Pun Salad

The Business Roundtable—an association of America's leading CEOs—committed itself in 2019 to "modernizing its principles on the role of a corporation." In the past, the group explained, it held that "corporations exist principally to serve their shareholders." But "it has become clear that this language on corporate purpose does not accurately describe the ways in which we and our fellow CEOs endeavor every day to create value for all our stakeholders, whose long-term interests are inseparable."

That term—stakeholder—represents a significant shift. But it did not emerge from nowhere. There is an entire historical and political apparatus underlying it that has led to results that are decidedly unfriendly to free markets.

Who are these stakeholders? The Business Roundtable statement invokes "customers, employees, suppliers, communities, and shareholders," but that isn't the only definition. One scholar identified no fewer than 593 different interpretations of who qualifies as a stakeholder. R. Edward Freeman, a prominent stakeholderism booster, has argued that stakeholders include "any group or individual who can affect or is affected by the achievements of the firm's objectives." Such all-embracing conceptions underpin what is called pluralistic stakeholderism: the theory that companies must consider the effects of their choices on potentially infinite numbers of stakeholders—even to the point of requiring businesses to consult with, if not receive approval from, such constituencies before making any significant decisions.

Jason Furman recently gave a talk in which he described how he teaches economics. He says that early in the course, he describes perfect competition. This is when the free market is most likely to be optimal. Then, over the course of the semester, the students learn all of the preconditions that must be assumed in order to have perfect competition. Since these preconditions are almost surely not satisfied, market failures will occur, and students learn how government intervention can produce better outcomes. (His talk began four hours into the conference, and the remarks that I am paraphrasing are at about the 4:15 mark.)

Furman comes close to making what I call the straw-man argument against libertarianism and for technocracy. That argument goes:

1. Libertarianism relies on markets.

2. Markets are optimal only under conditions of perfect competition.

3. The conditions for perfect competition are rarely satisfied.

4. There are many instances of market failure.

5. Therefore, libertarianism does not work.

This argument constantly emanates from economists of Harvard and MIT and their disciples. Students and journalists, who are inclined to resent markets and despise libertarians, feel vindicated when they hear this argument. They come away believing that markets are never any good, even when professors who teach this way, like Jason Furman, are less dogmatically anti-market.

What is wrong with the argument? Step (2) is a swindle. It sneaks in the assumption that markets have to be optimal in order to be preferable to government intervention.

Another month, another bad report. On October 13, the Bureau of Labor Statistics announced that consumer price inflation, at an 8.2 percent annualized rate, was higher than expected through September. Americans continue to endure the worst inflation in four decades. They continue to experience a decline in real average hourly earnings. They continue to tell pollsters that the economic recession has arrived. Blerina Uruci, an economist at T. Rowe Price, does not like what she sees. “This is very troubling,” Uruci told the New York Times. “The trend is very troubling.”

Not at the White House. It doesn’t see any troubles. According to President Biden, the most recent BLS data are superfluous. After all, everybody already knows that “Americans are squeezed by the cost of living: that’s been true for years, and they didn’t need today’s report to tell them that.” As a matter of fact, Biden said in a statement, rising costs are “a key reason I ran for President.” And anyway, the situation is under control. “My policies — that Democrats delivered — directly tackles [sic] price pressures we saw in today’s report.”

End of story, thank you all very much, nothing to see here, move along, move along.

Just a minute. Biden’s reading of recent economic history is filled with evasions, half-truths, and “yarns.” They deserve comment and rebuttal. I don’t remember Biden staking his 2020 candidacy on inflation. He couldn’t have. The inflation hadn’t happened. It didn’t arrive until the spring of 2021. By which time Biden was living — during weekdays, at least — at 1600 Pennsylvania Avenue.

Left-wing politicians promise that millions of good “green jobs” are right around the corner, but companies keep announcing layoffs in that extremely unproductive sector.

Just last week, General Electric announced it was laying off 20 percent of its entire U.S.-based onshore wind-power workforce, with hundreds of employees getting pink slips. “We are taking steps to streamline and size our onshore wind business for market realities to position us for future success. These are difficult decisions, which do not reflect on our employees’ dedication and hard work but are needed to ensure the business can compete and improve profitability over time,” a spokesperson for GE Renewable Energy told CNBC.

One might think that so-called green energy should be booming. After all, U.S. electricity prices are at record highs, with a kilowatt-hour in a U.S. city in August selling for 16 percent more than it would have just a year ago. The Democrats’ so-called “Inflation Reduction Act” pledged to invest $369 billion in wind and solar power over the next decade, giving a windfall of cash to the types of energy often favored by environmentalist activists. America already poured almost $450 billion into those energy sources between 2010 and 2019.