I got a couple of critical trackbacks and emails for my post on markets and corporations.

First, let me clarify — I didn’t mean corporations are inherently evil, nor did I mean to imply there’s anything more or less self-interested about them than partnerships or sole proprietorships. My point was only to say that those of us who believe in free markets are often accused of supporting nearly everything corporations do, and that’s simply not the case. Corporations fairly regularly behave in ways that are anti-market. They regularly invoke government to stifle competitors, and they regularly lobby for handouts, tax breaks, and welfare from politicians. Other businesses do these things too, but corporations have quite a bit more money, clout, and power. So they do them more effectively. Drawing a distincition between support for markets and support for sole propieterships would have been a bit of a non-starter.

I’ve talked to executives from a couple of food corporations now, for example, who’ve eloquently made the case for personal responsibility when it comes to the obesity issue, then turned right around and voiced support for the idea that trial lawyers should go after companies like Microsoft, Nintendo, and Blockbuster for their contribution to obesity. That’s not exactly principled, free market thinking.

The Institute for Justice regularly files lawsuits against state licensing commissions that have been captured by a monopoly or oligarchy of businesses that use the regulatory state to keep upstarts from ever entering the market. The best example of this is the way Phillip Morris did a complete 180 on FDA regulation of tobacco the moment the company realized that FDA regulation would mean Phillip Morris was almost guaranteed to hold and increase its market share.

There’s an example in the news just today — United Airlines defaulted on its pension plan, and today got permission to terminate them, meaning you and I — the taxpayers — will bail the company out (Alex Tabarrok has a wry angle on the story here).

Yes, corporations, businesses, and parternships are the essential machinery of free markets. But they don’t deserve unconditional support from free marketeers. The moment they start rent seeking, begging for corporate welfare, capturing and abusing regulatory agencies, and otherwise invoking the state to tilt the playing field, then yeah, they deserve some scorn.

This entry was posted on Wednesday, May 11th, 2005 at 5:44 pm by Radley Balko and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.