April 7, 2016
General Electric CEO Jeff Immelt has an interesting op-ed today in the Washington Post, hitting back against charges that his company is “destroying the moral fabric” of the country with a culture of corporate greed. The thrust of Immelt’s response is that, unlike politicians, companies like GE “create wealth and jobs, instead of just calling for them in speeches.”
March 28, 2016
Virginia’s Dillon rule prevents cities and counties from regulating the employment practices of private businesses. That bars them from setting minimum wages higher than the state or federal minimum wage, or adding new protected classes of employees at businesses’ expense (through anti-bias ordinances). That is good for businesses, promotes freedom of contract, and prevents a confusing patchwork quilt of regulation that varies from city to city and county to county. It is also one reason why Virginia has a better than average business climate.
North Carolina has now enacted legislation giving businesses the same protection (see, e.g., Section 143-422.2(c)). Unfortunately, it is part of...
February 29, 2016
When you hear about “crony capitalism,” what comes to mind? The Export-Import Bank? The ethanol mandate? Fannie Mae and Freddie Mac? Tax credits and loan guarantees for “green energy”? These are all prime examples of government intervention enriching narrow yet politically savvy corporate interests at the expense of taxpayers and consumers. But many other pernicious forms of crony capitalism slide under the radar. A case in point: the Federal Communications Commission’s (FCC) vetting of media and telecom mergers, a highly politicized process that empowers a few unelected bureaucrats to shape the future of entire markets.
Almost a year ago, the cable company Charter made a deal to purchase another cable company, Bright House Networks. Then, after the FCC decided to block another cable deal—Comcast’s attempted acquisition of Time Warner Cable (TWC)—Charter announced that it...
January 22, 2016
One of the justifications for heavy regulation of large companies is that they use market power to crush competition and maintain market dominance. Yet the history of America’s most successful companies—those that make it on to the Dow Jones Industrial Average (DJIA)—doesn’t support that theory. Sustainable competitive advantage is very hard to achieve, even for these titans of industry.
If we look at the history of the DJIA, we can immediately identify several significant changes in its sectoral composition over the years.
The DIJA was first published in 1884. It consisted of 11 companies, eight of which were railroad companies. The index was later expanded to 12 companies, before being expanded to 20 in 1916. The present Dow Jones Industrial...
January 13, 2016
Last night at the State of the Union, the President asked three questions regarding domestic policy (I’ll leave the foreign policy question to others). They were:
First, how do we give everyone a fair shot at opportunity and security in this new economy?
Second, how do we make technology work for us, and not against us – especially when it comes to solving urgent challenges like climate change?
And finally, how can we make our politics reflect what’s best in us, and not what’s worst?
These three questions are best answered by three great economists, Joseph Schumpeter, Ronald Coase, and Friedrich Hayek.
December 8, 2015
This Wednesday, the Senate Select Committee on Aging will hold a hearing on “sudden price spikes” among certain off-patent drugs. The most widely publicized of these spikes was the recent price increase of Turing Pharmaceuticals’ toxoplasmosis treatment Daraprim, which jumped in price from $13.50 per dose to $750. The medical consequences of the price increase, obviously of concern to hospitals, doctors, and patients, was, at times, overshadowed by personal attacks leveled at Turing CEO Martin Shkreli, who quickly became a target for complaints...
November 25, 2015
Thanksgiving is tomorrow, and all of us have much to be thankful for. Over at Inside Sources, I have a Julian Simon-inspired take on the holiday:
This Thursday is an opportunity to give thanks for a wonderful fact: In all of human history, there has never been a better time to be alive than right now. This might seem an odd thing to say at the moment. War, terrorism, poverty, political repression and hunger still plague many countries. The most recent wounds, inflicted in Paris, Syria, and elsewhere, are still fresh.
But life is improving in unprecedented ways.
Over the last century or so, the typical American’s income has grown sixfold. Life expectancy increased 30 years during the 20th century...
November 25, 2015
Thanksgiving is a day layered in tradition and myth. The standard story makes much of the creative efforts of our ancestors, the assistance provided by the friendly Indians (aka Native Americans) and the richness of the land and seas. That view is romantic, but obscures the fact that over half the original settlers died in the first year, bloody wars between the settlers and the Indians soon dominated the frontier, and that for the first three years, the “bountiful” earth provided little food to the starving colonials.
The Pilgrims were a highly religious group seeking to live as an extended family in a communal order. Initially they placed all farm lands into a “commons” which all would farm and harvest from collectively. That system goes back to tribal societies with strong cultural rules. Protestant culture, it turned out, ...
November 23, 2015
Today, in The Guardian, columnist Zoe Williams repeats an idea often advanced by progressives, that entrepreneurial activity is dependent on the action of others, especially “government,” and that therefore socialism built the iPad. This is contrasted with the idea of human innovation being the result of individual inspiration, which she describes variously as the credo of Thatcher, Reagan, McCloskey, or free markets in general. In doing so, Williams fails the ideological Turing Test; she has fundamentally misunderstood free enterprise economics.
November 20, 2015
Prof. Brad Thompson of Clemson University writes this week in Minding the Campus on the impact of corporate donations to institutions of higher education. In particular, he describes some of the controversy we’ve seen in recent years about donations from unabashedly pro-capitalist sources like BB&T and the Charles Koch Foundation. The allegedly insidious influence of such funding has even inspired the creation of the activist group “UnKoch My Campus.” Of course, as Casey Given of Students for Liberty has recently pointed out, George Soros ...