One might think that businessmen should easily understand the importance of trade. Those trying to encourage President-elect Donald Trump not to follow through on his protectionist threats certainly do so (“CEOs want Trump to reverse course on tariffs; he’s not budging”). Wall Street Journal, December 15, 2024). They seem to protect their freedom to trade, buy and sell goods (and services) as they wish.
I believe that “businessman” has roughly the same meaning as “supplier” in economics. A person whose primary occupation is to provide goods and services to market demand (consumers or other businesses). These include business managers, business executives, and intermediaries such as merchants and traders. Although workers are suppliers, they are only providers of human capital services in the labor market and are not usually included in businessmen. (Needless to say, “men” in “businessmen” includes both sexes of the human race.) According to Nobel economist John Hicks, as professional intermediaries who buy goods for the sole purpose of reselling them. The rise of merchants or traders was the first step in the rise of the market economy.
Merchants ruled city-states and largely autonomous medieval cities. These cities were not only richer than other parts of the country, but also much freer. A legal maxim that spread throughout Europe was: “The atmosphere of the city makes you free.” A serf could be freed from his landlord if he could “reach a city and live there a year and a day” (by Alexander William Salter and Andrew T. Young, which I recently reviewed in Regulation) (See Medieval Liberal Constitution). Merchants understood that in order to trade (relatively) freely, they needed a general institutional climate of freedom.
However, many analysts point out that businessmen, and perhaps especially corporate executives, have become poor defenders of trade and markets. As the late Financial Times columnist Samuel Brittan wrote in his 1973 book Capitalism and the Tolerant Society:
What is even more difficult is that the intellectuals who are professionally qualified to explain the case for capitalism are economists. Businessmen can usually resort to defending indefensible aspects of their activities, while yielding to the opponents of collectivism in all essential respects. That’s not a criticism either. Businessmen are paid to run the system, not to understand or expose it. And there is nothing more pathetic than seeing politicians of either party seek advice from businessmen and bankers that the latter are unqualified for. give.
Contrarians note that Brittan’s phrase “running the system” downplays the liberal idea of a self-regulating order that does not need to be “run” and naturally resists authority from above. I might. Of course, this gaffe is nothing compared to the collectivist preaching of naive business organizations, of which the World Economic Forum is a model.
Juan Peron, a former army officer, ruled Argentina as a left-wing populist politician from 1946 to 1955 and from 1973 to 1974. His economic knowledge is non-existent, which is not uncommon among politicians, especially populist politicians. He seemed to believe that wealthy businessmen naturally understood economics. Economist Roberto Cortés Conde states the following (Argentine Political Economy in the 20th Century): [Cambridge University Press, 2009]):
Peron did not have very developed or sophisticated economic ideas. [sic]. During both administrations, he placed the state treasury in the hands of those who knew how to get rich, demonstrating his overly simplistic view of economic phenomena.
The ancestors of all businessmen, merchants, if I may use this expression, were promoters of trade. Today’s businessmen are often clients or courtiers of powerful people. Why have businessmen become so alienated from economics and laissez-faire? One reason for this may be that the economy has become more complex and difficult to understand.
Another hypothesis formulated by public choice theory is that once a state reaches a certain size, or a certain level of what has come to be called “state capacity,” the name of the game becomes rent-seeking. . Opportunities to tap into the national treasury through government contracts and grants are becoming increasingly valuable. In order to gain privileges from the benefaction of their rulers, they must align themselves with and obey the state. As the rule of law eclipses human governments, businessmen fear that they will ruin their businesses. To survive, they must kiss the ring of nationhood. The Wall Street Journal dubbed this week “the week CEOs bent the knee to Trump” after observing how CEOs of major technology companies felt obligated to contribute to the inauguration of the new US president. It states that it was.
But wouldn’t it still be better to allow businessmen to bribe politicians and bureaucrats, directly or indirectly, legally or illegally, than to silence the fierce demands of their customers? Or? Perhaps, but the cost of this crony capitalism is high. Pareto-enhancing corruption encourages politicians and bureaucrats to finance their operations through this type of extortion. This is a deadweight tax like any other tax. It also undermines the rule of law and the ethics of reciprocity that are the basis of free and prosperous societies. As James Buchanan suggests, the corruption of public morality can lead to the corruption of private morality (see Buchanan’s “Why I’m Not a Conservative Too”), which can lead to efficient cooperation. It will further weaken the social institutions on which it depends.
The deterioration of public and private morals and the transformation of businessmen from promoters of consumer satisfaction to clients and courtiers of the state are highlighted by the threat of arbitrary and destructive tariffs on imports from Mexico and Canada. This is exemplified by a car manufacturer. They are desperate to sway politicians who have the power to interfere in their deals (“Hyundai does everything it can to woo Trump as tariffs loom”, Wall Street Journal, 2025) January 11th):
Hyundai, in particular, has launched an aggressive campaign to build relationships with President Trump’s advisers. The company told the president-elect’s aides that it is committed to creating American jobs and being a supporter of the U.S. auto industry.
Hyundai Motor executives, including Muñoz and Hyundai Motor Group Vice Chairman Jehoon Jang, may attend the inauguration event, the people said. A $1 million donation will provide six tickets to a private candlelight dinner with Trump and first lady Melania Trump on January 19, the day before Trump’s inauguration, according to a benefits package reviewed by The Wall Street Journal. It is said that it will be done. Your donation will also earn you six tickets to a private reception and other exclusive events with President Trump’s cabinet picks on January 18th.
Of course, Hyundai is just one example among the many perverse incentives created by bullying politics.
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According to DALL-E, Silk Road caravans around 200 AD
