Law of the land
Mar. 21st, 2009 02:06 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
aadlerYears ago — many years ago — I was in a college sports club. This wasn’t just a pastime for me, it was a serious part of my life. Because I was on what I called “the work-study program” (i.e., I studied until the money ran out, then I worked for a year or two — usually for the college itself, to keep myself eligible for club membership — to build up enough of a cash reserve to start taking classes again), I spent ten full years in this same sports club. I chose my classes, and sometimes my work schedules, to accommodate the club’s meetings and workouts. Over the years, I dated between a quarter and a third of the female membership. This particular activity-slash-gathering-of-people was my principal (sometimes my only) activity outside work or classes, and almost the entirely of my social life. I say all this to emphasize just how important it was to me.
At one point, the assistant instructor left the club to devote himself to finishing his graduate work. The club president accepted a promotion to assistant instructor, leaving the presidency vacant. The vice-president … It is difficult for me to express, without using language I would prefer not to post on my LJ, just what an appalling character he was. He hit on the female students, even though (we discovered) he was married. He had passed out campaign posters when running for vice-president, something one just didn’t do in that venue: everybody knew you, and if they agreed you were right for the position, you got their vote; the club was devoted to the sport, and bringing politics into it was unseemly to a disturbing degree. He was the wrong person, in the wrong place, not just at that time but at any time.
Those of us who were serious about the club did not want him to be our president. The resigning president did his best to call a new election, and I was all for it … and the chief instructor, the man who every year submitted himself for re-election but then ruled firmly throughout his repeated terms, said flatly, “No. According to our constitution, the vice-president succeeds if the president is unable to complete his duties.” And that was that, and we were stuck with a thoroughly unsuitable character as our president for the remainder of the year.
I had been part of the attempt to sidestep the rules as they stood, in order to avoid an undesirable consequence; and, when we were called on it, I recognized even then that the resort to fundamental authority, however unfortunate the result, was the way things ought actually to be done. The law is the law, and if the law is wrong, you change the law rather than breaking (or ignoring) it.
I said all that so I could say this:
The attempts to pass laws confiscating the bonuses to AIG executives, or to tax those bonuses at 90% or more, are not only wrong but illegal. Under our Constitution, it isn’t just illegal to do such things, it’s illegal to make such laws. Bills of attainder (laws aimed not just at classes of persons but directed at specific individuals) and ex post facto legislation (enacting laws that alter the legal consequences of an act, after the act was committed) are both specifically prohibited by the U.S. Constitution, and for good reason.
I was against the bailouts, to AIG or to anyone else. My feeling is, if a business fails, let it fail; other businesses will rush in to fill the gap. If, however, you DO give it money to keep it in normal operation, then you have to let it operate normally. A business isn’t a government agency, and can’t be operated by political rules.
What we’re seeing is cynical political grandstanding. It’s also against the law. Allowing it to proceed is a direct threat to this nation.
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Date: 2009-08-12 12:21 am (UTC)I'm a small business man myself, or rather the son of one working in the family business. I've seen a few to many instances of companies taking stuff off the market cause it was to good. I work in flooring. The two main companies have bought many of their competitors, now originally these were all about the same size, but have kept the old names to maintain brand loyalty. But they're pretty much all the same carpets. You've heard of Stainmaster? THe company that made that and pushed it as the best carpet around came up with a better fiber. So they sold the name to someone who jumped at the chance to have their stuff marketed as Stainmaster. Look at it's warrenties and there's plenty of non-Stainmaster stuff with better.
Remember Primestar, the satelite TV company? At least around my neighborhood everyone considered it the best of those companies. THey then sold to either Diorect TV or DishNetwork. WHo, instead of using their satelite to provide better coverage de-orbited it.
What innovations are you talking about?
The sort of business model innovations that create bubbles like the dot-com one and the recent real estate bubble, with the sub-prime mortgages? My familyl helped out a guy who lost his house because of that. FUnny thing is he could have afforded a normal mortgage, maybe on a smaller house, but was convince a sub-prime.
How about the medical innovations that leave us with commercials for drugs with more side affects than what they're supposed to cure. Of course they probably help raise medical costs. You've got to test if those drugs you will be appropriate for you after all.
Or the inovations that have moved us from a "fix it" society to a "throw it away if it's broken" to "throw it away if it isn't top of the line." Compare how long it took to go from VCR's to DVDs and how long it went to go from DVDs to HD DVDs and Blu-Ray.
There's to many people who'll come up with an idea and THEN search for a buyer of the idea for me to believe innovation will be crippled by the government.
I simply don't believe the people who say that their main concern is small and medium sized businesses actually mean it. It's all about big business. And if they're really concerned about them then treat them differently. Different circumstances and different needs invite different rules. You treat family differently than friends than acquaintances than enemies. THe special interests you mention belong to the businesses you trust.
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Date: 2009-08-12 08:25 am (UTC)What innovations? Innovations come from businessmen, not politicians. Bell, Browning, Ford, Goodyear, McCormick, Morse, Salk, Whitney, the Wright brothers -- I could go on and on. Private citizens all, innovating for the sake of discover and, yes, turning start up businesses into companies that often made them profits and, in turn, employed millions of Americans. Government is famous for stifling invention and innovation, not encouraging it.
Yes, businesses sometimes fail, sometimes make bad decisions, and sometimes get too big for their britches and have to be cut down to size. How is that not true of Big Government? It was the businessman, the inventor, the innovator, the mom and pop stores and the corporations, the private individual who made this country, not the government that all too often stomps the freedom to innovate out of anything its bloated shadow falls across.
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Date: 2009-08-12 11:40 am (UTC)All the people you list started out coming up with ideas and then became business men. That's why we don't need to worry about a lack of innovations. Some people work because that's what people do. There's plenty of people who invent because they need to see if their ideas can work. Once the people you listed ideas suceeded and they went into business, if they didn't fail, they often showed an incredible ability to be out of touch. Ma Bell had to be broken up to get innovations going.
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Date: 2009-08-12 06:39 pm (UTC)Well, yes, if business is systematically vilified and stifled by politicians who “know what’s best for us” (despite specializing in politics rather than, for instance, business), loss of confidence could easily happen.
Once the people you listed ideas succeeded and they went into business, if they didn't fail, they often showed an incredible ability to be out of touch.
Except when they didn’t. Or when they lost touch and then regained it. (Bill Gates has stumbled many times, and recovered his footing because he’s good at what he does.) And if these business do fail, and are replaced by new ones that are more in touch with what’s going on … how precisely does that indicate a failure of the free enterprise model?
Ma Bell had to be broken up to get innovations going.
‘Ma Bell’ was a heavily-regulated entity that was part business and part public utility, having some of the advantages and many of the problems of both. I’ve seen a fairly plausible claim that Bell itself engineered the split that was ‘forced’ onto it, in order to divest itself of obligations that were dragging it down while retaining the segments that were profitable.
no subject
Date: 2009-08-12 09:51 pm (UTC)no subject
Date: 2009-08-13 06:17 am (UTC)Invention, innovation and business go hand in hand, always have; inventers ultimately want business to make use of their ideas, and businesses want to take advantage of those ideas for the sake of improving their product or services.
no subject
Date: 2009-08-12 06:30 pm (UTC)Nobody takes a product off the market because it’s ‘too good’. They take it off the market if they can’t make a profit from it, or if something else will give them a better profit. Even then, there will always be niches where people are willing to pay more to get the better quality. It evens out.
Companies selling to other companies which then change the business model? What, are you saying someone shouldn’t be allowed to sell a successful business at a profit? Or that the new owners can’t restructure it to suit their own goals? If the result is deficient service/product, well, the customers will take their business elsewhere. And if there is no ‘elsewhere’, that means the new owners are still offering the best deal available.
Dot-com bubbles, real-estate bubbles? That’s why it’s called speculation. People with money risk it in hopes of making more money. The greater the potential profit, the greater the risk they’ll assume. This is the source of funds for investment. Sometimes it doesn’t work out, and there are winners and losers. But nobody is forced to join the game.
(The guy you describe who lost his house to a bad subprime mortgage, when he could have afforded a smaller house with a normal mortgage? He probably should have done the latter. He probably will be more cautious in future transactions.)
Drugs that cause more side effects than what they’re supposed to cure? That would still be a good option if the side effects were crippling but the disease was lethal. And the new drugs are developed by the pharmaceutical companies, not hospitals or physicians; they don’t “raise medical costs” unless people are willing to use them.
The notion of fix-it society vs. throw-it-away society … People buy new products because they want them or need them. Is it wrong, then, to provide something new and better that people will want to use in replacement of something lesser? Should those people be forbidden by law from getting better goods if they can afford them?
No, innovation can’t be stamped out. There will always be an economy of some sort, and people will always come up with new ideas. Clearly, however, some economies are more vibrant and successful than others, and if an activist government managed to choke off only 15% of the innovation that would ordinarily be there, the economic consequences would be horrendous.
As for the difference between big business and small business, I’ve seen the distinction used as a bait-and-switch tactic too many times to have much faith in it. ‘Big business’ is the villain … why, exactly? because it’s successful? because it’s big? I think it’s because there will always be people resentful of anyone who has more than them, and there will always be others willing to cadge for power by stoking and trading on that resentment.
Final word: I don’t trust government to manage the economy better than can be done by free enterprise because the business of government isn’t business. The business of government is governing. Central planning has failed everywhere it’s ever been tried. There was an eighty-year experiment in that — the Soviet Union, I believe it was called — which eventually collapsed under its own economic incompetence.
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Date: 2009-08-12 11:24 pm (UTC)And Big Business is the villain because small businesses have to fight for their market share with quality goods and services, meanwhile larger businesses are more than willing to get their profits by eliminating competition. THat's bad for customers and employees.
Yes, the guy I knew who could have afforded the regular mortgage should have taken it. But no one should have tried to convince him to take the riskier choice.