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OpenMarket: Morality of Capitalism

  • The Tesla File: Government Favors Cut Both Ways

    October 16, 2014 4:57 PM

    Electric vehicle manufacturer Tesla Motors has become a fascinating case study in economic freedom in recent years, although the narrative is a complicated one. The most recent development for Tesla has come out of Michigan, where the state legislature has banned car manufacturers from selling vehicles directly to the public or from owning dealerships themselves, new restrictions that effectively outlaw Tesla’s entire sales strategy, at least in the Great Lakes State. Michigan is not alone, however, in erecting restrictions on marketing and sales of cars that seem to target or effect only Tesla. Arizona, Maryland, Texas, and Virginia also ban the company from selling its cars in their states, although they can operate showrooms and residents can make purchases online. Colorado, Georgia, New Jersey, Ohio, and Pennsylvania also have restrictions or are in legal disputes with Tesla over what they can and can’t do in those states.

    Having to fight for the right to sell an otherwise legal product to willing customers – legislature by legislature – has created what Tesla’s James Chen has referred to as “a game of whack-a-mole in every state.” Just as the company has made its case before one state’s officials, another state comes along and threatens to erect barriers that suspiciously seem to harm only Telsa while protecting market incumbents from increased competition. This can only happen so many times before it begins to seem like more than a coincidence. In this scenario, CEO Elon Musk is cast in the role of the victim of opportunistic legislation lobbied for by bigger, more entrenched rivals – the underdog fighting cronyism between big carmakers and state politicians.

  • Farewell to Our Friend, Leonard Liggio

    October 14, 2014 1:14 PM

    We are saddened to hear our friend Leonard Liggio passed away this morning. Today, the liberty movement has lost an intellectual champion. The Competitive Enterprise Institute has lost a colleague and ally. And on a personal note, I have lost a reliable, ever-present partner since I first started working in this movement several decades ago. 

    Leonard was long the Don of the free market community. Realizing that CEI needed to move out of its infancy stage and expand its board of directors in the early 1990s, Fred Smith approached Leonard, who quickly agreed to serve on our team. He continued with that board role for nearly two decades, moving to emeritus status only last year. Leonard was whimsical in his conversation, grounded in his idealistic commitment, and often bemused by CEI’s temerity in translating classical ideas into actual reform. And, he was always supportive. 

     I asked Fred to recount a few of his own memories of Leonard. Here is his reply:  

  • Billionaire Diversity: Foreign vs. Domestic

    September 17, 2014 10:46 AM

    Brookings Institution scholar Darrell West, whose new book Billionaires: Reflections on the Upper Crust is being released later this week, has another intriguing graphic on the political influence of the extremely wealthy. Last week Brookings posted an interactive grid of the top players in domestic politics, the U.S. Billionaire Political Power Index. This ranking put Charles and David Koch predictably at #1, but followed by Michael Bloomberg and hedge fund manager/global warming activist Tom Steyer, with the likes of George Soros, Bill and Melinda Gates, Warren Buffett and Alice Walton filling out the rest of the list. As I pointed out at the time, the list shows that the exclusive club of politically active billionaires is hardly composed entirely of conservative or libertarian types, as some on the Progressive left would have us believe.

    This week the rankings go international as West releases the Global Billionaires Political Power Index. This one includes a few crossovers from the U.S. influence list, such as Bill and Melinda Gates (#1), George Soros (#2), and Rupert Murdoch (#7). Interestingly absent are the joint-ranked Koch brothers, who despite being West’s most politically influential billionaires in the U.S., didn’t manage to even crack the top 15 worldwide. It seems Charles and David are only a threat to democracy (so sayeth Robert Reich) here at home.

  • Celebrate Billionaire Diversity

    September 12, 2014 11:15 AM

    Darrell West, a Vice President at the Brookings Institution, has a new book coming out next week on the political influence of the very wealthy, titled Billionaires: Reflections on the Upper Crust. West has come up with a savvy promotional idea by assembling a list of the top 20 billionaires (and billionaire couples) ranked by political influence. Bloomberg TV had him on yesterday to discuss the list and Philip Bump at The Washington Post wrote about it last week, taking issue with some of West’s choices.

  • The American (Business) Revolution

    July 3, 2014 2:52 PM

    On our nation’s 238th birthday, a flood of public events, political speeches, and TV specials will remind us of the courage of our colonial ancestors in throwing off the authoritarian government of King George III. The Revolutionary War sparked a movement for democratic government that spread rapidly, eventually serving as an inspiration to billions around the globe.

    But the separation from Great Britain was also a revolution for commerce. In the 1770s, American merchants and consumers labored under a burden of high taxes, administrative red tape, and punitive import duties. It was the passage of the Tea Act in 1773, which worsened that burden, which drove the patriots known as the Sons of Liberty to destroy the East India Company’s famous cargo during the Boston Tea Party.

    We often forget that the taxes and regulations on tea that the Sons of Liberty found so odious were not just there to raise revenue for the crown. They were what we would call today a case of crony capitalism –a system of government policies that give a company preferential treatment over its competitors. Parliament passed the Tea Act in large part to bail out the British East India Company, which by that time had accumulated such an overstock of unsold tea that it was on the verge of bankruptcy.

    While many colonists objected to the government in London imposing taxes on them at all, the policies that led to the Boston Tea Party—and eventually the American Revolution—went beyond that by stacking the deck in favor of moneyed British interests. The King’s government routinely granted exclusive monopolies and privileges to for-profit ventures, often via cozy arrangements that, not surprisingly, benefitted the already wealthy and well-connected.

    Americans knew then what most Americans still believe today—that there is nothing wrong with making an honest profit from an honest product. Small merchants and skilled craftsmen thrived throughout colonial America by providing their neighbors with everything from horseshoes and barrels to clothing and beer. When an out-of-touch government raised taxes and passed laws to bail out big business interests, however, they protested the injustice. Sound familiar?

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