how much or little. The third servant who hid his talent away and squandered his time was punished because of his idleness. As with this parable, so are we. We are as these servants. Some of us have been given 5, others 2 and yet still others 1. It doesn’t matter what we do with them as long as we increase them through industry in whatever trade we seek. This is something that the Occupy movement refuses to accept. The majority lump all wealthy people into the same class, that of cronies.

That leads me to the next problem that I think the group could be great for remedying but are neglecting, that of crony capitalism. You see, the Occupy movement has this deep seated idea that “free markets” are the reason for the wealth disparity. However, that is completely false. The problem is that of crony capitalism. With crony capitalism, you have a group of business men who enter into pacts in order to convince law makers to pass laws and regulations that limit competition. These laws are often designed to deceive the public into believing the laws are there to protect the public from harm. Instead, what these laws are designed to do is increase the costs of doing business and raise the barrier to entry. This prices entrepreneurs out of the market and increases costs for consumers.This is called regulatory capture, or the process of capturing a market through regulation.

You can see examples of such crony capitalism all over the US, from interior designers in Florida, cosmetologists in just about every state, food truck regulations, limousine price floors, the FDA, the bank and auto bailouts etc. There are so many places where crony capitalism leads to regulatory capture. This is the practice that needs to be ended. What regulatory capture does is increase costs to consumers, raises revenue for the cronies and destroys the economy. This is also something the Lord has commanded us to avoid. As stated in the open scripture, the Lord will destroy any nation that supports and upholds such pacts. These are not in line with gospel truths or the will of the Lord.

As a Libertarian, such practices as crony capitalism and regulatory capture are things that will be ended.

Libertarians want all members of society to have abundant opportunities to achieve economic success. A free and competitive market allocates resources in the most efficient manner. Each person has the right to offer goods and services to others on the free market. The only proper role of government in the economic realm is to protect property rights, adjudicate disputes, and provide a legal framework in which voluntary trade is protected. All efforts by government to redistribute wealth, or to control or manage trade, are improper in a free society. (Libertarian Platform 2.0)

If we had such a free market, there would be nothing other than the demands of consumers that prevent us from closing the wealth disparity between the people. A free market does not lead to wealth disparity but leads to an increase of wealth of all people and the strengthening and growth of the economy as a whole. This should be the goal of any Latter-day Saint and any Libertarian.

If closing the wealth disparity is truly our goal as a society, we need to be pushing for changes in law and electing those politicians who will not bow to pressure from groups which seek to capture the market through regulation.

 

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