The Market Fundamentalist

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http://reason.com/blog/printer/130475.html

Link from Reason.com blog, HIT AND RUN

Sometimes, in order to understand how large social organizations work, it is illuminating to examine a relatively trivial example of the dynamic and gain insights into the more complicated large scale organization.

In Oregon, car dealerships, who are facing hard times, are asking the state government to PASS A LAW forbidding car sales on SUNDAY.

Of course, they will say that Sunday is a religious day, and large scale commerce should be banned for religious reasons.

This is a perfect example of the Baptist and Bootlegger paradigm in “rent seeking activity”. (RENT SEEKING is the PUBLIC CHOICE school of economics term for using the state to gain competitive advantages in the market)

The Baptists would be the evangelicals and others who would welcome the State of OREGON to ban car sales on Sunday as a religious gesture of the importance of the SABBATH.

The Bootleggers, in this case, are the CAR DEALERSHIPS who want to cut down their expenses in a sagging economy and try to squeeze more sales out of the Saturdays they are open.

The KICKER is that the dealerships do NOT just want to close on their own. Why? Because PRIVATE CARTELS do not last long, that is why. Even OPEC has its internal discipline problems. If all the current dealerships decide to close down on Sundays voluntarily, why some one might change their mind, or an UPSTART new guy from Nevada might see an OPPORTUNITY FOR PROFIT and open a dealership that is closed on MONDAYS, but open on SUNDAYS, when frustrated weekend shoppers might be willing to close the deal.

Ok, Ok this is small potatoes. What is the point you were trying to make about major issues?

Well, since we have numerous liberals on this list, let’s look at JIM CROW laws.

OMG, he’s talking about RACISM in economic terms! How dare he analyze the relationship between HUMAN BEINGS in anything but purely humanitarian calls for equality?

Well, because, like it or not, we live in a world of scarcity, and with limited knowledge, and those are the conditions that economics is geared to analyze.

Consider that in the DEEP SOUTH, the majority of the white people were racists and wanted to keep blacks down. What would their strategy be? Well, the majority of white people is STILL not the majority of all people. Some whites are not racist, and the blacks might even outnumber the whites.

So, what organ of power would you try to focus your attentions on? Controlling the free market? Not likely, because the free market is well, free. Too many variables.

So, how about controlling the STATE! Yes, that’s the ticket! Concentrate on controlling the STATE!

So, make it harder for blacks to vote. Sure, that is important. Then, the majority of racist whites can elect RACIST governments, willing to pass and uphold JIM CROW LAWS.

Then, be sure the District Attorney is racist, and the judges. Easy to do when justice is a MONOPOLY controlled by the state. Make sure juries are all white.

Then violence and intimidation against blacks will go unpunished, and any uppity blacks will be prosecuted to the “full extent of the law”.

Now, this is most important: Pass laws that state that EVERYONE MUST DISCRIMINATE. No exceptions. Every business must be all white, or all black. No one can move to the South , no big corporations can move in, without obeying the JIM CROW laws.

No white liberals can gain a competitive advantage (like being open on Sundays in Oregon) by being willing to serve both whites and blacks.

There you have it. Jim Crow was a function of the state controlling business, not vice versa.

Free markets in the South would never have supported JIM CROW, because segregation does not make MARKET SENSE. You would have to have two of everything: two locker rooms, two bathrooms for each gender, two lunch rooms, etc. The costs of doing business would be prohibitive. Not to mention the constant racial tensions in the workforce.

That is why when the black man Plessy dared to sit in a whites only railroad car in the 1890’s and was arrested , the RAILROADS paid for his defense all the way to the Supreme CT., which did not uphold his right, or the rights of the railroads either (government regulated, you know) to conduct their business in a PROFIT MAXIMIZING WAY.

So, large corporations usually avoided investing in the JIM CROW south. The south did NOT become prosperous until JIM CROW ended.

Now, what about the civil rights movement? Was it the best solution?

Not necessarily. Sure, the power of the state was crushed. But, the power of individuals to think and act in a private capacity was crushed as well.

Does passing laws saying NO ONE CAN DISCRIMINATE an ethically better option than laws saying EVERYONE MUST DISCRIMINATE?

Given that those who wish to discriminate will face market losses and pay for their discrimination, and that free markets will not sustain large scale discrimination, was it worth attacking private property rights and free speech and free thought to “stamp out” all discrimination?

Those who believe in political correctness, favor forced busing, believe that the government must constantly intrude into the lives and businesses of citizens to enforce “equality” certainly do.

Those of us who are skeptical of government intrusions, and are willing to tolerate private behavior we do not agree with so that the overall freedom of association (and non association as well) is protected, do not.

Barry Goldwater did not vote for the Civil Rights Act, because he thought it would indeed lead to the PC culture we indeed have today.

Was he right?

Brendan

This entry was posted on Thursday, December 11th, 2008 at 7:34 pm and is filed under RAWC, Econoblog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Stop me before I open again!

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