The most common forms of competition discussed in the social studies are impersonal competition which is directed toward a goal and personal competition which is directed toward any one individual. One needs to note that personal competition can lead to rivalry and differing stages of conflict at the point of exchange during competition. A third form of competition is “cultural competition” which is competition between two or more cultural groups. (1)
Restricting one’s freedom to use pecuniary wealth to influence others, say by offering higher prices to win agreements to sell, results in greater emphasis on “personal characteristics competition.” - Harold Demsetz (2)
Demsetz is stating that at the point of exchange, during competition, impersonal competition changes to personal competition when pecuniary wealth is restricted. Likely if any competitor is restricted in some freedom at the point of exchange some level of personal competition is introduced. As mentioned above, personal competition can lead to rivalry and differing stages of conflict at the point of exchange during competition.
Note that in Demsetz’s example, implicitly assumed, is that some exogenous power restricted freedom to use, in this example, pecuniary wealth.
What if an exogenous power, such as politicos, used verbal virtuosity based on the way things ought to be and the same politicos through the mechanism of government used regulatory authorities and their inherent regulatory powers to simultaneously create conditions for personal competition and cultural competition to the exclusion of impersonal competition? What if such conditions then fostered an army of economic rent seekers aka crony capitalism rather than an army of competitors in a free market environment? Could such conditions ever be present?
Welcome to the wonderful world of politico directed Department of Energy (DOE) loans to green energy companies simultaneously accompanied by the regulatory edicts of the Environmental Protection Agency (EPA).
Lets first examine cultural competition. If certain politicos want to foster cultural competition they must frame a cultural competition debate which subdivides culture into competitors. The politico purposely draws some distinction and purposely promotes an item as being positive and another item as being negative [verbal virtuosity based on the way things ought to be]. For example, green energy is positive and fosil based fuel is negative.
Next we have personal competition. The same group of politicos through the mechanism of government purposely act as an exogenous power to purposely restrict the freedom of one cultural competition competitor in the now purposely politico made cultural competition environment. For example, raise taxes and regulation on fossil fuels while subsidizing green energy.
We now have culture competition simultaneous with personal competition. Hence the politico has created an environment in which politico-created competing cultures compete on a personal basis. Stated alternatively, rather than free enterprise competition occurring in the area of energy to create the most efficient allocation of resources with alternative uses, politicos through the mechanism of government have created a centrally planned misallocation of resources with alternative uses by introducing cultural and personal competition.
Who loses when a misallocation of resources occur? The consumer is the ultimate loser as prices rise for the item in question [energy] while the consumer is also taxed [subsidies for green energy]. Hence the consumer is not only harmed by higher prices, the consumer is paying tax dollars to in effect create the higher prices. You have been duped again? Well of course you have!
Who gains when a misallocation of resources occur? The producer that charges above market prices (when lower market-based prices are available) and simultaneously enjoys subsidies [taxpayer money]. The politico also benefits as he/she has exercised political constituency building through the use of taxpayer dollars (tax payer funded subsidies recalculate back to the politico in the form of political contributions of one type or another including monetary). You have been duped again? Well of course you have!
What has been created for you, the consumer, by politicos through the mechanism of government? Your tax dollars have been put to work! You have funded a price increase for yourself and simultaneously funded select firms and funded political contributions all achieved by politicos through the mechanism of government misallocating resources to their particular gain. Very nice!
“The government has nothing to give. The government is simply a mechanism which has the power to take from some to give to others. It is a way in which some people can spend other peoples' money for the benefit of a third party - and not so incidentally themselves.” -Milton Friedman
Notes:
H/T Cafe Hayek
(1) Nature and characteristics of Competition, http://www.sociologyguide.com/basic-concepts/Characteristics-of-Competition.php
(2) Harold Demsetz, 1988, Ownership, Control, and the Firm, page 17.
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