© 2000  Karen Selick
Power, Not Money, Is the Problem
An edited version of this article first appeared in the April, 2000 issue of Canadian Lawyer.  If you wish to reproduce this article, click here for copyright info.


Power, Not Money, Is the Problem

Every so often, someone publishes an article declaring that some individual or corporation is richer than many of the worldís countries.  The National Post joined the club recently with a headline proclaiming that Microsoft founder Bill Gates is "worth more than Ireland."

The Ireland example was even sillier than most.  Looking past the headline, readers found that the article weighed Mr. Gatesí total wealth against Irelandís annual gross domestic productóin other words, capital against income.  Not a very useful comparison. 

However, in a more accurate follow-up article, economics professor William Watson noted that even when you compare income to income, Bill Gates still comes out ahead of some 39 countries, including Jamaica and Estonia.  Unfortunately, even Professor Watson--usually a staunch supporter of capitalism--seemed to concede that this was morally reprehensible in some way.

Comparisons of this kind are based on two unspoken premises.  The first is that itís manifestly unacceptableóeven dangerous--for an individual or a business to control such large amounts of wealth.  The second is that itís perfectly okayóeven desirable--for governments to do so. 

Personally, Iíve done my share of cursing Microsoft as I waited impatiently for my computer to reboot after the umpteenth crash of the week.  However, Bill Gates never held a gun to my head and made me buy Windows.  When I started writing magazine columns 11 years ago, I didnít even own a computer and wrote everything out longhand.  My life has definitely been improved by exchanging some of my money for Mr. Gatesí software. 

These individual-versus-country comparisons make the mistake of confounding economic power with political power.  The two are actually very different. 

All anyone can legally do with economic power is to buy and sell goods and servicesóor refrain from buying and selling, if he prefers.  Every single transaction that occurs is voluntary on both sides and is entered into with the expectation of gain on both sides. 

Even with all its economic power, Microsoft canít legally behave in any of the tyrannical ways that governments behave in.  It canít force people to buy its products if they donít even own a computer.  It canít forcibly take one personís money with the excuse that it intends to provide software to his neighbour.  If someone refuses to buy its products, it canít put him in jail and seize his assets.  It canít stop anyone from "emigrating" to a competitorís software.  It canít raise an army and kill those whose loyalty lies with Unix rather than Windows.  It canít bomb Corelís headquarters into smithereens. 

All of these acts are illegal for entities who wield only economic power.  However, they are all analogous to things that are done legally, sometimes even routinely, by governments in the exercise of their political powers. 

The only real danger that exists from the concentration of economic power in private hands is that money can sometimes be used to purchase political power.  The wealthy can, and sometimes do, bribe or lobby governments to pass laws that interfere with the free choices of their trading partners.  An industry may, for example, encourages the government to erect tariff barriers against its foreign competitors.  Or it might lobby for regulations, sometimes disguised as safety or environmental standards, that effectively keep its competitorsí products off the market.  Or it might push for laws that force everybody, willing or not, to buy a particular item (for example, smoke detectors).  Or it might solicit subsidies out of tax money.

Itís important to characterize acts like these accurately, as the consequences of political, rather than economic, power.  They are not the inevitable results of the accumulation of wealth. Getting away with this sort of thing depends upon the existence of mechanisms in society for the coercive imposition of one personís or one groupís will over othersópolitical mechanisms such as border guards, policemen, armies and jails. 

Whatís more, it depends upon the acceptance by the population of such coercion as normal, necessary and right. 

Those who continually fret over the economic power of corporations invariably advocate the greater use of political power to keep their bogeyman in check.  They push for higher taxes to transform private wealth into more regulators and cops.  They urge ever greater state control over trade.  They want armies of bureaucrats and politicians to inspect, investigate, oversee, study, probe and ultimately prohibit transactions they donít like.  They bombard the public with propaganda to make the process seem routine. 

What they fail to understand is that the erection of this enormous political apparatus is the very thing that makes it possible for those with economic power to abuse it.  You canít pervert the regulatory process to inflict harm on your competitors if no regulatory body exists.  Thereís no profit in bribing politicians if an electorate that understands and cherishes genuine freedom screams for their resignations the moment they try to bestow a favour. 

Instead of denouncing those who accumulate economic power, critics should concentrate on curbing the real dangersóa powerful political apparatus and public attitudes that embrace it. 

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June 22, 2000