Political and Economic Interests

Political interests and economic interests encompass an immense array of factors which impacts us daily.  Economist Henry Hazlitt asserted the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence.  Hazlitt said, “The art of economics consists of looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

Likewise, the art of politics when applied to economic interests consists of looking at the immediate effects of any act or policy and in tracing the consequences of that policy for one group while ignoring the effect on all groups.

Assume for a moment a total separation of political and economic interests.  Economic interests vary greatly from person to person, business to business, and industry to industry.  The underlying premise in all economic activity is that the exchange of goods and services between a provider and a consumer is voluntary and the exchange happens at a price agreeable to both parties.   In other words every economic transaction mutually benefits both parties.

More importantly, the underlying premise to these economic interests is they are voluntary.  No one person is coerced to purchase another good or service from anyone else.   How each individual chooses to provide for his needs, wants, and desires is his choice and responsibility.

Consequently, the marketplace for all goods and services reflects the needs, wants, and interests of all of society.  Naturally, there is some ebb and flow as both supply and demand fluctuate for various reasons and as new goods and services enter, and old goods leave the marketplace.  The marketplace is fluid as it adapts itself to reflect the goods and services society wants.   New products replace old products.  New inventions replace their predecessors.  Demands shift accordingly.

The goods produced and the services provided reflect the preferences of every individual and therefore society as a whole.

Contrast economic interests with political interests.  Political interests vary greatly from person to person.  Some are apolitical while others are hyper-political.  Assume political interests are totally separate from economic interests.  Once economic interests are excluded that leaves very little in the political realm.  Arguably, at a federal level all that remains is defense, relationships with foreign states, and adjudication of certain situations between states and what not.  Naturally, at the state and local levels there are other concerns such as law enforcement, infrastructure, roads, education, etc.

Political and economic interests have converged into a single interest.  The merging of political and economic interests creates disturbances in the nature of free markets.  When government enacts a program or policy with economic implications the political consequences are calculated based on the effect of a constituency group, donor, or business interest.  A policy/program may be sold under the guise of economic benefit to society, however the real intent is to secure political benefits.  Moreover, the callousness towards those people that are negatively impacted is eschewed as political posturing or by demeaning those that disagree with the policy.

The policy is measured and assessed by short-term political outcomes for the intended policy targets while the long-term economic effects on all are ignored.  As economic interests are consumed by and merge with political interests the authoritarian state manipulates the economy to meet government centric preferences.  How are government centric preferences more desirable than our individual preferences?  Do politicians possess magical powers and omnipotent insight into economic issues enabling them to make policy decisions regarding our economic interests?

As economic interests become political interests the state becomes authoritarian.  Politicians pick the winners and losers in the economy.  Politicians pass tax laws that favor certain businesses or industries.  They pass wage and price control laws.  They create public work programs.  They enact regulations that restrict certain activities and promote other activities.  They pass laws dictating what products you must buy and what products you cannot buy.  They force compliance through hundreds of thousands of laws complemented by millions of regulations promulgated by the State.   Non-compliance means fines, penalties, or prison.

Likewise, businesses turn to politicians to gain advantages they otherwise could not obtain in free markets.   Companies seek tax advantages, competitive advantages, exclusive privileges, etc. from politicians.  In turn these companies help fund political campaigns to ensure re-election.  The amalgamation of political and economic interests has created a fascist like government.  Politicians realize they are better off not actually owning the means of production and instead they control the power to levy, tax, and regulate companies to comply with government centric preferences to the detriment of individual choice and responsibility.  Politicians avoid all responsibility for their policies when they fail and direct blame to a company or big business.

The Affordable Care Act is a perfect example.   The ACA is a result of political interests and economic interests that helped further a political agenda and favor the health care and pharmaceutical companies.  It is a form of protectionism for those companies.  It is a form of socialism for the people.  Of course, politicians take credit for any perceived good that may come from the ACA while marginalizing companies and private markets for the problems. Politicians lie with impunity.  Politicians didn’t even know what was in the Act before it became law.  

Meanwhile, the political benefit is to ensure a certain constituency benefits by a law that requires some people to pay for the health care of others — something that could never happen in a free market.  In return, the politician receives votes from the targeted constituency and campaign donations from the companies receiving government protection.  Certain groups and constituencies ask for and receive waivers from the law.

The unintended consequences continue to accumulate.  Tens of millions have received letters terminating their health insurance.  Those forced into other plans are seeing their insurance costs increase by 30, 50, 100, and 200 percent or more.  The government is mandating certain coverage in all policies whether a person wants the coverage or not.  Deductible and out-of-pocket limits are increasing.  Employees have their hours cut to less than thirty as employers try to avoid the increased costs.  Some employers have laid-off workers to reduce their overall employee head count below fifty.  Eventually, many companies and individuals will be fined for not buying health insurance.  Of course, politicians will evade all blame and responsibility and instead blame the health insurance companies for all the problems.

The differences between a free market and the ACA are astounding.  In a free market nobody would be forced to buy insurance unless they voluntarily chose to do so.  Nobody would be fined for a lack of economic activity.  Nobody would choose mammograms, pre-natal, and pregnancy coverage if they are male or there isn’t anyone on their policy that would need that coverage.  In a free market, companies would offer insurance that consumers would want and at a price consumers are willing to pay.  In a free market people don’t pay $200 for a product they don’t want if they have a comparable product they want and only cost $100.

What the ACA demonstrates is economic interests are best determined by government and not by individuals.  Economic interests are swallowed up by political interests thereby eliminating individual choice and impeding the ability for two parties to voluntarily participate in the exchange of goods and services.   Just as it is criminal for one person to use force to require another person to buy a good or service, it is criminal when the government does it.

Of course, those that defend such action have no issue with government force or violence.  The same people that reject the right of self-defense applaud the government’s use of force against the people.   The same people that reject monopolies defend an all-powerful, centralized authoritarian state that is the largest, most coercive monopoly we know.  The same people clamor for this right or that right, yet defend a government that spies on its own people, can kill them with impunity, can illegally and indefinitely detain them, and acts arbitrarily and capriciously.

As government expands its reach people will realize the burden resting so heavily upon them is self-inflicted.  The people have placed the chains of bondage upon themselves by allowing political interests to supersede and engulf their own personal and economic freedom and liberty.  Just as politicians realized they don’t need to own the means of production, they realized they don’t need to own slaves as chattel property as they can enslave the people through an authoritarian state that deprives people of their unalienable rights, liberty, and ultimately their lives.

1 Comment

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One response to “Political and Economic Interests

  1. As always Scott, well done. This dovetails right into my most recent learning’s about money and currency and banks that you gentleman started by posting the Mike Maloney article on the Forgotten Men site. Excellent article!

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