The Catholic University of America

Max Torres wrote on capitalism and free markets in First Things. See below.

AMERICA NEEDS WORK

From: First Things
Date: February 8, 2017
Author: Max Torres

 

Last December, with a push from President-elect Donald Trump, Carrier Corporation decided to retain around eight hundred jobs in Indiana that it had slated to shift to Mexico. Commentators from George Will to James Pethokoukis and the Wall Street Journal criticized the episode as a violation of market principles. Larry Summers called it an ominous shift from “rule of law capitalism” to “ad hoc deal capitalism.”

 

These critics claim that carrot-and-stick interventions of the state into markets have economic costs. Free markets promote efficient use of capital, and when politicians intervene, we get higher consumer prices. Companies see that politics and regulation affect the bottom line, and this motivates them to spend time and money on political activity, creating a vicious circle as companies compete for influence in Washington rather than competing to make better products more efficiently. Worse yet, today’s protectionism may lead to tomorrow’s bankruptcy. ...

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