“Friendly to Business” and Friendly to Markets NOT the Same

Carl Icahn, corporate takeover specialist, speaks at the Reuters Corporate Reform Summit at the Reuters North American headquarters on Times Square in New York February 18, 2004. Of the current crisis in the mutual funds industry, Icahn said: "The surprise to me is that it hasn't happened sooner." REUTERS/Henny Ray Abrams  HRA - RTRD24J

Billionaire investor Carl Icahn Saturday attributed the recent Wall Street surge “completely” to Donald Trump because investors believe that the president-elect is “really going to be more friendly with business.”

“It is completely related to Trump,” Icahn, 80, the activist shareholder who also is an adviser to the president-elect, told Poppy Harlow on CNN. “The world believes that things are going to be very bright.

Actually, there’s a world of difference between being “friendly with business” and being friendly with the market.

To be friendly with business inevitably means to be friendly with certain businesses. It might be the businesses who give you the most money. Or it might be businesses who do things you want them to do, such as produce unmarketable products (green energy, for example) or move your factories from India to the United States.

To be friendly with the market means to align yourself with economic freedom. Economic freedom means leaving people alone to do what they see fit. Leaving people alone does not only mean refusing to hamper them; it also means refusing to help them via subsidies or bailouts when things go wrong.

For decades, under both parties, we have seen Presidents and a Congress quite “friendly to business.” Even Barack Obama, while he detests capitalism, private property and profit in the abstract, was friendly to businesses who did what he wanted, such as subsidize green energy. Of course, Obama also made it clear that “you didn’t build that,” which was his way of saying that if you’re successful in your business, the credit does not belong to you. And neither do the profits, which provided his rationalization for taking most of them.

Donald Trump will hopefully be a lot better than that. But at the same time, the success of his presidency depends heavily on whether he’s friendly to business or friendly to economic freedom.

Markets depend on the judgments and assessments of human beings. These include business owners/managers as well as customers. Human beings are fallible. Yet, unlike politicians, human beings in markets usually don’t make big mistakes, and when they do, they recover. Why? Because they’re accountable. Because they stand to lose profits, savings or earnings when they make mistakes. Politicians, on the other hand, simply get more money when they fail. Look at public schools. Look at the VA. Look at subsidies for any other enterprise or business. The worse they do, the more money they get. If you want to know the meaning of “the swamp” when Donald Trump talks about “draining the swamp,” this is it.

Draining the swamp will only happen if and when we restore economic freedom and get government out of the economy. The swamp is what you get when you mix business and politics. If America is to survive and become great again, it’s imperative the people in power understand this fact.

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