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'Government Knows Best' Is Simple Arrogance

Free enterprise: Emboldened by the Justice Department's attack on Microsoft, Lockyer targets oil companies.

May 28, 2000|M. DAVID STIRLING | M. David Stirling is vice president of the Sacramento-based public interest law firm Pacific Legal Foundation. He was chief deputy attorney general of California from 1991 to 1998

"Profiteering." Making "excessive profits." For those with a vision of the entrepreneurial spirit and energy of American free enterprise, the words jump off the page. By whose definition is an entrepreneur a profiteer? Who decides that an innovator is making excessive profits? Why should not a business person who provides consumers with a highly useful product or service make a lot of money?

Recently, California Atty. Gen. Bill Lockyer announced that he was considering suing oil companies for "profiteering." "We have a West Coast oil cartel that we are going to have to break up," Lockyer said.

Sound familiar? As one of 17 state attorneys general who is piggybacking the U.S. Justice Department's antitrust litigation against Microsoft, Lockyer is celebrating U.S. District Judge Thomas Penfield Jackson's ruling that Microsoft acted against competition, and he fully embraces the novel position that Microsoft needs breaking up. After all, isn't the primary evidence of Microsoft's anti-competitiveness that it generated much greater profits than its competitors?

The image of Lockyer lecturing the oil industry on how to locate, extract, transport, refine and market gasoline at the lowest cost would be humorous if he were not serious. The U.S. oil industry has managed to provide the American driving public with an uninterrupted supply of gasoline, regardless of world economic and political conditions, at an average price four times lower than the cost of gasoline in European countries for over 40 years.

The image of U.S. Assistant Atty. Gen. Joel Klein--the career government lawyer chosen by the Clinton administration to head its Microsoft antitrust case--instructing Bill Gates on how Microsoft can become more innovative would be laughable if he were not serious. That's the Bill Gates who started Microsoft in 1975 to write programs for microcomputers but who, by 1999, was head of one of the most successful companies in history, having completely changed for the better the lives of individuals, families and businesses while providing and contributing to countless numbers of jobs in the process.

Indeed, many now serving in high-level positions at the federal, state and local levels have a government-knows-best attitude that views entrepreneurs and business people with disdain. This helps explain why we see elected officials and their appointees targeting business enterprises and entire industries with disparaging public comments, threats and investigations.

But what explains the government-knows-best crowd's phobia of the entrepreneurial community? From whence comes their arrogance to challenge the generators of an economic system that has facilitated millions of individual success stories of both native-born and immigrant Americans who have driven the most productive, progressive and responsive economy in the history of the world?

Virginia Postrel of the Reason Foundation hits the mark when she writes: "The most potent challenge to markets today . . . is about stability and control. It is the argument that markets are disruptive and chaotic; that they make the future unpredictable; and that they serve too many diverse values rather than one best way." She calls this an ideology of stasis: "the notion that the good society is one of stability, predictability and control, and government's responsibility is to curb, direct or end unpredictable market evolution."

No one who cares about freedom of the marketplace should minimize the commitment of the government-knows-best adherents to the ideology of stasis. To the extent that their executive orders, legislative enactments, administrative regulations, enforcement litigation and demonization of entrepreneurs and business people succeed in curbing, directing and suppressing the dynamics of the marketplace, natural incentives essential to individual growth, opportunity, productivity and confidence are diminished, opening the door to systemic stagnation.

American free enterprise still generates the tax revenues, creates the jobs, funds the charities and provides the highest standard of living for the lowest costs to the greatest number of people of any country on Earth. We should be most uncomfortable whenever the government-knows-best crowd acts to curb, control, suppress or stabilize the marketplace. Their arrogance is only exceeded by their ignorance.

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