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I have often come across the argument used frequently by socialists against big business and globalisation.

This argument states that business will strive to open markets and liberalise trade thus leading to huge global trade and in turn a huge global organisation which will create an enormous global unaccountable government. An example often given is the WTO (the World Trade Organisation). The theory then goes on to argue that this will erode the protection that governments give to ordinary people, eventually taking away everybody’s’ rights and to use the power of international business to dictate their working conditions.

First of all, the only way that this can happen in the first place is if there is a strong government, this is why:

A strong government makes the entry of new firms into a market more difficult due to more barriers to entry in employment law, health and safety and so on. This reduces the amount of competition in an economy thus giving those businesses that can survive more power.

The other reason is that when there is a strong state, business and state will always mix. This is inevitable. Politicians will become lobbyists to protect the interest of businesses, and corruption will increase as businesses increasingly struggle to compete against an ever growing state.

When government AND big business mix, then problems of favouritism and bending of the rules to suite business (most likely only individual businesses, the ones who can pay enough) occur. The only answer to this is to reduce state control to encourage more competition and to make corruption more difficult. This is the only way to guarantee individual liberties.

Secondly, the most basic principle which makes this “doom and gloom” theory improbable is that business needs us to survive and to prosper. By dictating to us what we should do, they are essentially destroying themselves. We can already see that the biggest advances in consumerism and prosperity not only for business, but also for the general public have been during a time when the Middle Class has emerged. A class with spending power. It is not in the interest of business to squeeze and to abolish this class as it is the lifeblood of business.

In a free market, business will create the Middle Class, the prosperous people. Most of the people in developed Western European countries and in North America are considered to be middle class. This is due to the development of business and its constant search for larger profits. In searching for large profits, business competes; in competing they also need staff. As more people become employed in order to better individual businesses for competition reasons, the more these businesses make in profit.

It is therefore in the best interests of big business to compete and to take on more employees which in turn, over time creates better working conditions due to the added demand for labour.

This post is a follow on from the previous one on democracy.

I have already discussed and shown how our democracy can and often is taken away from us through the process of taxation, this post is meant to show how that is further worsened by the process of subsidisation.

Here is an up-to-date example of subsidisation of industry in the UK;
recently Rover MG was given millions of pounds by the UK government in order to continue to operate and to avoid the loss of jobs.

There is a reason why Rover was not making a profit - its cars were not good enough - simple. Therefore, people chose not to be Rover cars and to buy other brands instead.
Is it therefore not unfair that if you have opted to buy a VW rather than a Rover that your tax money should be spent on maintaining a company which you deliberately chose not to support in the first place?

How about if you were not one of those to vote for the political party which opted to use your tax money to pay for a company which you deliberately chose not to support? I would consider that to be grossly unfair.

Subsidisation is not only an unfair and unjust system to us, but also a system which creates inequalities abroad. For this I will use the example of the Common Agricultural Policy in the EU.

The EU spends about E50 Billion per year on farming subsidies. This has in the past led to massive over production in butter, wine and other products. In order to get rid of this, the EU has flooded African markets with the produce at well below cost price, which has not only made it impossible for the farmers there to export their goods, but has also ruined the domestic production of those goods. Farmers could no longer produce vegetables cheaply enough as the EU was selling the goods at a huge loss making rate simply in order to get rid of them.

In a developed EU country this may not be as bad because only 1%-3% of the population are employed in farming, however, in African countries farming often makes up a large number of those in employment.

This means, that not only are the subsidies being used to pay for goods that we won’t even use, but they are also crippling those who are most vulnerable.

People in Western countries like to think that they live in a democracy, that every person has a vote and can actually make a difference.

True democracy in a political sense does not exist.

Let me give an example;
If you live in a two party country, where there are only two many parties capable of winning an election, such as the UK (Labour and Conservatives) or US (Democrats and Republicans), 49% or more of the population end up with something which they don’t want.
In a system of proportional representation (often considered to be the purest form of democracy) parties need to form coalitions in order to be able to control. As a result of merging together, the original aims of the parties involved is entirely lost, and even less people get what the originally voted for.

The only true form of democracy is the market system. Every day we vote tens if not hundreds of times with our wallets. Every time we go into the supermarket and choose a certain product over another we have voted and the products available change as a result.

Here is an example (for this example we are assuming that the services are privatised);
if you travel by train from London to Manchester, and the price is too high or the service is poor, you will use the coach or perhaps even fly. The company running the train service will soon lose customers and will reduce prices and improve the service in order to make a larger profit, and so we can see that the motivation to make profit and your satisfaction or consumer taste have a direct impact on the goods and services that you use.

However, assume that the service is nationalised and that you get to vote once every 4 or 5 years; what motivation is there for the elected party to drastically improve the rail service? You pay tax no matter what happens. What about if you were one of 35, 45 or 65% who didn’t vote for that party?

I’ll take an example from the last UK election. Labour won with just 22% of those eligible to vote voting for Labour.

Simply by having to pay tax, the other 78% (the vast majority) have lost their right to democracy. However, if all services were privatised, then the remaining 78% would still have the ability to pick and choose between goods and services which would otherwise all have been decided by the minority.

Taxation in itself is therefore unfair and unjust. Anything that is forcefully taken from you without your agreement takes away your right to a democratic choice.

Therefore, the more the government changes and adds laws as well as regulating and nationalising industry the more our individual freedom is taken from us by a minority of people who get what they want.

The Socialist argument is that a minority of bourgeoisie control the masses, but in reality it is a minority of proletariat who have control.

I have been working on a “theory” recently. I don’t know if this has been already discussed anywhere as I have not done any research on it. Some of the theory was inspired by a lecture on Austrian economics.

Entrepreneurs are a type of labour and produce what they think will meet future demand. Entrepreneurs take entrepreneurial decisions (obviously) which means that the benefit exceeds the cost.

Without realising it we all make entrepreneurial decisions, every time we switch gas company we do so because the benefit of switching exceeds the cost (e.g the time taken etc). Every time we buy something in a shop the private benefit must exceed the cost of the good or we would not buy it.

If a private company is to make a profit it must satisfy the needs of its consumers in order to make a profit for its shareholders. If they do not do this, the cost of the shares will be more than the benefit derived from them for the shareholders; the shareholders will therefore sell their shares and can therefore have a direct influence on the company if it is not creating a greater benefit than cost.

The government also has to make entrepreneurial decisions using our (shareholders of society) tax money. They have to make the benefits exceed the cost.

So, what we have to decide is who will be most efficient at ensuring that the benefits are greater than the cost? Will that be a private company which MUST do so in order to survive, in terms of providing a benefit to the consumer AND shareholder?

Or would that be the government? We don’t have a choice about tax, but we do have a choice about where we spend our money. Therefore a lot of the time a tax paid (by society’s shareholders’) will often not be exceeded by the benefit for the consumer, as the government has far less incentive to use the money efficiently than a private company, as the money supply is practically guaranteed, whereas (as already said) a private company MUST provide a benefit to their customers AND their shareholders in order to survive and prosper.

That is why I am against taxation in most cases, as it usually leads to inefficiency.