So there's a problem for capitalists, Laissez-Faire-ies, libertarians, and free-marketeers.
(A) We believe the pursuit of profit is noble and good, but
(B) We understand, especially post-bailout, that for many businesses -- especially bigger, publicly held corporations -- the best path to profit is through regulations that kill competition, mandates that generate customers, handouts that pad profits, and institutionalized bailouts that absorb losses.
Liberal blogger Matt Yglesias gets at this problem in a post today:
Milton Friedman’s notion that “the social responsibility of business is to increase its profit” is one with a large number of adherents.
It seems to me, however, that if taken seriously this is an attitude that’s curiously destructive of the underpinnings of the capitalist order. After all, this implies that a business executive has not only the right as a citizen of a democratic country but a moral obligation to dedicate his energy and that of the firm he manages toward erecting regulatory barriers to competition and to begging for bailouts and subsidies. The Friedman view is that an entrepreneur who’s obsessed with creating great products is not just in some loose sense a sucker compared to the one who’s more focused on creating a politically entrenched monopoly, but that he’s also guilty of some kind of ethical failing.
I think Yglesias really gets at the problem. General Electric busies itself lobbying for subsidies and regulations from which it profits. If GE decided to tamp down the lobbying -- or to lobby instead for fairer competition -- it would be giving up one of its biggest advantages, political connections. To bring it back to an issue where Yglesias applauded the Regulatory Robber Barons, if Wal-Mart had opposed stayed silent on the employer mandate in health-insurance, it would have been passing up an opportunity to harm its smaller competitors.
Libertarian writer Peter Suderman objects to Yglesias's argument:
most folks who subscribe to a basically Friedmanite view of the world also believe that the short- and medium-term profits earned through rent-seeking tend to come at the expense of a firm’s long-term profits and sustainability.
This is a standard argument I encounter, and it's partly true. Look at the student lenders, who got subsidies and subsidies and subsidies until Obama decided they were merely "intermediaries." Look at ethanol businesses which had a nice little bubble in 2006 through 2008 and then started going bankrupt.
But I also find Suderman's argument partly unconvincing. I think the long-term harm of increased government intervention in the economy is broadly enough spread that the rent-seeker still comes out ahead.
So, I sort of agree with Yglesias's conclusion: Free-market types need to speak in moral terms. Pursuing profit is good, but only when done in a moral way.
It's immoral to steal land through eminent domain. It's immoral to lobby for a bill that forces people to buy your product. It's immoral to try to get handouts to pad your bottom line.