Platt Perspective on Business and Technology

Entrepreneurship and freedom

Posted in macroeconomics by Timothy Platt on June 30, 2012

There are postings that simply come to mind as appropriate and timely, given my ongoing flow of writing here and what I have already added to this blog. And there are postings that in effect percolate in the back of my mind and sometimes for a long while before I sit down to write them. This posting fits that second pattern. To put this in context, or to at least acknowledge impetus for turning to this now, I cite a series I have just finished on China: Perceiving China – East and West that I posted to my directory Macroeconomics and Business (see postings 78 and scattered following). And I add that this series was in many respects simply a continuation of earlier series and postings that I have added there and in Ubiquitous Computing and Communications – everywhere all the time. But I stress that I am not writing specifically about China and its marketplaces and business environments here. I could just as easily have cited as contextual reference a series I wrote where I primarily focused on the United States too, and I cite by way of example my recent Considering a Cost-Benefits Analysis of Economic Regulatory Rules (see Outsourcing and Globalization, postings 23 and following.)

China under Deng Xiaoping began a great experiment in free enterprise and in allowing its citizens to take the chance and seek out the opportunities of entrepreneurialism. Right now it is uncertain as to whether this initiative will be given a real opportunity to succeed and at a level that would require the State and Party stepping back from centralized control and even direct governmental ownership of so much of their economy and their systems of production and distribution.

The United States has become a source of reference example from a very different direction. For China this is the challenge of discovering and creating an area of opportunity that has never on their part been there. For the United States this is much more a matter of addressing challenges to the fundamental principles that this country was founded upon but that it has been drifting away from. I read the news and I network with others, both within and from outside of the United States and I find myself thinking of US Supreme Court decisions such as Citizens United v. Federal Election Commission, 558 U.S. 50 (2010) that ruled that under the terms of First Amendment freedom of speech guarantees, corporations and unions could not in any way be prohibited or limited from making political campaign contributions. And with the advent of Super PACs and related fundraising structures that can offer complete anonymity to donors and both for identifying who they are, and for identifying the size of their donations, large corporations and other special interest groups – basically any group willing to incorporate, can outspend any possible competing viewpoint’s fundraising so as to dominate the political field and in effect buy the electoral outcome. I cite in this context my 12th posting in my regulatory rules series as noted above, where I wrote of the way that income and wealth distribution have become progressively more skewed in this country with more and more concentrated into fewer and fewer hands. And those fewer hands are now in a position to buy elections and to do so under the protective cover of Bill of Rights freedoms, initially added into the US Constitution specifically to limit the potential for this type of abuse of power.

And I find myself thinking of the lack of transparency and of opportunity in the marketplace and in the social and political arenas in China, and of the lack of legal protection and accountability that prevails there and from the local levels on up. And I see how corporate and special interest parties can buy and own election results in this country from application of the principle that “corporations are people” as taken beyond the point of simple absurdity. And I find myself stepping away from my usual business and marketplace writing with this note to take a more purely political position. And I do so to ask some basic if perhaps awkward questions.

• Is it possible to have a free and open marketplace and economy if the playing field is so skewed and distorted as to create overwhelming leads of opportunity for a select few?
• If this situation pertains and to the extent that it does, limiting economic opportunity for individuals and their families and for entire communities and even entire demographic brackets, what does this say about freedom of opportunity and of freedom per se in that society?

There is a term emerging in political science thinking: “competitive authoritarianism” – a system of governance in which small groups of the politically and socioeconomically powerful compete, but only for all intent and purpose among themselves for positions of power and authority over all. China faces that challenge with the potential for unrest and instability that it creates. And as the shifting trends in empirical economic measures such as the Gini coefficient illustrate in the United States with its increasing concentration of wealth, opportunity and political voice into fewer and fewer hands, we face similar challenges here in this country too.

• If China cannot find a path through and beyond the limiting, strangling grip of its small numbers of hands will they be able to retain the economic reforms and advancements that they have achieved in recent years and will they be able to maintain the sociopolitical stability that they so desperately seek? In China, order is the one absolute good and chaos, the one absolute evil. Will they be able to hold onto their achieved good?
• And if we in the West and in the United States cannot stop our drift towards competitive authoritarianism with the instabilities that this is creating, what will come of our freedom and our societal good?

I have no answers here, only questions. But the questions and the issues and challenges that underlie them are important, and increasingly so every day.

After some deliberation, I decided to post this in my Macroeconomics and Business as it is about value and wealth, even if only peripherally about monetary value and wealth per se. We are at a cross-roads and in the East and in the West, in China and the United States and everywhere else. China has its upcoming power transitions with all that entails, and with the possibilities it might bring. We in the United States are facing a potential for power transition too, and essentially at the exact same time in November 2012. There is a – take your choice, curse or blessing that is sometimes attributed to the Chinese to the effect “may you live in interesting times.” We are all living in interesting times right now.

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