When perusing much public discourse concerning those in government and those who, say, are businessmen and entrepreneurs, one of the more striking aspects is how their economic roles and motivations are viewed as the complete opposite for what they really are.

Even though their achievements may, from time to time, be lauded, the businessman, entrepreneur or capitalist is almost universally despised for what appear to be his motives of greed, selfishness and exploitation. Central to this is the profit-motive, a factor that seems to receive exclusive attention at the expense of any other. Yes, it is true that people are in business to make money and usually as much of it as possible. But this completely overlooks the fact that no businessman is in a position to force anyone to contribute to his income. He can only gain a return on his investment if he is able to accurately devote the scarce resources available to the most highly valued ends of consumers. Even if he has no charitable motivation or any emotive feeling towards the people whom he serves, at the very least he is required to have a superior empathetic understanding of their tastes and desires. If he fails in this regard then the result is not a bumper profit but an eye-watering loss. All transactions, therefore, between businesses, their customers and their employees are entirely voluntary. People enter voluntary transactions because they expect to be better off as a result of them. Nobody is therefore put into a worse position through his interaction with a business, or at least they expect not be.

Counter this with the view of the politician. Reading the list of supposed motivations for government office one would think that only those with an angelic disposition need apply. Not only are they expected to be selfless and altruistic, thinking only of their “people” and of their “nation”, they are also supposed to be utterly devoid of any kind of personal ambition. Asked whether he/she has any eye for high office, one is normally retorted with the rhetoric of “public service” and the apparent fact that the budding statesman is just there to “do his job”.  In short, the implication is that government employment produces universally good and wonderful things that apparently require some kind of sacrifice for which there is very little reward. Nothing could be further from the truth. Government receives its revenue from taxation, and taxes are paid compulsorily. Whereas the entrepreneur has to risk the entirety of his wealth in order to persuade his consumers that what he produces is worthwhile spending their money on, a politician faces no such restraint. They can charge as much as they like, deliver services that are despicably dire and command a personal income that far exceeds what they would be able to obtain in the free market. Furthermore, because the funds for all of their boondoggles have been levied by the threat of force, there is a very real loss experienced by the taxpayers, even if the resulting service is relatively “good”. For none of them would need to be forced to pay up if the government’s ends where truly what they most highly desired to do with their money. Whereas an entrepreneur makes everyone – himself and his customers – better off, the politician only makes himself and the recipients of his tax loot better off. Those who have been forced to pay are left substantially worse off.

These fallacious views have played themselves out recently in the whole debacle of corporate tax avoidance. Few overlook the fact that the likes of Amazon and Starbucks rake in large revenues (if not apparent accounting profits) that somehow requires them to “give something back” to “society”. Yet what is forgotten is that they have only been able to obtain these revenues and profits through voluntary exchange because they have created employment and served the needs of customers by providing them with products that they want to buy. Yet for some reason we think it is just to charge them for this “privilege” of serving our needs. Further, is there not something incongruous about the whole rhetoric of “giving back”? I want a coffee so I go to Starbucks; I give them money, they give me coffee; they have already given in the form of a product that meets my needs. If Starbucks has to “give back” then why don’t I have to “give back” their coffee? Why am I, through the route of taxation, effectively allowed to renege on my side of the bargain?

A similarly related fallacy is that anyone who “owns resources” (i.e. land and capital goods) effectively just has to sit back and earn a perpetual income by virtue of this ownership. Although space precludes a detailed examination of the economics, a net return can only be earned from such ownership if the good is directed to a use more highly valued than that anticipated by other entrepreneurs. Failure to do this will simply result in losses. Try telling the owners of Woolworths, HMV or Blockbuster that ownership of resources is a path to perpetual wealth and income. If anything, it is the government that yields a perpetual income from resources. For it can confiscate anything it wants by force, and display zero entrepreneurial talent with its use by spending it on any wasteful project it deems desirable to itself and its cronies. The only say we have in the matter is an “election” between approved and screened candidates once every four to five years.

Whenever one is presented, therefore, with an opinion on the characters of businessmen on the one hand and of politicians on the other it is best to assume that the stated characteristics should be reversed.

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