In a recent discussion with one of my undergraduate business students, he said: “People of my generation trust government more than they trust business, particularly large corporations.” While I wasn’t exactly surprised by such a pronouncement, it was still disappointing to hear, particularly at the end of the semester after we had covered both statism and capitalism. The student is writing a paper on Google and he is concerned that the company does not divulge how it uses the information it is able to collect from customers while they use Google’s products. I of course asked why the student was suspicious of Google and trusting of government and explained why I hold the opposite view, given our statist system.

            Like my student, many people hold the view that business has sinister motives, always ready to defraud us, and big companies due to their sheer size are “powerful” and therefore, scary. Yet, they view government—which is much bigger than most business and much more powerful—as their protector, the benevolent nanny that will take care of us all. Why is such a view common? (I am hoping my student is wrong about young people yet fear he is not). I think fundamentally it is a failure to grasp what our survival and flourishing requires, which stems from a failure to integrate knowledge (to see the connections between different ideas). Let me explain.

            Simple observation tells us that if we want to survive and succeed, we must think and then act on our thinking. Random actions or actions deliberately contradicting human survival requirements will hurt us. For example, we must discover by using reason the contribution of a nutritious diet to our health and wellbeing and also what constitutes a nutritious diet, and then eat accordingly. Arbitrarily eating on impulse whatever foods we might be encountering, or deliberately eating foods that we know to have low or no nutritional value would be detrimental to our health and wellbeing.

            To be able to think and act on our choices, we need freedom: we must be free from physical force or fraud initiated by others. If the government bans, say trans-fatty acids and soft drinks and mandates that only organic vegetables are allowed, it is taking away that crucial choice from us. And note that in our statist system only government  can enforce such rules—companies, no matter how large, can only persuade us to buy their products and services: they cannot force us to do so (assuming they are not using deception or fraud). No matter how much data (such as our purchasing patterns) companies like Google have about us, they can only use it to persuade us (through targeted advertising, for example)—they cannot make us buy anything or prevent us from doing so. Only government can.

            Through regulation, government takes away our freedom to choose. Freedom to choose is crucial to our ability to achieve our values, and it includes the freedom to choose incorrectly (non-nutritious foods, for example) and bear the consequences of those choices. Nothing kills people’s motivation to pursue values—which we need for survival and flourishing—better than taking their freedom away. Observe totalitarian regimes for examples of decline of enterprise and productivity.

            The power that statist governments everywhere hold is much more destructive than power of any corporation, no matter how large. Government can and does initiate physical force on individuals and businesses in the form of regulation and taxation. Unlike government, corporations do not hold political power; they can only try to persuade us to trade with them, and we are free to agree or to decline. It is of course possible for corporations to engage in fraud and deception; however, it is not in their self-interest to do so. It is in Google’s interest to create wealth for its shareholders in the long term, which is only possible by creating value for its customers, not by defrauding them. This is why I trust business more than I trust government.

            The only social system in which government could be trusted (but held accountable by the Constitution) is capitalism—a system where individual rights are recognized and government’s only role is to protect those rights (against force and fraud). Under such a system government could not initiate physical force, leaving us free to make our own choices and deterring others from interfering with our freedom. If we value our freedom—our survival and flourishing—capitalism is worth fighting for.

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