Friday, April 11, 2014

Virtuous Capitalists

Are entrepreneurs virtuous? Here's an excellent (if long) video that lays out the issues.

The short version is that yes, entrepreneurs are virtuous when they profit from creating value, new products, services, as well as converging prices through arbitrage. Entrepreneurs are not virtuous when they rent seek, creating a legal system that forces people to give them money (or more money) based on a political decision influenced by lobbyists.

The weakness is that you can make good money by rent seeking in a debased political system that permits it. Any firm focused on creating value can add to its accounting profits by adding lobbyists to rent seek on behalf of the firm. This means that they are vulnerable to hostile takeover. The vulnerability to vicious rent seekers is only repaired by healing the political system so the rent seeking is denied in the political process.