Monday, October 30, 2006

How Big Business Uses Greens and Leftist to Raise Profits, Reduce Competition and Screw the Poor.

Any cause that people consider worthwhile becomes an excuse for rent-seeking by special interest groups. For the economically uninformed “rent-seeking” is the attempt to use government intervention to redistribute wealth to one’s self. Usually the rent-seekers need an excuse to justify their coercive greed.

Let us be clear here. The way a business normally gets money is by selling me something I want and am willing to purchase. Rent seekers find ways of making me give them money by either confiscating it outright or by limiting my choices.

Say I want to buy apples from New Zealand but the rent seekers, who happen to be apple producers in the US would rather coerce me into financing them. They could do this several ways. One is to get helpful Democrats and Republicans to give them subsidies. I pay involuntary taxes which are then given to the parasitical apple growers in the US (a hypothetical here though in real life this might also be the case).

Another method they use is impose taxes, called tariffs, on apples from New Zealand pushing them up in price compared to the the US apples. The net result is the same thing.

Of course the apple growers could just go out and burn down stores selling NZ apples but that is a little too obvious. They prefer the more subtle forms of coercion to get what they want.

But the really clever way of redistributing wealth to the already wealthy, which is what such measures tend to do, is to get the public into a panic and have them demand such moves. For that they need a panic.

Now the special interest, rent seeking, parasites of Europe are demanding we “save the planet”. The planet is in danger, so say the panic mongers in the Green Left (and I say they are full of the fertilisers they use on their organic farms). So the wealthy European farm community wants governments to impose air freight taxes. I should note that European consumers are harmed by this as well. Food in Europe is already expensive and quite honestly the quality sucks. I have lived and shopped on four continents and European food is the worst I've had. I suspect one reason the French have so many sauces is to cover up the low quality of the meat they eat. I suspect that the fact that European agribusiness is the most coddled and protected in the world is a major reason for this.

The Greenies have invented another bogus concept called “food miles”. It is really protectionism under a different name. They idea is to tax these “food miles” which amounts to a tariff on agricultural products from other nations. Now the whole concept is bogus. Bogus to the core in fact but then Greens know zero economics. They are economic illiterates which is necessary for them to be Greens.

So the Greenies in Europe along with the local pampered, subsidised, wealthy farmers want taxes imposed on food imported to Europe. They say this is necessary to save us from global warming. It won’t save us from global warming but it will make it easier for European farmers to spend more time on tropical beaches every year.

The new hysteria promoted by these fear mongers is that unless we destroy world trade the climate will change (it will change no matter what we do) and that will “lead to economic upheaval on the scale of the 1930s Depression.” Okay, so they don’t know the cause of the Depression either. Idiots.

See they don’t like the fact that their measures will destroy wealth. That means voters are less likely to support them. So they invent the fiction that unless we destroy the economy willingly it will be destroyed unwillingly. It’s rubbish.

One has to wonder why the Left hates the Third World so much. What exactly inspires this desire to confiscate what little wealth poor people have from exporting food to the West and give it to wealthy, white agribusiness's.

Environmentalism is movement now dominated by the rent-seekers. The environmental groups take huge sums of cash from big business and often big business hates competition. They like the Green regulations because such regulations limit competition especially from the smaller businesses who can’t afford to comply with the expensive regulatory system that big business and the Greens want.

Big business gives millions each year directly to these groups and then they also endow foundations and funds which also give to the groups. That means millions more indirectly. And one reason for this is to encourage regulatory regimes which inhibit competition and restrict the growth of potential competitors. Agribusiness will love “food miles” taxes because it directly pours millions of additional profits into their pocketbooks.

Now of course food producing nations will be hurt. The Kiwis will see a big decline in their national income and be worse off. Of course the Greens down there will blame this on the failures of capitalism and demand more welfare to solve the problem. And third world countries that rely on agriculture for most their income will be hurt again. The Greens will demand more international welfare for them and again point the figure at the evil capitalist menace.

Anyone who has studied the history of regulations of business will find that the major proponent of the regulations were the dominant players in that field. The antitrust candidates in the US in the early 1900s were funded by the very people who supposedly were going to be regulated. The Progressives got a lot of money from Wall Street.


Because the corporate interests knew that the regulations are costly and drive up the cost of doing business. But they could absorb this cost. In fact because the number of competitors, especially the smaller competitors, was dramatically reduced by the regulations the increased business they got more than compensated them for the increased costs.

The Left historian Gabriel Kolko shows how this was precisely the case during the Progressive Era in the US. His book The Triumph of Conservatism showed precisely how big business used the Left to promote restrictions on the market to secure advantages for themselves. His second book, Railroads and Regulation showed the same thing happening with rail service in the US. And remember Kolko is a Left historian.

This symbiotic relationship between special interest, big business groups and regulation was seen again when the Democrats started the deregulation of business in the US during the Carter presidency. When airlines were deregulated the moves were opposed by the airlines (and the Left). When the moves to begin deregulating trucking were made the opponents were trucking companies (and the Left). When oil prices were deregulated the opponents were Big Oil and again, the Left.

Things have not changed very much today. Big business can still afford the regulations. They know that the regulations will drive up prices hurting consumers, particularly low-income consumers. But their bottom-line is that these regulations will give them a higher share of the market and increase their profits. The reduced competition more than compensates them for the higher regulatory costs.

The corporations get higher profits. The Left politicians get the power they lust after. The consumer gets screwed. The little guy in business gets squeezed out. And poor people in the Third World... well they just die.

By the way the logo above is from a Green inspired web site promoting the “food miles” mythology. Please notice carefully that the trading pattern they show is from the poor South to the rich North. The traders they wish to restrict are the poor farmers of the South. The beneficiaries of their regualtions are will be the agribusiness corporations of the North. Keep that in mind when you next hear them sobbing about the plight of poor people in the South.