Freeman

ARTICLE

Perspective: Valuing the Future

FEBRUARY 01, 1991 by DWIGHT R. LEE, ROBERT L. SEXTON

If private property rights are well defined and respected, then the owner of a resource has confidence that he or she will, by maintaining ownership, benefit from any increase in the future value of the resource. As evidenced by the fact that graf-fill is ubiquitous on the walls of public rest rooms but seldom seen on the walls of rest rooms in private homes, people are more concerned with the future value of property they own than of property they do not own.

But genuinely farsighted behavior often requires that individuals consider consequences of their decisions that will not be realized until after they are gone. The private ownership of property by itself will not provide the necessary incentive for people to concern themselves with outcomes which extend beyond their own existence. Yet we observe property owners sacrificing current consumption in order to make investments that will not pay off for several generations. Many research and development projects will not, at best, pay off for decades. Owners of forest land replant white oak and Douglas fir trees that will not be harvested for 60 or more years. Some people invest in the production of wines and spirits that will be aged a century or more before they are sold and consumed. This behavior occurs because private ownership rights are generally transferable, and because future values are reflected in current prices.

—Dwight R. Lee and Robert L. Sexton,

writing in the April 9, 1989,

Orange County Register

Antitrust and Monopoly

Government, and not the market, is the source of monopoly power. Government licensing, certificates of public convenience, franchises, patents, tariffs, and other legally restrictive devices can and do create monopoly, and monopoly power, for specific business organizations protected from open competition. Abusive monopoly is always to be associated with governmental interference of production or exchange, and such situations do injure consumers, exclude sellers, and result in an inefficient misallocation of resources. But importantly, for this discussion, such monopoly situations are legal, created and sanctioned by the political authority for its own purposes. Thus, ironically or intentionally, the bulk of the abusive monopoly in the business system has always been beyond the scope of antitrust law and antitrust policy. Antitrust . . . is both a myth and a hoax.

—Dominick       T. Armentano, Antitrust and

Monopoly:       Anatomy of a Policy Failure

The Market for Corporate Control

The (relatively) free market economy of the United States has found a way to pierce the protective veil that insulates unresponsive management from the wrath Of small shareholders—the takeover. The corporate takeover is practically the only way that entrenched management can be shaken up and either forced to be responsive to shareholder interests or fired. This market for corporate control does not exist to any great extent in any country except the United States, which provides a competitive advantage over other countries because the threat of takeover provides corporate management an extra incentive to work for shareholder interests rather than its own. Thus, shareholders of United States companies receive a higher return on investment than can investors in companies that are not subject to a takeover threat, all other things being equal. The attack on Drexel Burnham, and the threat of an attack on anyone else who ties to facilitate the market for corporate control with junk bonds, is bound to harm the market for corporate control and thus decrease the already weak voice that shareholders have. Management of companies that do not have to fear a takeover will have less incentive to be efficient, which also hurts employees and consumers.

—Robert W. McGee and Walter E. Block, writing

in the Northern Illinois University Law Review

On the Skids

I wonder if one could not draw a parallel between a drunk on the skids and the American people with their addiction to more government. Or maybe compare our social welfare system with a mountain system of high peaks and bottomless ravines.

Behind us are the mountaintops of capitalism; below us is the chaos of socialism; we are perched on the slippery slopes which lead only downward.

Recently we witnessed several drunks in Eastern Europe, who after 40 years of socialism finally hit the bottom and only then were able to pick themselves up to vow never again to partake of what had nearly killed them. Need we follow them clear to the pits before we realize the terrible damage we do to ourselves when we tinker with the marketplace?

—Douglas N. Merritt, writing in the July 10, 1990,

Atchison Daily Globe, Atchison, Kansas

The Caretaker State

The modern state taxes people in the name and façade of compassion in order to accomplish its salvation of all men by legislation, controls, and science. People have long believed in statist salvation, and they have looked to the state to solve problems, moral problems, they themselves refuse to acknowledge as their responsibility. One of my more vivid memories of this came with the 1971 earthquake in California’s San Fernando Valley in Los Angeles. I heard someone in a check-out line of a supermarket complain about the earthquake, and earthquakes in general, and ask, “Why doesn’t the government do something about it?”

Impossible tasks have been asked of the state, and the state has failed again and again. As a false savior, it is increasingly the target of the people’s bitterness. The crisis will only worsen, and the evils experienced by peoples and states will intensify, until they recognize that the state is not god, nor is its power to do good equal to what man can do under God.

—Rousas John Rushdoony, writing in the

June 1990 issue of Chalcedon Report

ASSOCIATED ISSUE

February 1991

ABOUT

DWIGHT R. LEE

Dwight R. Lee is the O’Neil Professor of Global Markets and Freedom in the Cox School of Business at Southern Methodist University.

comments powered by Disqus

EMAIL UPDATES

* indicates required
Sign me up for...

CURRENT ISSUE

July/August 2014

The United States' corporate tax burden is the highest in the world, but innovators will always find a way to duck away from Uncle Sam's reach. Doug Bandow explains how those with the means are renouncing their citizenship in increasing numbers, while J. Dayne Girard describes the innovative use of freeports to shield wealth from the myriad taxes and duties imposed on it as it moves around the world. Of course the politicians brand all of these people unpatriotic, hoping you won't think too hard about the difference between the usual crony-capitalist suspects and the global creative elite that have done so much to improve our lives. In a special tech section, Joseph Diedrich, Thomas Bogle, and Matthew McCaffrey look at various ways these innovators add value to our lives--even in ways they probably never expected.
Download Free PDF

PAST ISSUES

SUBSCRIBE

RENEW YOUR SUBSCRIPTION