Council fora Competitive Economy Richard W. Wilcke President June 29, 1981 Howard S. Rich, Vice President EFFECTIVE PLUMBING CORPORATION 2001 Arthur Avenue Bronx, New York 10457 Dear Mr. Rich: On behalf of the staff and directors, I am delighted to welcome your firm as a member of the Council for a Competitive Economy. The Council is the only business organization in Washington stressing both the justice of economic freedom (as opposed to praising solely its efficiency) and the importance of a consistent advocacy of freedom by representatiVes of business (with no apologies for subsidies or protection). For maximum effectiveness, it is important that the positions put forth by the Council be principled, well?researched and timely. Regardless of the industry in which you are involved, you will doubtless have opportunities to aid the staff by bringing items to our attention, advising us on conditions or technicalities or eVen testifying yourself. Nothing is more convincing than a business owner or executive, especially if opposed on principle to a government program designed to help him. In any case, let me urge you to let us know about your industry. Please use Council materials to be active in your spheres of influence. And, if you know of others who may be interested in membership, by all means let us know. Thank you, and welcome again. Sincerely, RWW/sel Enclosures 410 First Street. SE. Washington, D.C. 20003 (202) 544-3786 i. Elf-i . .314 ?55 r?Jln. Council fora Competitive Economy Will Businessmen Be the . Death of Free CHIEF EXECUTIVE . . .a quarterly business publication written primarily by and for chief executive of?cers in American industry. It is also directed to decision makers in international business, government, labor and education. Reprinted by permission from Autumn 1930 1* Number Thirteen Copyright 1980 by Chief Executive Magazine. lnc., 645 Fifth Avenue. New York. N.Y. 10022 Steel trigger prices, price supports for sugar and tobacco, federal bailouts for Penn Central, Lockheed and and tax subsidies for corporations with the best?connected lobbyists- is this free enterprise? When business leaders preach laissez?faire but practice a la carte capitalism it?s enough to give free enterprise a bad name. BUSINESSMEN THE DEATH OF FREE BY CHARLES KOCH CHAIRMAN AND CHIEF EXECUTIVE OFFICER KOCH INDUSTRIES rorn all accounts no group seems less committed to free- enterprise capitalism than business people. Consider the following: US. Steel is suing seven Euro- pean nations (and may add others). charg- ing that they "dumped" steel in the that is. they sold it for less than US. Steel. Ford Motor (?ompany and Corp. have joined the I'nitcd Auto Workers in seeking restrictions on automobile imports from Japan. has virtually given up day-to-day operation of its business to the US. govern- ment in return for federal loan guarantees. The American Trucking Association has been the International Brotherhood of Teamsters' chief ally in opposing deregula- tion of the trucking industry. Many businessmen have sanctioned Presi- dent Carter's so-called voluntary wage- price guidelines by ~joining the Council on ?age and Price Stability [Not surprisingly. the Chamber of Commerce and National Association of Manufacturers supported President Nixon in 19?] when be imposed wage-price controls.) Mobil Oil Corporation agreed to a $30 mil- lion settlement with COWPS. which claimed Mobil violated the "voluntary" guidelines. Mobil chairman Rawleigh Warner. Jr. passed up a court challenge because. "it? mayht hone hr en the tchol?t' (louncff .. .tfou?n." Perhaps most ominous of all is the call. for an "industrial policy" by several prominent businessmen. "Industrial policy" is a euphe- mism for state capitalism under which poli- ticians and the annointed "spokesmen" for business and labor set "national goals" to which consumers and entrepreneurs must subordinate their own private goals. Busi- nessmen such as Felix Rohatyn and Henry - . Kaufman advocate such a policy. including revival of the Depression-era Reconstruc- tion Finance Corporation. as a way to make America competitive again. Their solution to America's stagnant economy is to shackle it with a comprehensive system of govern- ment intervention that would include loans to and equity investments in uncompetitive industries. But this is not new. Businessmen have always been in the forefront of the crusade for government manipulation of the Ameri- can economy. Nearly every major piece of interventionist legislation since 1587 has been supported by important segments of the business community. Observers viewing this history con- clude that many business people don't like the free market. Nco' tar-r; Tina-s columnist William Saf ire wrote. "The secret desire of so many top-level managers for controls and regulated monopoly is never openly stated .. . But today's managerial trend is not toward accepting risk. It is toward get- ting govern to help avoid risk." This is apparent everywhere. especially where imports are concerned. The steel industry is asking for duties because Euro- pean and Japanese steel sells for less here. This the American producers call "dump- ing" and "unfair competition." In fact, it is nothing more or less than effective competi- tion. The industry complains that the com- petition is unfair because it doesn't operate under the same conditions as American firms. 't't'hat they don't seem to understand is that the economy is not a game or a race. Its purpose is to satisfy consumers through voluntary exchange. If a Japanese steel firm undersells its American competitor. nothing unfair has occurred. The transac- tions are voluntary. and that is the only criterion of fairness. I True. the Japanese government is unfair to its citizens when it subsidizes the steel industry. but that is a matter for the Japanese to work out.) In the case of autos. unfair competition is not even alleged? American firms lagged behind the Japanese in making what Amer- icans want. so they want the government to limit imports to allow them to catch up. This is free My own industry. oil. is no different. Over the past several years our company has par- ticipated in dozens of hearings on regula- tory matters before the Federal Energy Administration and the Department of Energy. At virtually all of these hearings. many oil companies favor state regulation. As former energy secretary James Schle- singer once put it. "The oil industry loves regulation and has been in love with it for many years." The old business strategy of accom moda- tion with government paid off in the past to some extent. but today it falls on its face. Business now suffers as much as the rest of society from the adverse consequences of its own interventionism. For examplc.a refiner may prta-ure price controls on his purchased crude oil. yet later experience shortages and even find prici- controls slapped on his own gasoline to capture his politically derived "excess" profits. When price controls are finally phased out. oil pro- ducers are hit with a "wind fall profits" tax on grounds that they don't have a right to the market price for their produrt. lUil pipe- line companies invite the DOE to study regional pipeline needs hoping that their particular project will be favored. But in the future. Washington may make oli pipe- line decisions and even build all pipelines. Businessmen should realize that the more regulated an industry becomes, the less it can cepe with changing conditions. it is no coincidence that the lowest-rankin indus- tries in return on capital today?such as It}? in] gti pr] t'ii' gr [or ram-nails. natural gas and electric utilities? are aim the most highly regulated. The :nability to respond to new conditions is ?ffprul as an excuse liar the proposed mas- _.;ive intern-tits -n of an "industrial policy." Richard Ferris. president of United Air- lines. an exreption in his industry. predicted that. "tfontinued graern mental control will man airline ser'Jii'e as you know it will be seriously jeopardiZed. nd. as service and equipment deteriorate. you will stand by helplessly as the threat of nationalization incomes reality." in the electric utility industry. a numberot' states have already organiZed agencies to take over private util- ities unable to finance needed additional genenttin capacity. Even business' occasional success in achiev- ing a favorable regulatt'iry scheme does not guarantee future control. I in the contrary. lsilitically derived benefits for business cause hardships for other special-interest groups whoapply pressuri- on the regula- tors to turn the regulatory weapons around. YWhat executives fail to understand is that their ti tr special privilege upholds the principle of government intervention and undermines market forces. The business community is now aware of the shortcomings of this strategy as more firms suffer the effects of theirown pathetic schemes. Moreover. examples of even more dire consequences of interven- tionisni. especially the plight of the railroad industry in the [15. and major industries in fin-at Britain. are awakening businessmen to their own probable fate. They are also becomingjustifiably con- cerned alunit the rapidly growing antibusi- ness sentiment in this country. Public opin- ion [mils show that a large portion of intellectuals and the general public believe that business- especially big business? enjoys undue political power which it uses to stifle competition and to control prices. Businessmen have only themselves to blame for this. The hypocrisy of talking free entenirise while practicing state capitalism has discredited free-market rhetoric- The enemies of economic liberty have been handed a weapon they never could have won for themselves. But even those business people who claim to believe in capitalism have sold it short. The opponents of liberty put their arguments in mural terms. Gal- braith. Nader. Heilbroncr and others have branded capitalism wrong and harmful. But too many business people sidestep the rrioral issUe. Is?i'hcn a critic calls capitalism st'il. the businessman answers. in effect. Yes. but at least it's efficient." ObvioUsly. this is no defense. If business- men wonder about what the source of the ant?"slliitalists' momentum is. it is the result of the procapitalists having given away the ?10m! case. Obviously. capitalism 's own (Header-5 don't know its virtues. As Wil- ham Hayes. executive vice president of the COUNCIJ of Industry of Southeastern New York. wrote in a letter to His-{m ss Hit-t; "To defend capitalism on the basis of its ability to pri iduce more cars. more shoes, more television sets is to trivialize the dis- cussion. The ethical basis for capitalism is as the only social system in human history that is consistent with individual freedom." When will business people learn this'.? Businessmen have dug themselves into a hole but they can get themselves out- if they want to. As Tl? [Will .?ili't .loo r?mll has written. "Despite the blows they have suffered in the political arenalbusiness- menl still have the capacity to be highly influential in the political sphere. But they will not bring about such a reversal unless they are able to put aside short-term cun- cut its in favorot' those longcr~term consider- ations. Mic may be reaching the point where American businessmen will have to decide whether they really la-lieyc in the market system. if they don't. it is hard to see who will muster the political forces to defend it against its tery oral and often intensely committed enemies." In spite of business' sullied record in defending free enterprise. there are large numbers of busi- nessmen who want nothing more from gov- ernment than to be left alone. And these numbers are gmwing quickly. To survive. business must develop a new strategy. The great free-market economist and Nola-I Laureate FA. Hayek has pre- pared a guide for us: Almost cieryn'lierc the groups which pre- tend to oppose mt'ulism at the some time support policies which. iflhe principles on n'lt iclt they a re hosed tiers or no mlized. amuld no less lead in .sztx?ialt's the amoedly scriulislmlicies. There is some just?ii?irnlion of least in the loan! that me ofllw pretending ilelcnders of 'free leges and educates ({l?g?l?f?mlmi??l urlicii?y in Flieir?iioi: rather than opponents ofall prim'leges. In principle. the ind pro? tectionism and gmemmenl?supporlcd car- tels and the agricultural lom'icies of the con- the pmpisals?ir a mo re fa r~ reach ing direction ofcconom ic life monitored by the socialists. If is an illusion when the more consent:- liic inlemenlionisls believe that they will be able to confine these getern menl controls to the kinds ofu'lticli they opprme. In a democratic society at any rate. once the principle is calm illed that the gmirrnmenl undermines responsibilityfor the sin his a nd position ry'particalar groups. it is inerii?oblc that this control will be Erie nded to satisfy the aspirations and prejudices oj'llie great masses. The re is no hope ofa return to afreer system until the leads rs of the nmenwnt against state con- trol are prepared?rst to impose upon themseltes that discipline of a competitive market which they ask the masses to accept. The hopelessness ofllw prospect for the near-future indeed is due mainly to ?refuel that no organized political group anyonere is in fawr oft: truly free system. Bellini businessmen can serve as effective defenders of individual liberty and the Free enterprise system. it is first necessary for them to learn prewisely what t'rce enter- prise is and what it is not. We mUst do our homework; we must comprehend "the philo? sophic foundations of a free six-icty." (lnly then will we have the necessary resoh'e to carry out the difficult task ahead. Btisinessmen must practice what they preach. People see our inconsistencies and. quitejustifiably. don't believe us anymore. ?3.1 remit-st welfare for ourselves while attacking welfare for the poor. Our critics rightfully claim that we want socialism only for the rich. (Jur credibility cannot be regained if we continue to file. but in hand. to ?it'ashington while mouthing empty. insincere platitudes about free enterprise. We cannot continue to have it both ways. will not keep granting us favors. on the one hand. while allowing us to run our businesses as we see fit. on the other. lv?li? must stop defending eristing in lei-tendons and nen- ones. This might diminish the impetus for new regulations and win new allies for us among intellectuals. legis- lators and the ?t'?t'l?al public. Asking for tighter regulation of a competi- tor even if he has the advantage of being less regulated than you are starts a suicidal cycle that ends in the destruction of both of you. Instead. We should concentrate on loos- ening our own regulations. We must do away with all interventions. even those that provide short-term profits. Taxes are particularly tmublesome. because it is thought that tax exemptions are equiv- alent to subsidies. Yet. morally and strategi- cally. tax exemptions are the opposite of subsidies. .?ilorally. lon'ering taxes is simply defending property rights: seeking a sub- sidy is asking the government to steal someone elses property for your benefit. Iowcrin taxes reduces goverment.? subsi- dies increase government. Since our goal should be to roll back government. we should consistently work to reduce taxes. our own and those of others. Finally. we should not cave in the moment a regulator sets foot on our doorstep. Put into practice legal scholar Henry Manne's rec? ommendation that "the business commu- nity should use available techniques of legal adversary proceedings to announce publicly and vigorously. both as individual compa- ales and through associations. that it will not cooperate with the government beyond the legally compelling minimum in develOp- ing or complying with any control pro- gram." As he urges. "Publicize as widely as possible the inevitable inefficiencies. mis- takes. and human miseries that will develop with these controls. . .help the public under- stand that morality. in the case of arrogant. intrusive. totalitarian laws, lies in the behest possible obedience and in refusal to cooperate willingly beyond the letter of the law." Do not imperatc voluntarily; instead. resist wherever and to whatever extent you legally can. Business' educational strategy has been guided by greatcrconcern with short-term respectability and acceptance than with long-term survixai We have supported uni- versities and foundations philosophically t'ledicatcd to the destruction of business and what remains of the free market. We must stop financing our own destruction. Even when business supports ?free enter- prise" education it is ineffectual because businessmen have little understanding of it. They spend their money on disasters surh as ?free enterprise" chairs at their alma mater and watch in dismay as holders teach everything but free entetprise. Also largely wasted is the money contrib- uted to those private colleges that make free noises. but fail to produce competent graduates dedicated to estah- lishinp: the free enterprise system. The development of talent is. or should be. the major point of all these efforts. To be effective. this talent must have the knowl- edge. skill and sophistiiaition to meet statist adversaries and their armiments head on and to defeat them. They must have the desire and commitment to uncensingly advance the consent Durinpr the 15 years i have been actively investing my time and money in reestablishing our free society. our biggest problem has been the shortage of talent. Statists ltave succeeded while we fit iundered because they have had the talent and the cadre to develop and sell their programs. Our direct defense of business. particularly our media advertising is either clumsy and pitifully ineffectual or else downright destructive. We substitute intellectual bro- mides for a cogent explanation of our point of view. We take a conciliatory attitude. Uur ads apologize for profits. We accept the fallacious concept that the corporation has abroad ?social responsibil- ity" beyond its duty to its shareholders, We are ashamed of private ownership and prof- its. and are hoodwinked into characterizing government regulations as "virtuous" and in the "public interest." As a typical exam- plc. the Advertising Council. hacked by most major US. connorations. describes reg- ulations as "the promotion of fair economic competition and the protection of public health and safety." This is nonsense, Instead of this bankrupt approach. we need to go on the of fcnsive. We should cast aside our desire to be popular with colleagues and the establishment intellectuals, and over- come fear of government reprisals. We need to advertise that the market system is not only the most efficient. but also the most moral system in history. We need to attack government regulations for wreaking havoc on those it is allegedly designed to helpr those least able to fend for themselves. We need to stigmatize interventionism as bsemers conclude that many business people (let: ?t like mo . . "today?s managerial trend fs not to accept risk, but to amid intrinsically unjust because it deprives indi? vidualsof their right to use theirlivcs and property as they see fit. We need to defend the right of "capitalist acts between con- sentintr adults." in the words of business scholar Robert Noaivk. A recent demonstration of the need for arguments beyond the standard one of effi- ciency is the Supreme t'ourt decision upholding a Maryland law {passed at the bidding of a service station dealers ?1554 icia- tioni liarrinpr oil producers and refiners front operating service stations. The court found that "regardless of the tilt imatc eco- noniic efficiency of the statute. we have no hesitancy in concluding that it bears a rea- sonable relation to the state's legitimate purpose in controlliny,r the gasoline retail market. . . . l?ifft't'tite defense of business will not rest on arguments based on effi- ciency. hot on justice. To claim that that state has the right to "control the gasoline retail market" is totalitarian nonsense. We must demand the same principled behavior of our organizations as we do of ourselves and our c: Impanics. When. for example. the t'ommittee for Economic Development advocates "that public-private partnerships must be an essential part of any national urban strategy, business should withdraw its support. it should do the same if the Chamber of t?om merce con- tinues to promote government intervention under the philosophy espoused by a former president. "It?s not possible or desirable to remove all the regulations." We noed new business organizations that refrain from askinpr for state protection and subsidies. and that criticize. expose and lobby against instances of political capitalism and "the partnership between business and govern- ment." They should be unafraid to criticize alleged defenders of market capitalism when it is undermined. For example. the ('hamber of Commerce has vigorou'sly defended the Comprehensive Employment rTraining Act program on grounds that "the government will pay and train the hanl-to-employ." llt'ho is willinpr to condemn the Chamber for its anti-market stance? Such a group exists: The Council for 3 Com- petitive Economy. Launched a year ago. the Washington-based Council propagates the ethical case for capitalism and seeks to attract business people who helieye in the importance of this mission. Its full-time staff has researched and presented testi- mony on such issues as the bailout, trucking deregulation, auto import T't??ll'lt'~ tions and gasoline rationing. 'l'his groupof over LIHHtt-olnpanies and iudn iduals sup- ports unregulated. unsubsidiaed free market and opposes all gou'rnmetlt fayorit- ism. protectionism and special priy ilcge, Whether its aid to the tourist industry or tilltitt'tlst law, the objects on prim-i- to all disruptions of the market prta'ess, Such an organization ill help businessmen avoid blunders similar to that of the Wichita t'hainber of when it hum-Hy promoted :l coal pfasifi- cation plant. which would ban- been par? tially owned by Wichlta and subsidised by Washington. The people of Wichita rejected t?hamher propaganda that the plan would not ens] them anything and voted it down. It Ither lulunders can be prevented, such as the t?alifornia business community's Luv-rut opposition. 'l'ltese blunders create an imagi- of littsiness in cahoots with gov- ernment to tax and exploit these people. .?dilton Friedman describes this as business followinpr "its uncrrint.r instinct for if a free market is ouraim. the issue of political realism is noohstat'le. [lay-to-day politics operates in a fnunework of values. l'p until now. those valtics have been stip- plied in. the :tnticapitalists. whether of the J.alph Naderor Felix Rohatyn stripe. Our job is to finally provide real competition to them by making the moral case for capital- ism. doing so. we will stretch the perim- eters of public debate until it includes free- market ideology. Hut that cannot happen until business people talk about it publicly. and have the courage to defend their rights. Business can survive. but not without the help of bosinessmen. Hy fighting against interventions. however profitable. and by defendini,I the free enterprise system, busi- nessmen can be a vital force in establishing a free society. To date. businessmen have not seen fit to do so. 'i'fhether they will in the future may determine whether business has a future. Or deserves to. - Koch: chair-mm of Koch n, a 3 billion only. mineral oil, grand Plank. In Km. H. is also chain-mm oi the of ditch" of ?u End] for a Comp-min Romy We?. D.C. (Iquncil tum (lompolilivc Economy Defending the Market Economy Defending the market economy is, of course, the main goal of the Council for a Competitive Economy. Thus it is appropriate that ourfirst set of reprinted articles deals directly with that concern. The authors represented here have different perspectives on the problem, but they all agree on several basic points: that the free market economy is the most just and efficient economic system possible; that it is therefore worth defending: that those who should be its strongest defenders are at present doing a less than adequatejob; and that a better defense of the market is both necessary and possible. We believe yOu will find the articles in this series provocative and important. We hope they will provide some ideas that can be acted upon. And we hope that in this and other ways the Council can play a significant role in defending the free market economy. Contents Capitalism and the Corporate Exe0utive Robert H. Bork Which Way for Capitalism? Milton Friedman Pragmatic Politics Won?t Win for Business A. F. Ehrbar How to Achieve an American Miracle C. Jackson Grayson Jr. Big Business Comes out of Its Corner . . . Fighting? Thomas Winslow Hazlett The Business Community: Resisting Regulation Charles G. Koch ?Businessmen do not display constant devotion to free market principles. They, like any other groups in society. often ask government for favors. subsidies. and protection they should not have. When that happens. as it will. they may expect to be opposed vigorously, by those who are otherwise their allies in preserving the institutions of the free market. To the degree that business leaders behave that way. they undercut their credibility on issues where their position accords with the public interest. Reprint Series Capitalism and the Corporate Executive It is commonplace that the corporation is today one of the least liked and re- Spected institutions in American society. It is also, and partly for that reason, the tendency of current public policy to thrust great and increasing costs upon business in order to achieve a wide variety of social goals. These costs are reaching levels that now impair the effi- ciency of our economic system and may shortly threaten the capacity of corpora- tions to perfomi?in terms of produc- tion, investment, and employment?in ways the public regards as adequate. Since capitalism as a system is not widely loved for itself but is, rather, tolerated for its superior perfonnance, the prospect is worrisome. Unacceptable performance will not be attributed to the costs imposed by govemment but will be blamed upon the corporate sysrem. The demand will be for further reforms that threaten the continued existence of capitalism. The puzzles are-Why is this happen~ ing? How can the system be defended? and, particularly, Why is it not being de- fended more vigorously? Robert H. Bork. former solicitor general of the United States and resident scholar 0f the American Enterprise institute, is Chancellor Kent professor of law at Yale School. By Robert H. Bork We must recognize that these may be the wrong questions altogether. The problem may not be specific to corpora- tions and capitalism. The fact is that the institutions of our society are generally in decline. It is a phenomenon Robert Nisbet calls the ?nvilight of authority." In the last ten or fifteen years most of our maior institutions?govenu?nent, corporations, the military, universities, the family?all have experienced a loss of respect and of moral authority, so that one is inclined to suspect a more gen- eral cause at work than simple, specific distrust of business and capitalism. Per- haps the causes lie in the related phe- nomena of an explosive growth of the intellectual class and an upsurge of an egalitarianism that distrusts and deni- grates all centers of perceived power. Be the causes what they may, it is apparent that there has been a flattening of the American institutional landscape. Political battles, however, cannot be conducted in terms of general societal trends. They must be fought in terms of particular proposals for the reform of specific institutions. It is also true that victories and losses on confined fields affect trends in larger areas. When we examine the conditions nec- essary for the continued vigor of our corporations and the survival of the capitalist system, the issue of moral authority is crucial. Capitalism has per- formed unprecedented feats in the pro- duction of material well-behig, but eco- nomic performance by itself is not enough. institutions that hope to survive in a society like ours have to be seen as possessing moral authority: their pow- ers and their wealth must be accepted in some moral and political sense as legiti- mate. lt is apparent that corporations have little moral authority and very little notion of how to regain it. It is instructive to meet the leaders of the major American corporations when they are out of the office, gathered to- gether, and thinking about their position in the society. These are the people thought of by the general public and by the critics of the corporate system as bold, rapacious, cunning leaders. the Machiavellis of our society. 111ch could hardly be a greater disparity between that image and the reality. In their concemed discussions of their relationships with the outside world, one finds many of them to be docile, apprehensive, defen? sive, and unsure of how to reSpond to sharp and unrelenting attacks. I remember a talk in which a promi- nent businessman said that he and his colleagues were concerned that the large American corporation does not possess legitimacy in the eyes of the rest of society. He asked how they could alter ?u uwnav- - and head off punishing ?reforms? is like tinkering With a leaky faucet in the hope of averting the th?StUW? ?004? My other reaction was surprise at the mood of defeat, of lowered morale, that suffuses meetings to discuss problem$ Of this sort. It is as though a large fractl?n of the community of business leaders wants to make preemptive concessions, as if they meet not to plan a fight against a wrongheaded movement but to discuss how best to negotiate the terms of surrender. That attitude, a defensive posture and an ressed willingness to make on wise ges in order tobe accepted, will not lead to peace and popularity, much less to reestablishment of moral author- ity. It will be seen as weakness and will earn only the contempt of the enemies of corporations and capitalism, while lead- ing the large, relatively indifferent ma- ]onty to suppose that the critics must be right: if capitalism were a positive good and worth defending, business leaders would not be so ready to compromise and, if need be, to capitulate. To ask what You can do to be accepted is to ad- mit that you are not acceptable. Nobody ever got into a club that way. The hosrility that fuels the attack upon corporations arises from an alliance 01?, perhaps more properlyF a congruence of interests and beliefs between social- Populists, politicians, and intellec- tuals. In that constellation the intellec- tual class seems the crucial element for it provrdes the indiSpensable theoretical apparatus With which the institutions of capitalism are attacked. The academjc branch of the intellectual class, which is the creative core, produces an enormous amount of scholarship designed to prov free economic and social mama?? me knuujr -. . are associated With business. The shift of power from business to go?lemmem represents a shift from the primacy Of the market to the primacy 0f palms and hence a gain to the mtellec?l?dl class at the expense of the bourgeoisre. There may be a great deal of truth "1 that lit" pothesis, but perhaps it is not the entire explanation. Allowance must also be made for the economic ignorance that characterizes not only the population at large but the intellectual class. Few intellectuals have been exposed to a good basic course in price theory. Most of them have no firm idea of the functions that markets serve and they tend to suppose that bet- ter economic results can he ordered by law. Thus, the great majority of academ- ics appear honestly to believe that mini- mum wage laws benefit workers as a class, supposing that such measures sunply transfer wealth from wealthy businesses to poor workers. People who believe that have no difficulty support- mg detailed regulation of all business since they have little notion either of its real costs or upon whom those costs ultimately fall. But I think we also overlook the envi- ionment in which professors spend their that we underrate the influence :?irted on professors by their students. f' studies show that when students "Emmi 3011336 their political sym- fl?) res shift massively to the left, 3 p113- 0 $21.10? ?3113?? taken to be the result famtlellec tual aunOSphere created by true If; til N0 dOUb? that is partially I may not be the entire Story. tudents ent - . . ?ung universities tIme 1? their ?Um: _?Ierf0rt.h boredom at the ceiling, whisper to one anotherwalked in the other direction toward the windows, they would become increasingly atten- tive until, as he paused by the windows, they would be leaning forward in rapt attention. After being subjected to hf- teen minutes of this alternating treat- ment, the professor was pinned to the outside wall, quite unconscious of what had happened to him. It seems likely that an analogous sort of conditioning, taken over a period of ten or fifteen yeaIS, may modify the political outlook of many professors at universities. . There are, of course, other factors in- fluencing the outlook ofmtellectuah, one or two of which require brief men- tion. Intellectuals, like other peopler 3N apt to find capitalism cause it lacks a central v151on. 53115 ?0 offer no meaning to personal ma?i beyond the narrowest self-interest. in is hardly capitalism's fault, since modern times at least it does not tend to be more than a_mcan5_0f ?if; nizing production and distnbutlim-?v other systems of belief that once i alongside capitalism and in spiritual lack have declined. [161' 8125. . part due to the rationalist attitu culcated by capitalism. P601313 {fell ter- want more than rationalism, ?l?h ap- and material prospean- 33? 5 mlvaluer Pear to hunger for transcen en ed offer and socialism and similar ere secularized versions of suchf million capitalism does not. They 0f er,r - the promise is false and neverumw? in practice, a vision of (3(7memean concern for society at lathe: 0 heels. That's a constructed out of whole cloth. The plain fact is that at no other time in human history has the ordinary man improved his condition and benefited his lite as much as he did during that period of the 19th century when we were the closest to free enterprise. Many of us, Iventure to say, are bene- ficiaries of that period. I speak of myself. My parents came to this country in the 1890?s. Like millions of others, they came with empty hands. They were able to find a place in this country, to build a life for themselves and to provide a basis on which their children and their children?s children could have a better life. There is no saga in history remotely comparable to the saga of the United States during that era, welcoming mil? lions of people from all over the world and enabling them to find a place for themselves and to improve their lives. And it was possible only because there was an essentially free society. if the laws and regulations that today hamstring industry and commerce had been in effect in the 19th century, our standard of living today would be below that of the 19th century. It would have been impossible to have absorbed the millions of people who came to this country. What produced the shift? Why did we move from a situation in which we had an essentially free society to a situation of increasing regimentation by govern- ment? In my opinion, the fundamental cause of most government intervention is an unholy coalition between, on the one hand, well?meaning people seeking to do good and, on the other, Special in- terests [meaning you and me] seeking advantage from government. The great movement toward govern- ment has not come about as a result of peeple with evil intentions trying to do evil. No, it has come about because of good peOple trying to do good. But they have tried to do good with other people's money, and doing good with 0! er peo? ple?s money has own basic flaws. 1n the first place, you never spend anybody else?s money as carefully as you spend Your oWn. So a large fraction of that money is inevitably wasted. In the sec- ond place, and equally important, you cannot do good with other people?s money unless you first get the money away from them, so that force? sending a policeman to take the money from somebody?s pocket?is fundamental to the Philosophy of the welfare state. That 15 why the attempt by good people to do 800d has led to disastrous results. It was this movement toward welfare statism that produced the phenomenon In Chile which ended with the Allende Test?me. It is this tendency to try to do gnod with other people?s money that has brought Great Britain ?once the greatest nation of the earth, the nation which is the source of our traditions and our val- ues and our beliefs in a free society?to the edge of catastrophe. When you start on the road to do good with other people?s money, it is easy at first. You?ve got a lot of people to pay taxes and a small number of people for whom you are trying to do good. But the later stages bcCorne harder and harder. As the number of people on the receiving end grows, you end up taxing 50 percent of the people to help 50 percent of the people?or really, 100 percent of the people to distribute benefits to 100 percent! The Future Where do we go from here? People may say, ?You can?t turn the clock back. How can you go back?? But the thing that al- ways amuses me about that argument is that the people who make it, and who accuse me or my colleagues of trying to turn the clock back to the 19th century, are themselves busily at work trying to turn it back to the 18th century. Adam Smith, in 17?6, wrote The Weafth of Nations. it was an attack on the government controls of his time? on mercantilism, on tariffs, on restric. tions, on govemrnental monopoly. But those are exactly the results which the presentday reformers are seeking to achieve. In any event, that?s a foolish question. The real question is not whether you are turning the clock back or forward but whether you are doing the right thing. Some people argue that technological changes require big government and you can no longer talk in the terms of the 19th century when the federal govem- merit only absorbed three percent of the national income. That?s nonsense from beginning to end. Some technological changes no doubt require the government to engage in activities different from those in which it engaged before. But other tech- nological changes ret'iuce the need for government. The improvements in com- munication and tran5portation have greatly reduced the possibility of local monopoly which requires govemment intervention to protect the consumers. Moreover, if you look at the record, the great growth of government has not been in the areas dictated by technologi- cal change. The great growth of govern- ment has been to take money from some people and to give it to others. The only way technolo has entered into that is by providing computers which make it possible to do so. Other people will say, ?How can you talk about stopping this trend:1 What about big husrness? Does it really make any difference whether automobiles are made by General Motors, which is an enonnous bureaucratic enterprise em? ploying thousands of people, or by an agency of the United States mcnt, which is another bureaucratic enterprise?? The answer to that is very simple. It does make all the difference in the world, because there is a fundamental differ- ence between the two. There is no way in which General Motors can get a dollar from you unless you agree to give it to them. They can only get money from you by providing you with something you value more than the money you give them. If they try to force something on you that you don?t want?ask Mr. Henry Ford what happened when they tried to introduce the Edsel. On the other hand, the government can get money from you without your consent. They can send policemen to take it out of your pocket. General Mo- tors doesn?t have that power. And that is all the difference in the world. It is the difference between a society in which exchange is voluntary and a society in which exchange is not voluntary. It?s the reason why the government, when it is in the saddle, produces poor quality at high cost, while industry, when it?s in the saddle, produces high quality at low cost. The one has to satisfy its customers and the other does not. Two Scenarios Where shall we go from here? There are two possible scenarios. The one is that we shall continue in the direction in which we have been going, with gradual increases in the scope of government and government control. If we do con- tinue in that direction, two results are inevitable. One is financial crisis and the other is loss of freedom. Great Britain is a frightening example to contemplate. It moved in this direcrion earlier than we and has gone much further. The effects are patent and clear. But at least when Britain moved in this direction and thus lost its power politically and interna- tionally, the United States was there to take over the defense of the free world. But I ask you, if the United States fol- lows the same course, who is going to take over from us? That's one scenario, and I very much fear it?s the more likely one. The other scenario is that we shall, in fact, halt this trend?that we shall call a halt to the apparently increasing growth of government, set a limit, and hold it back. There are many favorable signs from this point of view. I may say that the greatest reason for hope, in my opinion, is the inefficiency of govemnient. Many people complain about govenunent waste, but I welcome it. I welcome it for two reasons. in the first place, efficiency is not a desirable thing it somebody is doing a bad thing. A great teacher of mine, Harold Hoteliing, a mathematical economist. once wrote an article on the teaching of statistics. He said. ?Pedagogical ability is a Vice rather than a virtue if it is devoted to teaching error.? That's a fundamental principle. Government is doing things that we don't want it to do,- so the more money it wastes, the better. In the second place, waste brings home to the public at large the fact that govern ment is not an efficient and effective in- strument for achieving its obiectives. One of the great causes for hope is a growing disillusionment around the country with the idea that government is the all-wise, all?powerful big brother who can solve every problem that comes along, that if only you throw enough money at a problem it will be resolved. Several years ago lohn Kenneth Gal- braith wrote an article in which he said that New York City had no problem that could not be solved by an increase in gov- ernment spending in New York. Well, since that time, the budget in the city of New York has more tl?itm doubled and so have the problems of New York. The one is cause and the other effect. The govem? ment has spent more, but that meant that the people have less to spend. Since the spends money less effi- ciently than individuals spend their own money, as government spending has gone up, the problems have gotten worse. My main point is that this inefficiency, this waste, brings home to the public at large the undesirability of govemmental intervention. There are also many unfavorable signs. It's far easier to enact laws than to re- peal them. Every Special interest, in- cluding you and me, has great resistance to giving up its special privileges. I re- member when C}erald Ford become presi- dent and called a summit conference to do something about problems of infla- tion. I sat at that summit conference and heard representatives of one group after anorher go to the podium?a representa- tive of business, a representative of labor, you name the group?they all went to the podium and they all said the same things: ?Of course, we recognize that in order to stop inflation we must cut down govenunent spending. AndI tell you, the way to cut down govenuncnt spending is to spend more on me." That was the uni- versal refrain. Many people say that one of the causes for hope is the rising recognition by the business community that the growth of govemment is a threat to the free enter- prise system. I wish I could believe that. but I do not. You must recognize the facts. Business corporations in general are not defenders of free enterprise. On the contrary, they are one of the chief sources of danger. The use greatest enemies of free enter- prise in the United States, in my opinion, have been, on the one hand, my fellow intellectuals and, on the other hand, the business corporations of this country. They are enemies for opposite reasons. Every one of my fellow intellectuals believes in freedom for himself. He wants free speech. He wants free re- search. I ask him, ?Isn?t it a terrible waste that a dozen people are Studying the same problem? Oughtn?t we to have a central planning committee to decide what research proiects various individu- als undertake?? He?ll look at me as if I?m crazy, and he?ll say, "What do you mean? Don?t you understand about the value of academic freedom and freedom of re? search?? But when it comes to business he says, ?Oh, that's wasteful competi? tion. That's duplication over there! We must have a central planning board to make those things intelligent, sensible! So every intellectual is in favor of free- dom for himself and against freedom for anybody else. The businessman and the business enterprises are very different. Every businessman and every business enterprise is in favor of freedom for ev? erybody else, but when it comes to him- self, that?s a different question. We have to have that tariff to protect us against competition from abroad. We have to have that special provision in the tax code. We have to have that subsidy. Businessmen are in favor of freedom for everybody else but not for themselves. There are many notable exceptions. There are many business leaders who have been extremely farsighted in their undersranding of the problem and will come to the defense of a free enterprise system. But for the business communi . in general, the tendency is typified by U. 3. Steel Company. which takes ads to extol the virtues of free enterprise but then pleads before Congress for an im. port quota on steel from lapan. The only result of that is for everybody who is fairvininded to say, "What a bunch of hypocrites!" And they're right. Now don?t misunderstand me, I don?t blame business enterprise. I don't blame U. 5. Steel for seeking to get those special privileges. The heads of U. 5. Steel have an obligation to their stockholders, and they would be false to that obligation if they did not try to take advantage of the opportunities to get assistance. Idon?t blame them. I blame the rest of us for letting them get away with it. A Matter of Faith? Where are we going to end up? I do not know. I think that depends upon a great many things. I am reminded of a story which will illustrate what we may need. It has to do with a young and attractiVe nun who was out driving a car down a superhigh- way and ran out of gas. She remembered that a mile back there had been a gas station. She got out of her car, hiked up her habit, and walked back. When she got to the station, she found that there was only one young man in attendance there. He said he'd love to help her but he couldn?t leave the gas station because he was the only one there. He said he would try to find a container in which he could give her some gas. He hunted around the gas station and couldn?t find a decent container. The only thing he could find was a little baby?s potty that had been left there. So he filled the baby potty with gasoline and gave it to the nun. She took the baby potty and walked the mile down the road to her car. She got to her car and opened the gas tank and started to pour it in. lust at that moment a great big Cadillac came barreling down the road at 80 miles an hour. The driver was looking out and couldn't believe what he was seeing. So he iammed on his brakes, stopped, backed tip, opened the window and looked out and said, ?Sister, 1 only wish I had your faith!? "To be convincing, a strategy based on principle requires a consistency that is sorely lacking in business's actions and advocacy now. Too often, business?s political positions are opportunistic and unprincipled, and even subversive of the free market. Few traits are as repugnant as hypocrisy, and essant pleas for subsidies and protection from it seems likely that the inc competition have done as much as all the Naderite diatribes to undermine the credibility of ?tree' enterprise. Reprint Series Pragmatic Politics Won?t Win for Business By A. F. Ehrbar The propenSiW 0f to focus on Stabilitll- observed rules of behavior: near-team results is a major reason why The biggest among bi businesses not I Play along with the White House as ng W1 the price stan- much as possible. This principle reflects only are going 310 016 other executives? be SenSible public policies are not adopted more often. Their eyes fixed ?rmly on dards, but also are helping can liefs that they stand abet- the 9159mm; POhtiCiaDS IOUtinelY companies into Ime- The corporate ter chance of getting a receptive hearing meet measures. that would bring irnme statesmen W110 make Up the Business from the Administration?on dune dlscoml?m in favor of inferior Roundtable are such enthusiastic boost- that affect them most directly if they Short-run palliatives that frequently 6T5 that they quality 35 3 5011 Of moffi? lay ball with the Presrdent on issues 0 mite underlying problems worse. Lately cial COWPS auxiliary. Thomas A. Mur? lesser importance, ?Says Laurence i: mcmaSinle apparent that phy, chairman of General Motors and of Silberman, a In ?2:11:55 [933de are afflicted with a sim- the Roundtablc, has Written the heads of former deputy anon-i enlinyopl'iil at least when it comes to the FORTUNE 500 an 22,000 GM. sup- aren?t many companl?: the White Camp ?11m government. Many large pliers, urging them to comply, and GM. they need an open oor 0 can be d2: atgc?ursumg a strategy that has been running ads routing the pro- House . be' a ?re- modatio and only as one of accom? gram. Murphy has been hawking the . Cid-?vale the wage mg me to an concessmn. They acqui- huugh, he told FORTUNE, spon51ble corp . [h 1e this mangananted demands by ragula- he believes that they cannot reduce 1n- executive explains wi freC?lEnt] Himmlle. House, and they flation, and that the other part of the wa is important POSItlons that are inimi? Carter programefiscal and monetary re- that you This he: big-ten? mtereStS. straint?can succeed without them. a white hat or, at th b' odor ?nth the Went]? 112th anSt evident Why is Thomas Murphy pushing a a m'mt of Pregidlgiilycunlvetsal endorse- policy tdhlit r115 fbothhbad fortGenegaggilro? vemmem arter?s wa e-an - tors an a or spun ry. go . 9;?tl?elt?es. Though few exegutivgs extent, it may be a patriotic gesture. re- particularly acute {aiulirreWhere health . mm: theirpnce increases are any- fleetingafecling that the Presrdent Inflation President and everybody ought to try to says Walter . Com a'handful 0f the CO in lawye . A . [James ha . follow his lea ers . blic perception tends to with [h V9 Promised to coo erat troubled times. But more quiet becauselpu industry in the bad guy roe . meets at the melhave rolled back ly, the answer can nd by 100 mg oaks W'll . Loman chief executives Sim- fr andesr (?inflation adviser beyond business's reaction [11v practically EVEW large 111185,. or any other single issue, an, ex- pl want t0 We! to er} mg; 0f high-Priced amining the whole pattern of busmess . DD sa tor the copious re- behavior that adds up to the strategy of yourldcoOffend 3 until on wage and Price concession. Consider these commonlY W011 pend on to take your side in disputes with the regulatory agencies. If you do, you are likely to lose your protector. Says one auto executive. ?People come in packages, and there is a feeling that you have to buy the whole thing,? I In dealing the agencies, 'ou must yield on minor matters in or er to get fair treatment on the ones that are most important to the company. Yielding is calculated to and avoid antagonizing agency staffers. This prin- ciple causes executives to go along with what they believe are a number of bad ideas. As one businessman who spends much of his time negotiating with the Environmental Protection Agency says: ?You bite your lip a lot, and it gets pretty swollen.? I Do not criticize an agency publicly; if you do, the staffers will get you. One company calls this the Great 8 Syn- drome. referring to the presumed power of employees with a Civil Service grade of (3.8-8 toiling in the bowels of the hu? reaucracy. [Real influence doesn?t begin until the grade of (3.5.43 or higher, but Great 8 rhymes] I It is perfectly acceptable to challenge an agency in court, but don?t hold a press conference about it. Many regulators are lawyers and regard lawsuits by compa- nies as gentlemanly acts. Because they are comparatively private, Suits are also less likely to generate adverse publicity about an agency than accusations in the press or at a Senate hearing. Douglas B. M. Ehlke, a lawyer in the State of Wash- ington who specializes in Occupational Safety and Health Administration liti- gation, frequently has to promise his clients that he will not tell the press about their cases, even after they are completed. A recent exception to this mle was Sears, Roebuck?s gutsy challenge to the confused enforcement of the anti-dis- crimination laws, complete with press conferences and the repudiation 520 million a year in government business. But Sears later appeared to cave in to pressure on another front, cutting its catalogue prices at President Carter?s request. Underlying business?s approach to dealing with government is a pervasive fear of Washington that reminds one of a timid child?s trepidation at confronting the neighborhood bully. Businessmen seem to think they have to play up to the bully so that he will leave them alone or, better still, take their side in some future fights. Fear is all too obvious in the ex- planation one chief executive gave Poit- runs for complying with the guidelines: ?We know what it is costing us to com- ply, but we don?t know what the cost might be if we refused.? The unknow- able "cost? he has in mind involves Washington?s power to punish a company by intensifying regulatory enforcement, denying it privileges that only the gov- ernment can bestow, or exposing it to the embarrassment of a public tongue- lashing. The questions businessmen should be asking themselves are whether these fearsare iustified and, ifso, whether appeasement will work. The bureaucrat as pug The obiective evidence suggests that fears of retribution against companies that forcefully oppose regulators and poweriul politicians are wildly over- blown. To be sure, fear is a perfectly natural reaction to the numbing increase in regulation over the last fifteen years? thirty maior regulatory laws and seven new agencies in the first half of the 1970?s alone. The new fomis of regula? tion are particularly intrusive because they are prescriptive rather than pro- scriptive, and give administrators a re- markable measure of discretionary iwer, ranging from the approval of ?af- imiative action? plans to specific de- sign requirements for ladders, tricycles, and matchbooks. Given that power, there are grounds for suspecting that any Administration may try to use the agencies to carry out political vendettas. Iohn F. Kennedy ef- fectively mobilized the FBI and the IRS to demonstrate the realities of relative power to price-boosting steel executives. And the Nixon Administration used agencies in much the same way loan sharks employ err-heavyweights to col- lect delinquent debts. In 1971, for instance, Lyle C. Roll, the chairman of Kellogg, was asked for a company contribution to Nixon?s reelec- tion campaign. The fund raiser made it clear that the then two-year-old FTC in- vestigation of the breakfast-cereal indes? try could end in a complaint to dismem- her the companies if Kellogg didn?t cough up. In rather indelicate language, Roll refused. The antitrust action has been under way for seven years now. There is no evidence that the White House had a part in the decision to file a complaint, but it doesn?t really matter; the circumstance alone is suffi- cient to give an executive pause. Fortunately, incidents of such flagrant abuse appear to be rare, and there is no evidence that the Carter Administration has stooped to those tactics. Instead, Car- ter has "enforced" the ?voluntary? guidelines with threats to withhold gov- ernment contracts from noncompliers and to label them official sinners. But the legality of blacklisting uncoopera- tive companies from government con- tracts is so questionable, and the threat to expose them publicly is so mild, that it is difficult to understand why busi- nessmen feel so vulnerable. After all, a company wins customers mainly on the basis of quality and price. not its com)- rate conduct in Washington. No (1110 without quid The only significant threats employed by this Administration have involved economic floors that industries get from that govemment therefore has the power to take away. The Administration made It clear to steel companies that there is a quid pro quo between compliance with the guide- lines and the level of trigger prices on imported steel. At Carter?s request, the Interstate Commerce Commission said it would not ?automatically? allow truckers to pass along cost increases ie.g., a union contract in excess of the guidelines}. Using trade policy and rate regulation to strong-arm corporations may seem reprehensible, but it is hard to feel much pity for the companies in- volved. They made themselves suppli- cants to the government in the first place by seeking special privileges. It is only natural that the dispenser of privi- lege will occasionally ask something in return. Corporations also fear that the regula- tory agencies will hound them without any prodding from their political mas- ters. The anxiety is built on the abun? dant instances of harassment and intimi- dation by over?zealous regulators. But it is unlikely that the pliant posture busi- ness has adopted toward regulators and politicians will make run-ins with the agencies any less likely. The selection of companies to receive harsh treatment appears to be largely a matter of chance. In a month of searching, FORTUNE found only one case in which an agency ap- peared to have been striking back at a corporation for giving it a hard time. [Following accepted practice, the com- pany asked not to be identified} Given the nearly infinite permutations of contacts, the fact that only one case tumed up suggests that the practice is so rare as to be inconsequenv tial. The more important point is that the Great 8?s [or 13?s] do not need any special incitement to turn against business. The regulation created over the last fifteen years has largely been of the social, rather than economic, Variety leg, health, safety, and pollution control}. People attracted to careers in the agen- cies administering those laws tend to see corporations as exploiters of hapless workers and deSpoilers of the environ ment. As a result, dealing with the but- eaucrats has by nature become an advert sary rocedure, and no amount of pussy ooting around is likely to win the regulators? affections. A game called ?gotcha" A physician in the Food and Drug Admin- istriltion provided a remarkably candid view of the regulators? philosophy in testifying in 1976 before a Special FDA review panel. He was explaining?why the agency should not tell companies what infonnation they must provide in order to get a new drug approved. ?That's gaincsinanship, the game of schlemiel,? he said. ?It's not up to us to tell them all the details of what should he done . . The No. 1 game of the agency should be ?got- cha.? You tried to slip one past, and I knew where to look for your trick. I called my shots and went and there it was? The panel, by the way, was looking into charges by staff mem- bers that the drug industry had the FDA in its pocket. Corporations obviously need political allies to influence the standards set for such things as auto and truck gasoline mileage, and to make their voices heard on legislation before Congress. But many businessmen naively believe they can build tip a sort of political credit bank. This theory holds that a company can accumulate goodwill at the White House or in Congress and then draw on it when necessary. More often than not, a com- pany finds that no matter how many de- posits it has made, the account is empty. Explaining is no fun The credit~bank theory and the notion that you have to "buy the whole pack- age? to win Congressmen to your side are convenient fictions that make life easier for corporate lobbyists in Wash- ington. After all, explaining to 3 Con- gressman why your company keeps tak- ing sides against him on specific issues isn?t a particularly pleasant pastime. Not incidentally, the presumed difficulty in cultivating political friendships also in- flates the lobbyists' importance. But, in fact, champions often require little culti- vation. Representative Iohn Dingell and Senator Donald Riegle Ir., both of Michi- gan, for example, are likely to support auto interests regardless of what the companies say or do about other issues, there simply are too many auto workers (read: votersl in Michigan for them to do anything other than defend the industry. Business?s accommodating posture is indicative of what might be called the salesman?s approach to politics. Business leaders assume that they have to be corp dial to the point of coziness in order to sell their view of issues to politicians, and that pointed criticism is counterpro- ductive. But politics and business are different worlds and require different tactics. Corporations win in politics not by currying favor, but by mobilizing a A year f-Ur CK?mnle. ment of Transportation to case its pro? posed 1980 fleet-mileage standard for light trucks. The pressure didn't come from Congressmen who were repaying a debt to the automakers or taking the side of companies that had fashioned the proper image. Congress and the Depart- ment of Transportation were reacting to protests frotn the United Auto Workers. the National Association for the Ad- vancement of Colored People, and Mayor Coleman Young of Detroit?all of whom feared thulLl close a Detroit plant if theoriginal proposal were adopted. The pitfalls of pandering Behind corporate timidity lies a prag? matic strategy calculated to minimize the bottom?line impact of the claims made on business. Such pragmatism is woefully misguided. Not only does it yield few, if any. short-run benefits, it alsorand this is the critical point?in- tensifies long?run threats to the free- enterprisc system. By pandering to govemment officials, business makes concessions that erode its rights and prerogatives, and takes positions that ultimately strengthen its adversaries? arguments. For example, though most chief execu- tives would deny the proposition. acced- ing to the guidelines amounts to a tacit admission that busmess and labor? not government?cause inflation. By al- lowing themselvcs to be cast as whipping boys, corporations draw attention away from the fiscal and monetary profligacy that is the true cause of inflation, reduc- ing the pressure on Congress and the Ad- ministration to behave responsibly. When the guidelines inevitably fail, business will be hard pressed to make a persuasive argument against mandatory price controls, with all their ill effects not only on business but on the efficient allocation of resources. If business is to halt the erosion of its rights? and possibly recapture some that it has lost?it needs to switch to a strat- egy founded not on pragmatism but on principle. There is a set of principles that fully legitimizes the role of business in society, but that business leaders often pay no more than lip service to?and of- ten violate themselves. Much maligned though it may be, the free?market economy serves the best material interests of society. Like preachers, ioumalists, machinists, and rock stars, businessmen are greedy in- dividuals trying to maximize their own welfare. The di5cipline of the market- place forces them to use their labor and capital in the ways that society values most highly. The market '3 allocation of resources results in greater wealth and a higher standard of living than arrangement. But the case for the free market is not of itself a sufficient political argument. opponents have been wrn- the battle by basing their appeals on what they call social They contend that competition is inherently unfair because not everyone is equally equ1ppcd to compete. and they favor a more egalitarian society in which every- body is cushioned against risk. For business to prevail, it too must appeal to a higher value. Fortunately, business? men are in .1 position to argue that the greatest good accrues to the greatest number under a system that grants indi- viduals the maximum amount of per- sonal liberty consistent with an orderly society. Risk is a right This implies in tum sonic strict limits on the powers and prerogatives of gov- ernment. It makes sense, for instance, to regulate prescription drugs, because lay- men generally aren't competent to assess the benefits and risks. Children and others unable to fend for themselves need to be protected from exploitation. And govemment intervention is essen? tial when private activities create intol- erable ?third?party effects,? such as paper mills fouling rivers and streams that no one really ?owns.? In many other areas, however, govern- ment interference with individual choice has gone too far and is unwarranted. The cyclamate ban is a case in point. While it is reasonable for the government to identify and publicize substances that may cause cancer, and to require disclov sure of their use in foods and beverages, individuals should have the right to as? sume risks if they so desire. As things stand now, individuals retain that right only when their voting power is strong enough to demand it, as the case of saccharin and cigarettes. One marvels at the logic of a system that bans cycla? mates while allowing an obviously more hazardous substance, tobacco, to be freely sold. The tension between freedom and reg- ulation is most evident when some of the recent legislation is viewed in the context of small businesses. In the area of workers' health and safety, for in- stance, the government now forbids, say, a boatyard and a carpenter from entering into mutually agreeable arrangements about working conditions. The govt-ni- ment has usurped the right of the car- penter to Work in a noisy shop, even it lic believes the yard owner is paying him enough to put up with all of the clamor. When business helps Nader The. Instr. of freedom is. sumo- ers negotiating with large corporations, but the issue is still there. To be sure, dividuals may be at a disadvantage in negotiations with corporate giants, hilt in competitive labor markets corpora- tions have an incentive to provide good enough pay and conditions of employ- ment to hold their workers. And there is no reason to suppose that the United Steelworkers or the United Auto Work? ers lack the sophistication and muscle to protect their memberships' interests. To be convmcing, a strategy based on principle requires a consistency that is Sorely lacking in business's actions and advocacy now. Too often, business?s political positions are opportunistic and unprincipled, and even subversive of the free market. Few traits are as repugnant as hypocnsy, and it seems likely that the incessant pleas for subsidies and protec- tion from competition#bankers' oppo? sition to removing ceilings on interest paid to depositors and import quotas on color televisions are but two of many- havc done as much as all the Naderite diatribes to Lindennine the credibility of ?free? enterprise. What, for example. is the public to make of the stand that Heath Larry, the president of the National Association of ManufaCturers, has taken on price con? trols? He has been arguing that prices and profits should not be restricted, but that it may be proper to control wages and dividends. It is difficult to imagine a more baldly pro?management position, advocating a form of regulation that would help managers keep their hands on profits and clamp down on wages. If business wants free prices, it will have to advocate freedom for all of them, in- cluding the price of labor. A successful strategy also requires that business aggressively pursue the public interest, even when that means sacrlfic- ing its own short-tenn interests. This en? tai ls formulating positive policies to deal w1th problems that the market mecha- nism cannot handle. Pollution is an ob? vious problem area where current policy is seriously flawed, and where busmess has failed to make the case for a superior alternative. Economists generally agree that a sys- tem of taxing companies based on the amount they pollute would work better than the present maze of rules and stand- ards. The govemment would still deter? mine the desired level of environmental quality. But in reaching that level, com? panies would be motivated to clean up the cheapest sources of pollution first. achieving any given level of envrron- mental purity at the minimum cost. Pollution regulators naturally dislike the tax idea because they would have power and considerably less to do than they have now. Many corporations also prefer the present system, in part be- cause the rigid requirements placed on the construction of new plants some- times act as a barrier to new competitors. A tax system would remove the barrier and probably favor modern factories at the expense of old ones. It also would in- troduce a new element of competition? the race to come up with better ways to reduce effluents and therefore taxes and prices. Uncertainty about who Would win that race naturally makes managers uncomfortable, Standing up for greed At the very least, business ought to re- fashion its response to attacks and stop allowing its critics to define the 15mg.; When the Administration was hectoriri business about ?catastrophic" profit: recently and George Meany Wag talkin about ?profit-push" inflation the N.A.M., the u. 8. Chamber ?(cum merce. and General Electric all FUSbed forth w1th analyses the re ported eamings? gains. That analysis may be correct. but busi. nessmen should never defend the fi'f?g} of profits,- justifying the lcVel 51mph, fosters their opponents? notion that cor. porations are taking something away from society and that they have to be closely watched lest they take too much Instead of denigrating the numbers, businessmen ought to candidly admit that they are out for all they can get-? and drive home the point that the work- ings of the market mechanism prevent them from getting anything more than the value society places on what they contribute. A lot has been said recently about business?s newfound lobbying clout. It is quite true that business has won a re- markable string of victories in Washing- ton over the last couple of years, But so far the Victories have all entailed beating back new curbs on corporations. Busi? nessmen will not have truly begun to win in Washington until they get their heads straight about what they stand for, master the art of advancing positive policies, and do a lot better job of ex? plaining themselves. Only then will they be able to roll back the attack on a free society. Unfortunately, business's timid- ity and opportunism make it difficult to expect that this will happen anytime soon, pl'l ?The most frightening aspect of the current gasoline crunch is the almost total absence of serious consideration and cpen support by businessmen, politicians, and economists for a return to the market system to ration demand and increase supplies. Believing it can't be done, many businessmen and legislators fail to fight for a return to the market system. instead. they remain silence or concentrate on compromises and accept what Representative Al Ullman calls ?the political equation. Reprint Series How to achieve an American miracle The most frightening aspect of the cur- rent gasoline crunch is not the long lines. Nor the price. Nor ocrc. It is not even the shoot-outs at the service stations. It?s the almost total absence of serious consideration and open support by busi- nessmen, politicians, and economists for a return to the market system to ra- tion demand and increase supplies. The answer to our problems has to be complete decontrol?decontrol not only of oil, but also of gasoline uand elimina- tion of the price and wage ?guidelmes? program along with it: a complete dis- mantling of the increasingly compli- cated, inefficient, inequitable, and un- workable machinery of energy and wage- price controls. [recommend this not from blind ideo- logical faith in the market system, but from a reading of the history of the failures of wage-price and allocation con- trols for over 40 centuries, an obser- vation of the current failures of energy and wage-price guidelines, and my own personal experience in directing controls, during Phase II of President Nixon?s wage-price program. C. Jackson Grayson It, a fonner business SChool dean, is currently chairman of the American Productivity Center in Houston. From 19%? to 1973, he was Chairman of the Price Commission. By C. Jackson Grayson Jr. The gasoline situation is a good ex- ample. The President blames Congress and scolds the public. The Congress blames the President and lectures the oil companies. Endless and fruitless djs~ putcs, investigations, and hearing drain the nation?s energies to find out who?s to blame: ?Is there a shortage? Where is the gasoline?" At the gas pumps there are hired guards, shootings, thefts, and scams. Hundreds of thousands of hours are Spent nonproductively in long lines when the nation?s productivity growth is already alarmingly low. New alloca- tion schemes are cooked up almost daily: odd-even days, numbered wind- shield srickers, minimum purchase amounts, state conservation quotas, cou- pons. Such controls organize and pro- long shortages. And in the process the poor, those with low incomes, and the weak are hurt the most. Back to a market economy. A good ac- count of the history of controls is chron- icled in a recent book by Robert L. Schuettinger and Eamonn P. Butler, Forty Centuries of Wage and Price Con- trols {The Heritage Foundation, Wash- ington, D. C., 1979). It is tragicornic that 40 centuries of price and wage controls and governmentally directed allocation systems for such commodities as flour, corn, wheat, and housing show a record of repeated failures. Not only do the guidelines violate the basic economic laws of supply and de- mand, they also violate the basic political laws of consensus, miner and equity. The program has no power base, no real support by business or organized labor, and it is rife with inequities. The pro- gram is not fading fast?it is dead. No scraping painting over, or review is go- ing to change it from being bad law, had economics, and bad politics. ?We have to continue,? says Barry Bosworth, director of the Council on Wage a Price Stability. ?There is no alternative.? Yes there is. I offer these recommen- dations: Remove all price and allocation con- trols over gasoline and other fuels. - Remove all wage and price controls. 0 Abolish the Council on Wage Price Stability. Return to a market economy. A ?political impossibility,? the con- ventional wisdom runs. it can?t be done. Congress, the President, and the public would never stand for it. Believing this, many businessmen and legislators fail to fight for a return to the market system. Instead, they remain silent or concen- trate on compromises and accept what Representative Al calls ?the po- litical equation.? That?s a mistake, both economically and politically. Economically, controls are a disaster. As chainnan of the Price Commission during Phase II {1971-73}, 1 saw this first- hand. After an initial appearance of gains, the inevitable erosion and inefficiencies began. No matter how rood our inten- tions, how hard we not of, what mod- els we employed, or how ingeniously we designed the regulations, the controls could never handle as efficiently or as effectively the millions of deciswns made daily in the marketplace to adjust to the changing conditions of supply and demand. The controls did not reduce shortages or inflation. They increased both. Fl sprinted from the July 16. 1979 ime of BusinessWeek by pennisslon ?Political courage.? Bad economics is also had politics. A very recent example is Britain. Margaret Thatcher rode to power on pledges to reduce much of the govemmenta] economic management, to decontrol prices and wages, and to rev1ve the market system. The classic example, of course, is West Germany. in Iuly 1948, Virtually all economic Controls were removed, in- cluding price and wage controls. The Allied powers, then in control, were fear- ful that it would lead to greater inflation, unemployment, political instability, and more problems for the poor. The bold move was controversial even among those closest to its architect, the econo- mist [later Chancellor) Ludwig Erhard. All rights reserved The fears proved unfounded, There was higher employment, higher real wages, rising productivity, :1 disappear ance of black markets, an abundance of goods in the shops, and?after an initial spurt in prices?a great reduction in in- flation. Apathy and despair turned to hope and energy. In truth, the ?economic miracles? that have followed decontrol were not mira- cles. They were no more than an end to the economic paralysis and disorder caused by the control mechanisms and a return to the market economy. President Carter speaks of the need for ?political courage? in facing these prob- lems. It's time for an act of political courage that makes both political and economic sense: decontrol. The Business Community: Resisting Regulation The maiority of businessmen today are not supporters of free ente ism, instead 1 rprise capital- ialisrn a trey prefer_?political capi- system in which government guarantees business f' mess its If pro its while buSi- and moc aces both less competition niaGovre security for itself. As Califor? times beumor?lerry Brown puts it, ?Some- though almost operate as Mam? feel more comfortable in a With a faint: where they could just deal em What Cttiilmmissars who would tell What quot he production goals were C?ncemedat}: ey had. . . . I am really 310me wea at many businessmen are market,? or the rigors of the free William Sa?ew York Times columnist analysis; agrees with this sobering {DP-levelm secret desire of so many ted monoc?lnafgers for controls and regu- ?13be is never openly stated. tQWard at?: managerial trend is not ting gov risk. It is tow En ar get- in elp to avoid risk.? that ?it?s ?if: Ford [1 has pOintEd out D'Zrats LinJust liberal do-gooilers, Em?lmnme?. consumerists and or the who are muse grow th of Native politigovermnent. It?s also (made eians who favor in- lndu 5.0 Koch Sings 15? Chairman 0 .. and of the (7m rnr?r'f (ni- ff'l' By Charles Koch Easiness ?so: seer It's bank 3' pent in en own districts. and transporters and retail- ers and manufacturers who want pro- tection from competitors. It?s insurance companies that lobby for bumper and air bag regulations that might lower their claims costs. It?s even, if you?ll forgive me, car dealers who want state govern? ment to protect them from the factory or from new dealers in their territory.? But that is only the tip of the iceberg. It was support from a large portion of the business community, including the Chamber of Commerce and the National Association of Manufacturers, which enabled Nixon to impose wage and price controls in 1971. Much earlier, bankers suceeded in pushing through legal pro- hibitions on the payment of interest on demand deposits. Moreover, the steel in- dustry has just caused the government to set minimum prices on imported steel. Businesses often fight bitterly against deregulation, as well as urging new con- trols. Despite support by both liberals and conservatives in Congress, deregu? lation of the airline industry was bloc ed for some time by heavy press the airlines themselves. Dere lation of the trucking industry as_ no pressure from the American Trucking A Ai?pmnt. Over the past five years our company has participated in dozens of hearings on regulatory matters before the Federal Energy Administration and the Depart? ment of Energy. At virtually all of these hearings, a number of oil companies have come down on the side of state regulation. Secretary of Energy James Schlesinger summed it up: ?The oil iri- dustry loves regulation and has been in love with it forniany years.? Precisely so. Businessmen have always been anx? ious to convince a gullible public and an opportunisric Congress that the free mar- ket cannot work efficiently in their in- dustry, that some governmental planning and regulations would be in the ?public interest.? Indeed, much of the govern- ment regulation which Plagues 115 tO?iaY has come only alter businesses have begged and lobbied for it. Neath? major piece of interventionist legis- 887 has been support the busrness strategy of accoms modation with government paid off in . ?rhaps. but st to some extent, pe . the P3 face. Business now it falls on its suffers as mm: as the rest of notifier}! se consequences its from the a vet Xhausmmo own interventionismet ea c. the ?reserve fund? pr_ itr {4363 great economiSt Ludwig yon ity. This old busines Passed at the behest of busmess, regula- tions boomerang A refiner may procure price controls on his purchased crude oil, yet later he experiences shortages and even may find price controls slapped on his own gasoline tocaprure hispolitically derived ?excess" profits. Oil pipeline companies invite the DOE in to study YEgiOI?ial pipeline needs, hoping that their particular project will be favored. But in the future, Washington may well make all pipeline decisions, and even build all pipelines. Businessmen should realize that the more regulated an industry becomes, the less it can cope with changing conditions in the World. It is no coincidence that the four lowest ranking industries in return on capital today (airlines, railroads, nat4 ural gas utilities, and electric utilities] are also the most highly regulated. The final stage of political capitalism is even worse. Richard Ferris, president of United Airlines [an exception in his industry] predicts, ?Continued govem- mental control will mean airline service as you know it today will be seriously jeopardized. And, as service and equip- ment deteriorate, you will stand by help~ lessly as the threat of nationalization becomes reality." In the electric utility industry, a number of states have al? ready organized agencies to take over from private utilities unable to finance needed additional generating capacity. Even business?s dwindling Successes in achieving precisely the regulatory scheme desired by them do not guaran- tee future control. Iiist theoppositc often occurs. Politically derived benefits for business cause hardships for other spe- cial interest groups, who apply pressure on the regulators to turn the regulatory weapon around. Thus, the business community is growing more and more aware of the shortcomings of this strategy as more and more firms directly suffer the after effects of their own pathetic schemes. Moreover, examples of the ultimate consequences of interventionism, eSpe- cially the plight of the railroad industry in the United States and major industries in Great Britain, are awakening business- men to their own probable fate. Businessmen are also becoming justi- fiably concerned with the rapidly grow- ing antibusiness sentiment in this coun- try. Recent public opinion polls show that a large portion of intellectuals and the general public believe that business FeSpecially big business?has undue political power, which it uses to stifle and smash competition and to control prices. The Liberation of Business But business can free itself from this predicament, if only it will. As the Wall Street loumal recently noted, ?Despite the blows they have suffered in the ptillt' ical arena {businessmen} still have the capacity to be highly influential 1n the political 5 here. But they not bring about sucl; a reversal unless they are able to put aside short-temi concepts in favor of those longer?term consrdelra- tionsreaching the pornt where American businessmen will have to decide whether they really believe in the market system. If they don?t, it is hard to see who will muster the political forces to defend it against its very real and often intensely committed ene- mies.? In spite of business's sullicd rec- ord in defending free enterprise, there are large numbers of businessmen who want nothing more from government than to be left alone. And these numbers are growing quickly today. To survive, business must develop a new strategy. The great freevmarkct and Nobel Laureate economist F. A. has prepared a guide for us: Almost everywhere the groups which pretend to oppose socialism at the same time support policies which, if the principles on which they are based were generalized, would no less lead to socialism than the avowedly socialist policies. There is some iusti- fication at least in the taunt that many of the pretending defenders of ?free enterprise" are in fact defend- ers of privileges and advocates of gov- ernment activity in their favor, rather than opponents of all privilege. In principle the industrial protectionism and government-supported cartels and the agricultural policies of the conser- vative groups are not different from the proposals for a more far?reaching direction of economic life sponsored by the socialists. It is an illusion when the more conservative inrerventionists believe that they will be able to con- fine these government controls to the particular kinds of which they ap- prove. in a democratic Society, at any rate, once the principle is admitted that the government undertakes re- sponsibility for the status and postion of particular groups, it is inevitable that this control will be extended to satisfy the aspirations and prejudices of the great masses. There is no hope of a retum to a freer system until the leaders of the movement against state control are prepared first to impose upon themselves that discipline of a competitive market which they ask the masses to accept. The hopeless- ness of the prospect for the near future indeed is due mainly to the fact that poor ized political group anywhere is in aVor of a truly free system_ Before businessmen can serve as ef~ fective defenders of individual libe and the free enterprise system it is necessary for them to learn?precisrl5t what free enterprise rs and what it is ?if, We must do our homewurk, we mus, comprehend ?the philosophic found; tions of a free society.? Only then Will we have the necessary resolve to ca out the difficult task ahead. rry Armed with understanding, business. men can confidently proceed with the new strategy, which is composed of three parts: business/government rela- tions, education, and political action. 1. Businesleovenunent Relations- The first requirement is to practice what we preach. People see our incon- sistencies and? uite justifiably?51m. ply don ?t believe anymore, How discrediting it is for us to requizst welfare for ourselves while attacking welfare for the poor. Our critics rightfully claim that we want socialism only for the rich. Our credibility cannot be regained if we continue to file, hat in hand, to Wash. ington while mouthing empty, insincere platitudes about free enterprise. We can- not continue to have it both ways. Gov- ernment will not keep granting us favors on the one hand, while allowing us to run Our own businesses as we see fit, on the other. We must stop defending inter- ventions and demanding new ones. This might well diminish the impetus for new regulations and win new allies for us among intellectuals, legislators, and the eneral public. T?en we should advocate the repeal of existing regulations in our industries, as well. Never ask for ti ter re lation of a competitor even if has advantage of being less regulated than you are. This starts the Suicidal cycle which ends in the destruction of beth. instead we should concentrate on loosening our own regulations. We should defend our own right to be free of uniuSt regulath?S, and not try to shackle competitors. Stra- tegically, the critical point is to fight,m eliminate, rather than continue a 911' terventions, even those that .1310de short-term profits. Only by 3d? hering to this policy can we begm the step-by-step process of freeing ourselves? Taxes are particularly troublesome especially since many free mark}?! burn nessmen believe that tax citeinl?tlli'n5 are equivalent to subsidies. i?ct morally:n strategically, tax exemptions are them?g posits of subsidies. Morallyi 10W: t5- taxes is simply defending property . . . km the govem seeking a subsidy is as i ment to steal someone else?s limp??ring yoor benefit. Strategies Y: lg in- . 1 65 taxes reduces govenunentilsu l'd to say crease governmentthat reducing your taxes sunp A you! so!? our (if f3 RUVC thosi Fir muff doors Mam bu5ir tech! to 31 both throu COUPE the li velOPi rogl?i' aidelj cicnci that ii help tl in the rogant in the refusal letter: untaril strateg cem v. and ac than w: We h. sities a sophica Of our the he: must Sti Period, Even f'free en Ineffecti had litrl ms phil. BL . free er mater a] hqlder tE pHSe_ A130 money Colic BS . . "r sham? of the tax burden to here is no ?fair? share. I is not to reallocate the burden i our goal is to roll back Ouf g03 We should consistently .. nent. "mm all taxes, our own and work to mine thiJSf of others. ?nally, WC moment a rel!? dairstep. Fm hould not cave in the lator sets foot on our into practice Henry MannC'S recoirimendation that ?the husinegg community utilize available techniques of legal adversary proceedings to publicly and vigorously, both 35 individual companies. and through assocrations, that they Will nor With the govemi?nent beyond {he'lcgally compelled minimum in de- velopi?g or complying anycontrol prograIHS-" As he urge-s, "publicize as widely as possible the inevitable ineffi? ciencies, mistakes, and human miseries that will develop with these controls . . . help the public understand that morality, in the case of arrogant, in the case of ar- rogant, intnisive, totalitarian laws, lies in the barest possible obedience and in refusal to cooperate linglv beyond the letter of the law." Do not cooperate vol- untarily,- instead, resist wherever and to whatever extent you legally can. And do so in the name of 2. Education?Business?s educational Strategy has been guided more by con- tent with short-term ?respectability? and acceptance by the establishment than with long?tenn survival. We have voluntarily supported univer? srties and foundations who are philo- dedicated to the destruction $0qu busmesses and of what remains of tee market. This must stop. We mu.? Stop ?nancing our own destruction. Period .. EVen When business has supported in enterprise? education, it has been had {actual because businessmen have ing liitlle understanding of the underly- ?g 13 059th or of a meaningful strat- Dion usmessrnen have spent their ?heeEY 0n disasters such as buying a at their alma 0 den: in dismay as the Prise. es everything but free enter- in]? largely wasted has been the CUlleges :mtnbuted to those private bur have {9 {make free enterprise noises, ?mes dial-3d to produce competent terp lcated to establishing the Hiding? 5Ystem. There are too ed . :?I?Silgpment of talent is, or should 33' talent, nailomt of all these efforts. 3411 those rare, exception- ally Ca ?Illin Dable SChOIars or conununicators c3054: to dedicate their liv the live} thuismdinual liberty. Toesbe affec- cm must have the knowl- edge, skill, and sophistication to statist adversaries and their 211' meat head on, and to defeat them. Thgeum?nts have the desire and advance the cause of l'beun- Sratists have succeeded 1. hi -1 rt)" i we flow-1- tiered because they've had their talent their cadre, to develop and sell theif programs. During the 15 years I have been actively investing my time and money in reestablishing our free society our biggest problem has been the short: age of talent. When conscrentiom, dedj- cated scholars or communicators Worked on 3 Pmlect, we were effective, when they Weren't available, we failed. Thus, businessmust concentrate its support on those few institutes and uni- verSIry departments that have effective programs for producing a free?market cadre. Our own direct defense of business, particularly our media advertising, has been either bungling and pitifully inef- fectual, or else downright destructive. We have substituted intellectual bro- mides for a principled exposition of a point of We have taken a conCilia- tory attitude. Our ads have apologized for profits. We have accepted the con- cept that the corporation has a broad ?social reponsibility" beyond its duty to its shareholders. We have been made to feel ashamed of private ownership and profits, and have been hoodwinked into characterizing government resub- tion as ?virtuous? and in the ?1)?th in- terest.? As a typical example, the Adver- tising Council, backed by most 0f the major U. S. corporation?- 3085 5? for 35. t" describe regulation as, ?the promotion of fair economic ciZJFIileifm and the protection of public health and safety. What simple-minded nonsense. Instead of this bankrupt approach, we need to go on the offensive. We needi? cast aside our desire to be our colleagues and the 111- tellectuals, to cast. asrde our few 0 ?6 prisals by government. We ogre: its? salt the mar et vertise isalso the only 1. 't only the most efficient, i at- morai system in history. We rficredwtroca tack government regulatro?idlodesjgned ing havoc on those it is toy fend for - a to he] ?thosc least . er- We need to stigrria?ze1 3111:: st ventionism as be" intrinsma - 'ndividuals of t1"Cir because It deprives iheir lives and L156 2:31:13: :lhgehyt :26 fit. We need Iggf?gl the right of ?6313mm: acts b5?; Robert senting adults,? in the war 5 demonsuattllimsfiinth for at ems beyond Supreme of timer is mending 3 Maria? Court decision 11111101 13W, lpassed at the brad-m station deal . 3 Of a sem' ?5 associati - CE and refiners ?111 harms 0? service stations, The co 0m operatin regardless of the ultima fieacy of th ts economic ci- Statute we h- tancy in concluding Ethat no hesi- sonable relation to the stati??ari 3 tea. PUTDOSE in controllin th . ?gltunate of business will reitenmginative defense from efficiency but i I can - . ,r arguments from 3151158. To claim that the state has th right to ?control the gasoline ?1 . . . . Ct?l 11131- elk! is totalitanan nonsense. behae must demand the satire VIOI of our organization - ourselves ?Ewe do 0f 3111 our companies. When, for 133331111!) 6, Corninittee for Economic eve opment advocates ?that public- pnvate partnerships must be an essential part of any national urban strategy," busrness should withdraw its support. It should do the same if the Chamber of Commerce continues to promote gov- ernment intervention under the philoso- phy espoused by a former president: ?It?s not possible or desirable to remove all the regulations.? New business organi- zations should be set up which refrain from asking for state protection and sub- sidies, and which, going further, CUUCIZB, expose and lobby against instances of political capitalism, of "?111? partnership between business and govcmment._ Only such organizations can help bugl? ness regain the respect Of the American people. in fact, a group ofti515 launching iust such an organization. The Courier for a Competitive Economy. . Such an orga?ii?mi"n will help bugl- nessmen avoid blunders similar ii) if Wichita Chamber of Commerce 611 - 'llioridollar heavil promoted a one bi. . coal gasificatiori plant, which would owned by Wichita l' have been partial Washington. The rejected Chamber and ita perspigda it: the plant-would not cost Itlherpn anything and voted. it down. A?lfii such an organization help plifunu- blunders such as the busmegsugsmm :1in in California oppostngan image 0 13' These blunmts with government to business in loit the poop . tax atdii:"fiifijbes this as busmess??ig?g 511:1 unerring insrinct for se 1 . [mg Ion. sto shack Business should also It: antilibcr- Sitio 1, . - the free-ma?kcsfugil 35 [Friar] . - 0 - roentlonl In! it 15 the free-market rhetoric is a sham?that business only cares about freedom for it- Selt, and doesn't give a damn about free- dom tor the individual? The public reacts at least as negatively to business calls for still turther foreign adventunsm. What other feelings can we Cerct from people taxed and con? scripted to save our foreign investments or to enlarge our foreign profits? We should take our own risks abroad. and not expect them to he bome by the Amer- ican people. Businessmen have been the first to support any Sort of foreign adventurism, if only it is sold under the rubric of ?national security." If business really wants a tree marketlprivate property sys- tem it must resist govemment's for? eign interventions as well as its domes- tic interventions. Businessmen must realize that the single greatest force behind the growth of govemment is for? eign adventurism and its daughter?war. America cannot both be policeman to the world and have a free domestic economy, they are mutually exclusive Our classic-.11 liberal forebears in England who struggled for free trade and laissez- faire realized this? the peace movement and the free trade movement are one and the same. 3. Political Action Businessmen should be involved in politics and po- litical action?from local tax revolts to campaigns for Congress and the presr- dency. But we should apply the same standards of understanding and princr- pled behavior as in the other parts of our strategy. We must discard our lesser-of? evils approach to politics. This has brought only the continued growth of government. Our movement should have as its goal the fulfillment of the ideal of the free and independent entrepreneur. To ac- complish this, our movement must de- stroy the prevalent statist paradigm anti erect, in its stead, a new paradigm of liberty for all people. Our movement must avoid the faulty strategy of con? servatives, whose acceptance of statist premisrzs has caused their proposals to be simply moderate versions of the origi- nal statist schemes. Our movement must struggle for the realization of the principle of the free market rather than settle for immediately obtainable rc~ Reprinted by pennissnon of Libertarian Review magazine. forms. For, as Aileen Kraditor writes ?To criticize the [radical] agitator for uni trimming his demands to the immedi- ately realizable?that is, for not acting as a politician?is to miss the point the more extreme demand of the agitator makes the politician?s demand seem ac? ceptable and perhaps desirable in the sense that the adversary may prefer to give up half a loaf rather than the whole. Also, the agitator helps define the value, the for which the politician bargains. The ethical values placed on various possible political courses are put there partly by agitators working on the public opinion that creates political possibilities.? Business can survive, but it cannot survive without the help of busnessmen. By fighting against interventions, how- ever profitable, by advocating a princi- pled, philoSophical defense of the free enterprise system, and by working for freedom for everyone, businessmen can, with pride, be a vital force in restoring our free society. To date, businessmen have not seen fit to do so Whether busi? nessmen do so in the future may deter- mine whether business, indeed, has a future. Or deserves to. (L'Quncil I0ra_ . [monomy 410 First Street. SJ-L. Washington. 20003 [202} 544-3786