Friday, August 31, 2012

Romney's 'Government as a Business' Fetish

By, Chris Rossini

Here's a clip of Romney stating that he and Paul Ryan will "make sure this company deals with its challenges."

Was this a gaffe? Sure.

But do Romney (and many voters) believe that he'll use his business prowess to turn America into a well-oiled machine? Oh yeah.

I've heard it myself in conversations with friends : 'What we need is someone with a proven track record. Someone with business experience.'

This is, of course, total nonsense.

If you've found yourself mired in the same type of conversation, here are some sage observations from  Murray Rothbard. I recommend reading this entire article, but if you're pressed for time, here are some snippets:

Is there traffic congestion? Ban all cars! Water shortage? Drink less water! Postal deficit? Cut mail deliveries to one a day! Crime in urban areas? Impose curfews! No private supplier could long stay in business if he thus reacted to the wishes of customers. But when government is the supplier, instead of being guided by what the customer wants, it directs him to do with less or do without. While the motto of private enterprise is "the customer is always right," the slogan of government is "the public be damned!"

...a government operation gets its revenues from coercive taxation instead of voluntary payment for services rendered, it is not obliged to be efficient in serving the consumer...

On the free market, in contrast, each group finances and supports its own preferred product, whether newspaper, school, or package of baby food. Socialists, free enterprisers, progressives, traditionalists, gossip-lovers, and chess-lovers, all find schools, papers, or magazines that meet their needs. Preferences are given free rein, and no one is compelled to take an unwanted product. Every political preference, every variety of taste, is satisfied. Instead of a majority or the politically powerful tyrannizing over a minority, every individual may have as much as he can afford of precisely what he wants.

The standard government reply to charges of inefficiency or shortage is to blame the public: "Taxpayers won't give us more money!" The public literally has to be forced to hand over more tax money for highways, schools, and the like. Yet, here again, the question arises: "Why doesn't private enterprise have these problems?" Why don't TV firms or steel companies have trouble finding capital for expansion? Because consumers pay for steel and television sets, and savers, as a result, can make money by investing in those businesses.

Firms that successfully serve the public find it easy to obtain capital for expansion; unsuccessful, inefficient firms of course go out of business. In government, there are no profits for investors and no penalty charged against the inefficient operator. No one invests, therefore, and no one can insure that successful plants expand and unsuccessful ones disappear. These are some of the reasons why the government must raise its "capital" by literally conscripting it.

There is another critical problem in government operation of business. Private firms are models of efficiency largely because the free market establishes prices which permit them to calculate, which they must do in order to make profits and avoid losses. Thus, free "capitalism" tends to set prices in such a way that goods are properly allocated among all the intricate branches and areas of production that make up the modern economy. 

Capitalist profit-and-loss calculation makes this marvel possible — and without central planning by one agency. In fact, central planners, being deprived of accurate pricing, could not calculate, and so could not maintain a modern mass-production economy. In short, they could not plan. 

There is no way to gauge the success of a product that the customers are compelled to buy. And every time government enters a business, it distorts pricing a little more, and skews calculation. In short, a government business introduces a disruptive island of calculational chaos into the economic system.

No wonder, then, that our economic problems center in government enterprises. Government ownership breeds insoluble conflicts, inevitable inefficiency, and breakdown of living standards. Private ownership brings peace, mutual harmony, great efficiency, and notable improvements in standards of living.


  1. You do good work, Chris. I'm glad Wenzel has been having you do all these posts lately.

  2. I don't know, Wenzel. When I hear Romney use the word company in this clip, I thought it poetic, that he was using it to refer to multiple things--his associates, his partners, a business firm, a military regiment, and a ship's company, all condensed references to his oligarchical business buddies. He would be hard pressed to say that these are not his country.

  3. Lets talk about Romney health plan now since it was not a topic at the RNC Conference.
    Mitt Romney was the governor of MA...he should of stayed there.
    Ron Paul

  4. Every time I heard idiot Republicans tout Romney's business experience, I groan. These morons think that we need a better manager that will make government run more smoothly and make it more efficient. Since everything the government does is harmful, this means making the government more efficient at causing harm. Eff a bunch of that! Who wants the government to be more efficient at taking our money, more efficient at spying on us, more efficient at killing innocent brown people, more efficient at subsidizing failed business ventures, more efficient at helping out corporations by setting up regulatory road blocks for small businesses, or more efficient at screwing up the structure of production by distorting the real rate of interest. Not me!