The Parasite Economy

David Boaz of CATO Institute and John Stossel explain how society is made poor by various parasites who enrich themselves by manipulating government. Source: LibertyPen YouTube channel.

Transcript:

John Stossel:

One great thing about America and free enterprise is that for the most part people can only get rich by helping others in some way. That's because capitalism is voluntary. No one is forced to buy from you. And that's great. Most of life fortunately happens this way. But now in America, we have more people who do get to use force. They enrich themselves, not by pleasing their customers but, by using government to force people to give them money. David Boaz of the CATO Institute calls this the parasite economy. That's a chapter in his brand new book: “The Libertarian Mind.” So, what do you mean by parasite economy?

David Boaz:

There's two ways to get rich in any society. You can make it and trade with others or take it from people who have produced something. And I call making it the economic means of wealth, and taking it, the political means. And some of the people who take are criminals. They rob you. They embezzle from you. But more importantly are the people who use government to take from you.

John Stossel:

And that's growing numbers. And what do you mean parasite economy, what's the scam?

David Boaz:

Well, the scam is that you are not producing something of value yourself. You are using the law.

John Stossel:

Or enough value to get people to voluntarily to give you money.

David Boaz:

That's right. So you are using the law to get something you couldn't get voluntarily in the marketplace. And you might use a tariff to prevent people from buying from your foreign competitors or you might get the government to give you a subsidy or a transfer payment. You might get the government to pass a law that makes it difficult for competitors to compete with you. And all of those things are parasitical. You're glomming on to the wealth that other people produce. And another reason it's the parasite economy is that when parasites attack us, we have to spend some effort fighting them off.

John Stossel:

And the fighting them off means lobbying. Some of it is just evil. Lobbying to get money. But much of it is lobbying just to say don't crush my business. Everyone is forced to play.

David Boaz:

Probably a smaller part. But yes, you're absolutely right. Over the past 15 years I have watched Microsoft and then Apple and then Google sit out there in the west coast, making stuff that we all decided voluntarily to buy, and then you have politicians, bureaucrats, and lobbyists coming around to these companies and saying, hey, nice little company you got there. Too bad if something happened to it. And they start suggesting that maybe you need to make some campaign contributions. Maybe you need to hire some lobbyists. Maybe we'll run an antitrust investigation. And maybe we'll limit your supply of overseas immigrant engineers. All these things drag these companies into Washington's lobbying culture.

John Stossel:

And I would argue they are less creative than they once were. Peter Thiel points out that the CEO can no longer focus just on innovation. He is focusing on manipulating Washington.

David Boaz:

And that's a very important aspect of it. We can talk about how much money it cost, but the most valuable thing we have in our economy is brilliant creative people. And if brilliant creative people are making iPhones and software and automobiles and new ways of getting around the city, then that's a good thing. And if they are distracted into either fighting off other people's lobbyists or hiring their own lobbyists, then that's a net loss for society. It means fewer innovative products and more lobbyists.

John Stossel:

Let's go to some examples. You include the military-industrial complex.

David Boaz:

Well, Sure. We need a national defense. And that requires having some weapons. Even the weapons we need, we have to recognize, they are gonna be sold to the government by lobbyists, and there's going to be a problem in overbuying. We just spent in the latest omnibus spending bill, $470 million on f-35 fighters that the Pentagon doesn't want.

John Stossel:

You've got farmers, veterans, government employees, unions, the ethanol industry, the aerospace industry, trucking – they are all in D.C., trying to get something for nothing.

David Boaz:

They asked Willie Sutton: why do you rob banks? And he said: because that's where the money is. And for a lot of people, where the money is is in Washington.

Translated by Jadranko Brkic.