I consider myself pro-market, but not pro-labor, pro-education, pro-health care or pro-environment. That’s not because I don’t see the virtue of workers, education, health care or a clean environment. Rather, I don’t accept many of the policy views associated with those positions. In an earlier post, Bryan Caplan did a nice job of explaining my perspective on how to characterize one’s beliefs:
What would a non-argumentative definition of feminism look like? Ideally, feminists, non-feminists, and anti-feminists could all endorse it. If that’s asking too much, all these groups should at least be able to accept the proposed definition as a rough approximation of the position they affirm or deny. My preferred candidate:
feminism: the view that society generally treats men more fairly than women
What’s good about my definition?
First, the definition doesn’t include everyone who thinks that our society treats women unfairly to some degree. In the real world, of course, every member of every group experiences unfairness on occasion.
Second, a large majority of self-identified feminists hold the view I ascribe to them. Indeed, if someone said, “I’m a feminist, but I think society generally treats women more fairly than men,” most listeners would simply be confused.
Third, a large majority of self-identified non-feminists disbelieve the view I ascribe to feminists. If you think, “Society treats both genders equally well,” or “Society treats women more fairly than men,” you’re highly unlikely to see yourself as a feminist.
I like that Bryan tries to work out a definition of feminism that matches the reality of how the term is used in the real world. I feel the same way about issues like labor rights. I could say I’m “pro-labor” because I believe that my favored policies would be good for most workers. But that would be deeply misleading, as I am often opposed to policies that are generally recognized as pro-labor, such as higher minimum wages, restrictions on child labor, restrictions on immigration, and the Wagner Act. Thus I’m not pro-labor in the commonly used sense of the term.
And I also do not support a package of public policies that would normally be viewed as pro-education, pro-health care, etc.
What about business? Here again, I think highly of business just as I think highly of labor. It’s an essential part of a well-functioning society, and provides many benefits to the public. But I’m not pro-business in the ordinary sense of the term, because I oppose a whole range of public policies aimed at things like allowing businesses to worsen global warming, shielding businesses from competition, subsidizing business via the Ex-Im Bank, crop price supports, the Small Business Administration, or allowing banks to lend out federally insured deposits to risky borrowers, etc.
On the other hand, I am pro-market, because I almost always support public policies associated with the “pro-market” label. Therefore I do think it is useful to identify as “pro-market but not pro-business”, especially at a time when a certain highly visible politician has taken a pro-business but not pro-market stance on public policy.
In a recent post, Bryan Caplan made this claim:
Yes, businesspeople are flawed human beings. But they are the least-flawed major segment of society. If any such segment deserves our admiration, gratitude, and sympathy, it is businesspeople.
I have to disagree with this. My father was a realtor, and he told me that 90% of realtors were dishonest. I’ve met numerous used car dealers, auto repair shop owners, financial advisors, etc., and they don’t seem more admirable that airline pilots, librarians or bartenders. Indeed many were dishonest. Overall, I have a modestly favorable view of businesspeople (market discipline reduces their worst tendencies), and a few are highly productive in ways that greatly benefit society. My best friend is a highly admirable businessman. But they certainly should not be treated like heroes. Just doing their job.
PS. If we treat them like heroes, then society might begin assuming they are highly qualified to perform jobs having nothing to do with business, like politics.
READER COMMENTS
Matthew Waters
Aug 7 2018 at 2:05pm
Also, “businessperson” probably conjures up a sole proprietor selling wares in a free market. In practice, a publicly traded corporation has large inefficiencies between CEO-board-shareholders control. Further, even if CEOs get paid true market rates and act in shareholder best interests, regulatory capture could very well serve shareholders best.
Libertarian economists the past 30 years should have looked on “free market” claims more intensely. Both health care and finance in America took on a free market guise over extraordinary regulatory capture.
Keenan
Aug 7 2018 at 4:13pm
Unrelated to this post, but applies to a post from Aug3 and wanted to make sure you saw it Scott. 🙂
Scott,
I think a good analogy for your approach to monetary policy is someone steering a ship towards dead north. The wheel is straight, all is good to start. However, *for some reason*, the ship starts to veer 45 degrees East. If the captain turned the wheel 30 degrees West, so the ship was now going 15 degrees East, the public/economics profession may very well say “the captain is being accommodative”. Especially if the wheel has never been more than 30 degrees in either direction before. However, you would say, it’s not accommodative *enough*. The captain should turn the wheel 45 degrees West: that is his job.
When you say “tight money caused NGDP growth to plunge”, it seems you are saying just this. The captain only turned the wheel 30 degrees, not 45. But I think it would be very useful if you addressed WHY the ship started going 45 degrees east in the first place. I’m guessing your answer is “I don’t know”, which is fine. But, I think it’s confusing to people when you say “the ship is going too far East because the captain is causing it to go too far that way”, when in reality he’s just doing his job poorly, and some outside force (wind maybe) is causing him to change the wheel’s position.
Philo
Aug 7 2018 at 6:10pm
“I am often opposed to policies that are generally recognized as pro-labor, such as higher minimum wages, restrictions on child labor, restrictions on immigration, and the Wagner Act. Thus I’m not pro-labor in the commonly used sense of the term.” I think this last claim is wrong. The policies you mention are widely but wrongly thought to be pro-labor (you should not say “recognized,” since that implies correctly thought to be . . .). But the key point is that ‘pro’ and ‘labor’ have commonly recognized meanings which, in combination with empirical facts, imply that the policies you mention are not really pro-labor. If you said, simply, “I am pro-labor,” that would be misleading but true. If you amplified your simple statement with a full explanation, your performance would utterly above reproach. On the other hand, if you said “I am anti-labor,” as apparently you are proposing to do, you would be asserting a falsehood, whatever else we might think about your statement.
In short, you are pro-labor, not anti-labor. It is easy for ordinary people to misunderstand your position; that is too bad for them, but it should not drive you to asserting falsehoods.
B Cole
Aug 7 2018 at 8:31pm
Some nations, especially in the Far East, are pro-business but not pro-market. Singapore comes to mind.
Perhaps there are aspects of human nature or structural impediments and institutional frictions in the real world which make the Far East approach superior, at least in context.
OPEC nations have not followed free-market principles, yet many have very high per capita incomes. Were the OPEC nations right to cartelize global oil markets?
If a theory is your street lamp, then you look for the keys to prosperity under it.
Matthias Goergens
Aug 7 2018 at 10:21pm
How is Singapore pro-business but not pro-market?
(I can totally see the criticism about Singapore lacking a democracy as vibrant as eg Germany, or some curtails on a free press. But there pro-market credentials seem pretty top notch in general. Barriers to entry are generally quite low, starting a new business is super easy, taxes are low and sinple and easy to pay.
An interesting example is that most cities complain about Uber, but Singapore managed to regulate them well, and complained when Uber left the field in favour of a local rival.
A pro-business/contra-market stance would have been to congratulate or even help the local Grab to eliminate Uber, instead of (almost?) blocking the deal.
Scott Sumner
Aug 8 2018 at 12:17am
Matthew, Good point.
Keenan, Actually, I have addressed that issue in earlier posts. In late 2007 and early 2008, the Fed suddenly stopped increasing the monetary base. This tipped the economy into recession.
Philo, You said:
“On the other hand, if you said “I am anti-labor,” as apparently you are proposing to do,”
No, I’m not proposing to do that.
Ben, You are wrong about almost everything. First of all, Singapore is one of the most pro-market countries in the world. As far as this:
“OPEC nations have not followed free-market principles, yet many have very high per capita incomes.”
I hardly know what to say. Are you claiming that relatively anti-market countries like Venezuela are doing better than relatively pro-market countries like the UAE? If not, what is your point? Is it that Kuwait is rich for some reason other than oil?
Your OPEC comment would be like saying. “A certain billionaire’s only son didn’t study hard in school, and yet is quite rich.” How’d that happen?
Philo
Aug 8 2018 at 3:23am
Caplan’s post gave a rather full explanation of his view about businesspeople. It was not, as a whole, misleading, let alone “deeply misleading.” And even if we take his statement that he is “pro-business” out of contxt, and call it “misleading,” the statement is stll *true*.
john hare
Aug 8 2018 at 5:43am
Some thought might be given to simple phrases (soundbites) that describe the points made in this post. Pro business having the general meaning “government policies affecting business” is unfortunate. I have a small business and often see regulations detrimental to consumers that are called pro business. Before this article, I hadn’t given this much thought.
Benjamin Cole
Aug 8 2018 at 8:57am
Scott and Matthew G:
I suspect you two are confusing “pro-market” with “pro-business.”
Singapore is pro-business, and I like that. I think every government should be pro-business.
But when I study the economy of Singapore…I find the mythology and the reality are worlds apart. They are pro-business, but free markets are absent.
Okay, the big stuff:
All the land in Singapore is owned by the government. There is no private property. Oh, that.
Singapore provides free capital to select businesses and industry.
80% of Singaporeans live in government-built-subsidized housing.
Okay, so aside from providing free land, infrastructure or capital to favored industries and businesses, and dominating housing, Singapore is free-market.
Well, not quite…
Read up on Jurong Island. Amazing! It is an entire island built by the government of Singapore to house petrochemical industries, of which many the government of Singapore is a JV partner. Singapore also owns 49% of a huge (7,000 workers) shipbuilding facility on the island.
Tidbits: The government of Singapore owns Singapore Airlines. Really, this is getting silly—does the US government own a commercial airline?
But then Singapore also owns the Singapore Airport. Gee, I wonder how gate assignments and landing times are worked out. Through free markets? I suspect Singapore Airlines gets a fair shake.
And Singapore Airlines, when they buy fuel from Singapore-owned oil refiners–maybe they buy wholesale? Do Singapore Airline workers qualify for Singapore-built housing? No one knows.
There is tons more, and I really just scratched the surface on amazing Singapore.
The real deal: Singapore is a public-private economy, the way grey paint is black and white. Free markets have nothing to do with it.
Oh! There is a 7% sales tax on all imported goods and services, but not on exports. So importers and domestic producers pay the freight to help run Singapore, but not exporters, who piggyback. That is an export subsidy.
But many observers say the Singapore export-subsidy story is even deeper that that—the term “fungible tariffs” is used.
Like this: So, a Singapore company says to the government (and its equity partner or banker, and landlord), “You know imports are hurting us.”
Government official: “Okay, we can rebate your sales tax through a rent reduction.”
So the importer pays a 7% “sales tax,” but the domestic competitor-producer gets a rent break, offsetting its sales tax.
Free markets in action!
BTW, according the the IMF, Singapore runs a trade surplus equal to 18% of GDP, the world’s highest. Their per capita GDP PPP is 50% higher than that of the US.
http://conversableeconomist.blogspot.com/2018/08/some-facts-on-global-current-account.html
Dudes, let’s get real. There is no such thing as “free,” “fair” or “foul” trade. Those ideas do not really exist in Singapore, or to a greater or lesser extent, anywhere else either.
John Alcorn
Aug 8 2018 at 10:23am
The issues here are: 1) Is there adverse selection in business (attracting dishonest people)? 2) If so, does market competition fully counteract adverse selection?
Italians have a saying about everyone: L’occasione fa il ladro. (Opportunity is what makes a thief.)
My hunch is that the subset of markets in which it’s hard for consumers to check performance and quality are more vulnerable to dishonest business practices (whether by adverse selection or by “opportunity makes a thief”). The businesses mentioned by Prof. Sumner (used car dealers, auto repair shops, financial services) are in this category. But such markets often develop countervailing mechanisms (and/or incur a thicket of regulation).
If Prof. Caplan is even half right about education, many not-for-profit organizations give business a run for the money in dishonesty.
Andrei Shleifer argues that market competition destroys ethical behavior in some contexts:
Useful counterpoints are John Meadowcroft, “Greed and the Market” and Robert Sugden, “The Market as a Cooperative Endeavour,” Public Choice 152:3-4 (September 2012) 365-370.
Benjamin Cole
Aug 8 2018 at 11:15am
https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=2876&context=soe_research
The above is a study published in the Singapore Economic Review.
From abstract:
“Compared with other dynamic Asian economies, the Singapore government’s approach to intervene in the economy is both more extensive and more intrusive, but with a narrow focus on GDP growth and surplus accumulation as the primary objectives.”
More intrusive than other Asian economies? Boy, that is saying something, Japan Inc? S Korea? China?
Another quote:
“Hardly any major strategic or structural change in Singapore in the past five decades took place without the involvement of or a strong push from the government.”
“The government was not averse to using GLCs (government money) to undertake investments that might intrude into the space of the private sector but which it considered strategic for the long term growth of the economy.”
The author is TAN KIM SONG School of Economics, Singapore Management University 90 Stamford Road, Singapore 178903
You know, these Singaporeans need to be schooled by Westerners as to the true nature of their economy…..
In the last 10 to 15 years, there was a move towards globalization, notes author Song.
“Over the past 10 to 15 years, there has been a major strategic shift to transform Singapore into a “global city”. While the average GDP growth rate remained high during this period and the per capita income of the country continued to surge, developments in other areas of the economy have been less satisfactory. Today, Singapore has one of the most unequal income distributions (as measured by the Gini coefficient) among developed countries, a large segment of the population suffers from long years of wage stagnation, and productivity growth performance is dismal compared with that of other dynamic Asian economies.2 Despite the nation’s wealth and the high level of savings at the macroeconomic level, there are serious concerns about the adequacy of savings for retirement at the individual level. Meanwhile, the quality of life is seen to have declined significantly over the past 10 to 15 years when the population rose sharply without the necessary increase in provision of public services, infrastructure and public goods in general.”
You know, the more I read, the less Singapore resembles the descriptions provided by Westerners….
Still, I think Singapore’s industrialization policy has worked better than Detroit’s de-industrialization policy….
Kevin Erdmann
Aug 8 2018 at 11:16am
I see what you’re saying, but I think Bryan’ s feminism example is fitting.
For instance, there have been several articles lately about how share buybacks are terrible. Those articles tend to be popular and they also are full of foolish nonsense that could only be arrived at through some dense prejudice and motivated reasoning.
It seems reasonable to say that you are pro-business because you recognize that a significant amount of public opinion is muddied by prejudice and motivated reasoning and it is a priority to you to oppose it. There is a fairly stark bias in rhetoric and policy to control and coerce for-profit institutions in ways that we wouldnt stand for in any other context. Since many people dont seem to notice this, it is important to be an advocate for a balanced approach. This seems similar to the definition of feminist. Yet pro-business doesn’t quite sound right.
Scott Sumner
Aug 8 2018 at 11:31am
Philo, I never said his post was “deeply misleading”. The post was quite clear. Rather, I said that if I called myself “pro-labor” it would be misleading, given how the term is generally used. One is entitled to call oneself whatever one wishes. For instance, Donald Trump can call himself a feminist if he likes. But I claim that some statements about our beliefs will mislead the listener.
Ben, I could produce a list 100 times longer for the US. So what is your point?
Kevin, The rhetoric you refer to is anti-market. That’s why I say I’m pro-market. If I say I’m pro-business then people will think I hold Trumpian views.
P Burgos
Aug 8 2018 at 11:50am
I would love to try and see someone do this for capitalism. Would it be possible to come up with any that meets the following conditions?
“What would a non-argumentative definition of capitalism look like? Ideally, pro-capitalists, non-capitalists, and anti-capitalists could all endorse it. If that’s asking too much, all these groups should at least be able to accept the proposed definition as a rough approximation of the position they affirm or deny. My preferred candidate: …”
Benjamin Cole
Aug 8 2018 at 11:58pm
Scott–
Oh, come.
The US government owns all the land in the US (and rents to select but major industries for sweetheart rates)? No private property in the US?
The US government is a JV partner (has provided free capital) in the major industries of the US?
80% of housing is built by Uncle Sam?
The US charges a 7% “sales tax” on all imports but not on exports?
“Compared with other dynamic economies, the US government’s approach to intervene in the economy is both more extensive and more intrusive, but with a narrow focus on GDP growth and surplus accumulation as the primary objectives.” Does this define the US–it does Singapore, according to the Singapore Economic Review.
Singapore is a statist corporatist nirvana, very pro-business, usually smart, but….no free markets in the major arenas, including housing.
Sure, you can probably open up a bar, bookstore, small software shop, and taxes are low. That’s good! They keep regs light, also good!
But Western scholars need to find another economy to idealize, instead of Singapore.
Scott Sumner
Aug 9 2018 at 12:18am
Burgos, Good example.
Ben, You said:
“The US charges a 7% “sales tax” on all imports but not on exports?”
I think you are in over your head on this. It’s not a non-market policy, indeed it’s arguably the most neutral type of tax one can find in the real world. It does NOT favor exports–check out any textbook in public finance.
California has a 8% sales tax that applies to imports but not exports, so do lots of other states.
Philo
Aug 9 2018 at 1:05am
Whether you claim to be “pro-business,” “anti-business,” or “neutral on business,” *in the absence of any explanatory context*, your statement will be, at best, misleading. That tells us nothing about which of these statements is *true*.
P Burgos
Aug 9 2018 at 11:55am
I was hoping that someone would try and tackle that challenge on capitalism. I myself haven’t been able to come up with a good definition that wouldn’t be considered non-argumentative. I also wonder about Prof. Sumner’s definition of pro-market. I think that all of these terms end up subsumed in popular discourse by partisan politics. So any point of view on public policy gets conflated with whatever side of the partisan divide that view would commonly be associated with. So someone calling themselves “pro-market” will then be seen as conservative or neo-liberal, etc. Is there a word for a viewpoint that public policy and law should promote competitive markets, competitive elections, and making people pay for externalities where lawsuits cannot work? I associate this view with Francis Fukuyama, but there isn’t really a label that I can think of that matches this constellation of views (and I think that it would be a useful label that would allow people to discuss what exactly makes markets and elections competitive, and overall what mechanisms work to make government officials and businesses accountable).
Scott Sumner
Aug 10 2018 at 12:56am
P. Burgos, You asked:
“Is there a word for a viewpoint that public policy and law should promote competitive markets, competitive elections, and making people pay for externalities where lawsuits cannot work?”
Some would call that neoliberalism
P Burgos
Aug 10 2018 at 11:09am
In my own mind I have a hard time not hearing neoliberalism as a synonym for crony capitalism (i.e. privatizing state owned enterprises by selling them off to cronies of the ruling elite and then limiting competition for those entities, or bank bailouts, etc.). The more I write about trying to find non-argumentative labels for views on economic policy, the more convinced I become that every label is too contested to meet Prof. Caplan’s requirements, or if the definition isn’t yet too contested, it soon will be.
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