In Defense of the Modern Business

The U.S. still has a market economy (though a heavily distorted one). People often like to point out the ways various large and small businesses benefit and are harmed by this. The point I would like to make is that they are doing the best they can. Under existing, distorted price information and property rights there is no possible way to better allocate resources. Distorted price signals are better than no price signals, and given the actual costs involved in any given investment outlay capitalists and entrepreneurs are doing the best they can. Criticizing businesses for doing stupid things or making money because of the interventionist nature of the economy seems to be to miss the point that there is no way they could do better.

Maybe Wal-Mart and PepsiCo are benefitting more than they are losing, maybe they are artificially enlarged by distortions. Maybe the opposite is true. The point is that they are serving their customers as best they can in the given circumstances. Whatever you think of the cause of its position you have to be basically insane not to recognize that Wal-Mart is a lot better than government public works programs.