Why I Am Not Pro-Business

Oct 21, 2019 | Blog | 0 comments

Most who consider themselves conservative, even many with libertarian leanings, are comfortable with describing themselves as pro-business.

Not me.

Don’t get me wrong. Just because I’m not pro-business doesn’t mean I’m anti-business. I’m pro-free enterprise, but that’s different from being pro-business.

Chambers of Commerce across the nation are pro-business. They are established to represent their various business members, with large corporations usually the most influential amongst their numbers. Chambers of Commerce almost always favor measures that subsidize businesses, give special tax breaks to businesses, or exempt businesses from regulation, even when these measures favor only specific industries.

Here is one example. Pro-business interests favor special discretionary funds at the state and local levels that are used to pay businesses to locate within the government’s jurisdiction. Often called “closing funds,” they allow the ruling class to take credit for creating jobs. Businesses that benefit from these payoffs rarely change their plans as a result of the payoffs. But, because different jurisdictions simultaneously bid for the same business projects, big corporations that are the objects of officials’ affections can pit communities and states against each other to maximize the payoff in the jurisdiction where the corporations intended to locate all along. That means closing funds, at best, make no economic difference at all.

The pro-business crowd also loves to shower taxpayer money on Hollywood, professional sports, tourism venues, renewable energy, and high-tech, among others. These are all popular because, somewhere, one of these industries has grown fast and driven a community’s high-paying jobs and economic development. The pro-business crowd likes to sell the idea that with the right government incentive every community can get in on the same economic boom. It’s usually an easy sell since the jobs they supposedly create are easy to see. The damage, though, goes unseen. Unfortunately, subsidizing an attempt to develop an existing, already-booming industry in a place where it has never been before is like buying stocks when prices are high; the opportunity is actually already gone.

But it’s worse than that. The value people place on goods and services is subjective. Much (probably most, but not all) of the cost of producing goods and services is objective, determined by technology and physical laws. A complex interplay occurs in a free-enterprise market system that transmits information through prices to balance the allocation of resources (always limited, compared to human wants) so that the most highly-valued goods and services are provided (voluntarily, and without central direction), taking cost into consideration. When politicians step in and artificially lower costs for favored industries or businesses, the balance free enterprise produces is upset. Resources are misallocated. Income and wealth is reduced compared to what it could have been. And although the U.S. is a long way from becoming a Venezuela, that country illustrates what happens when politics interrupts market mechanisms.

Being pro-business grants license to policymakers at all levels of government to act like they are in favor of free markets when they are actually baby socialists, thinking they can centrally plan an economy into prosperity. They enact laws and policies that actually make a mess of things. A mayor in Goodyear, Arizona once told me that if they took care of the big businesses (granted them special privileges), small business would take care of itself. This was likely a common refrain at whatever mayors’ conferences she’d attended. The idea is that when big businesses hire lots of people, there are plenty of scraps for small businesses, like local restaurants and car repair, to get along. Of course, the Goodyear mayor likely would not hesitate to favor big corporations behind various restaurant and car repair franchises that compete with truly local small businesses. The Goodyear mayor’s thinking discourages the organic innovation and economic development that made big corporations grow from once-small enterprises to the behemoths they’ve become.

Pro-business policies are inevitably crony policies. They cement in place a privileged few, create inequality before the law, and contribute to social unrest when people gain a sense that some count for more than others in our government. So no, I’m not pro-business; I’m proudly pro-free enterprise, where the economic playing field is level, and government favors no one.

Byron Schlomach is 1889 Institute Director. He can be reached at bschlomach@1889institute.org.