Should Government Get Involved in Protecting Businesses?

I went down to city hall yesterday to participate in a hearing on net neutrality. I realize the NYC city council has no oversight on this issue but the lobbyists were coming out in force so I figured I might as well show up too.

They were live streaming the event. My testimony is about 26 minutes into that stream.

But this post is not about net neutrality. It's about an issue that came up during the questioning. A council member mentioned the idea that we should help infrastructure providers protect their businesses.

I am all in favor of the survival instinct in the marketplace. All companies should be executing strategies that will result in their survival.

But the idea that government should "protect businesses" seems very dangerous to me. Businesses come and go. Jobs come and go. Products and services come and go. That's the way of capitalism.

Our government stepped in and protected a bunch of businesses during the financial crisis. Examples are Citibank (C), AIG, and General Motors. In a time of financial panic, government does have a role in restoring confidence and we can argue whether those actions were necessary or not.

But the financial panic is long gone. We still have big economic issues in this country and it would be a mistake for our government to continue to protect businesses and jobs now that markets are functioning again.

If the telcos and cable companies can't run profitable businesses without government protections, then I think we should let them go under and allow entrepreneurs to pick up their assets and make them work instead.

I also believe that government should be fostering a lot of competition in the access business. That was the idea of the telcom reform act. But it hasn't played out that way. We have an ever increasing consolidation of power in the access business. Just like we had in the banking and brokerage business. This is not good.

I could go on and on about this issue but I'll stop here and let the discussion start in the comments. I'll be in there with you.

Comments

[j-dub]

"Should Government Get Involved in Protecting Businesses?"

Absolutely!! Here are the dangers government needs to protect businesses from in today's world:
1) over taxation
2) over regulation
3) government largess
4) government interference
5) cap and trade tax
6) the breaking of anti-trust laws

Otherwise be true to American business and stay the hell away from it. Let those who actually know how to run businesses do so, and let those who don't fail.

2009 Nov 22 02:51 AM

[tommiegun]

I didn't know that there was a Anti-Trust department in the United States.

2009 Nov 22 03:49 PM

[George /Mississauga/Ontario]

Capitalism mixed in with a bit of Socialism. That is a good balance that seems to work only with a multiparty party system as we have in Canada, (1/10 of your population) but cannot work with a 2 party system to the same degree. Our government for example did not step in to help Nortel nor Avro Arrow. Nortel was broken up and sold to foreigners on the other side of the ocean, and the Avro was scraped and the talent went south. Our banks wanted consolidation and our government said no which under the present circumstances it was the right decision. Our minority government stepped in to the aid of GM in conjunction the US counterpart. There is interference by our government but not to the same degree that is going on in the USA. Is it good or bad for the government to interfere. Yes and No. A bit of capitalism mixed with a bit of Socialism. However most North Americans don't like to use the word socialism. For some reason it reminds them of the cold war with the former USSR. Nothing to be afraid of. Socialism is all around us in small ways whether we want to believe it or not.

When it comes to health care , we have a fully paid system if you can wait for some medical procedures, but it seems to work. At least you cannot go bankrupt while you wait. That is the compromise. People donating money to non profit organizations is a form of socialism and so on.

I may be getting of the subject a little bit but this article asks a very important question which can mean and stand for many things. If the question is simply do I believe that the government should be subsidizing small businesses to the same degree as the large conglomerates, the answer is no. The to "big to fail" has some merit since it will hurt many workers that are not the entrepreneurial type and bury their head in the sand (not in all cases) wondering what to do next. Whereas the small business ( I am talking about the real small businesses say 1-10 employees), they always seem to survive in difficult times because they are bread that way. They are tough and although they can use a hand out, they are to proud to take it, that is in most cases. However if you ask me if CITI should have been helped by the government which supports many Ma and Pa businesses, my answer would be yes. Would that be government supporting business, I suppose it would be, and my answer would still be yes.

2009 Nov 22 05:27 PM

[bob adamson]

George /Mississauga/Ontario -

Your comments illustrate the pragmatic sort of policy development and implementation that works; often by trial and error. The following illustrated why, to my mind, dogmatic thinking, however brilliant and well intentioned, tends to lead to grief.

We sometimes forget that the municipal public library is, in many ways, a socialistic sort of thing but, who cares because it works. Would we reject such a proposed library in our community for doctinaire reasons?

While not persuaded that there are not less wasteful and painless ways to achieve efficiency and effectiveness in the economy, I concede the logic of those that argue the case for constructive destruction through the occasional mild recession. That logic is a bit like that for not interfering with natural, small and fast burning forest fires that occur annually (although some spread control near residential areas should be OK). Experience in the forests of western Canada and the western US over the past 70 years has shown that suppression of these natural annual fires leads over time to the accumulation of unnatural accumulations of deep layers of wood waste on the forest floors within which a large, highly destructive (both in the immediate and in the longer term environmental senses) and hard to control fire at some point in the future will undoubtedly occur. By contrast, the annual natural fires appear to promote the regeneration of the forest areas and the habitat they sustain.

That said, it is obvious from reading many of the comments to this article that some Libertarian and Austrian School enthusiasts push the argument for constructive destruction to an extreme and embrace the ‘noble’ notion of a great cleansing destruction of the inefficient, ineffective and inappropriate elements of the economy and society (and probably much else besides) by standing aside and allowing the free market (in the form of the deflationary collapse) to do its thing unimpeded by the soiling effect of fiscal or monetary stimulus or other interference of any kind by government. It is interesting to note the similarity of this millennium vision to that of some extreme Marxists for the efficacious effects of “The Revolution” and of some extreme Syndicalists for the efficacious effects of “The General Strike”.

Götterdämmerung anyone?


On Nov 22 05:27 PM George /Mississauga/Ontario wrote:

> Capitalism mixed in with a bit of Socialism. That is a good balance
> that seems to work only with a multiparty party system as we have
> in Canada, (1/10 of your population) but cannot work with a 2 party
> system to the same degree. Our government for example did not step
> in to help Nortel nor Avro Arrow. Nortel was broken up and sold to
> foreigners on the other side of the ocean, and the Avro was scraped
> and the talent went south. Our banks wanted consolidation and our
> government said no which under the present circumstances it was the
> right decision. Our minority government stepped in to the aid of
> GM in conjunction the US counterpart. There is interference by our
> government but not to the same degree that is going on in the USA.
> Is it good or bad for the government to interfere. Yes and No. A
> bit of capitalism mixed with a bit of Socialism. However most North
> Americans don't like to use the word socialism. For some reason it
> reminds them of the cold war with the former USSR. Nothing to be
> afraid of. Socialism is all around us in small ways whether we want
> to believe it or not.
>
> When it comes to health care , we have a fully paid system if you
> can wait for some medical procedures, but it seems to work. At least
> you cannot go bankrupt while you wait. That is the compromise. People
> donating money to non profit organizations is a form of socialism
> and so on.
>
> I may be getting of the subject a little bit but this article asks
> a very important question which can mean and stand for many things.
> If the question is simply do I believe that the government should
> be subsidizing small businesses to the same degree as the large conglomerates,
> the answer is no. The to "big to fail" has some merit since it will
> hurt many workers that are not the entrepreneurial type and bury
> their head in the sand (not in all cases) wondering what to do next.
> Whereas the small business ( I am talking about the real small businesses
> say 1-10 employees), they always seem to survive in difficult times
> because they are bread that way. They are tough and although they
> can use a hand out, they are to proud to take it, that is in most
> cases. However if you ask me if CITI should have been helped by the
> government which supports many Ma and Pa businesses, my answer would
> be yes. Would that be government supporting business, I suppose it
> would be, and my answer would still be yes.

2009 Nov 22 10:47 PM