Pro-Market vs. Pro-Business

Luigi Zingales draws an important distinction between the two:

Ideologically, the Republican establishment doesn’t appreciate the difference between being pro-market and being pro-business. Many businesspeople want free markets only when they’re trying to enter a new market; when they’re already in a market, they lobby for barriers to entry and protection from competition. A pro-market advocate defends freedom of entry in all cases. Failure to understand this distinction makes the Republican establishment too timid in criticizing business when it undermines free markets.

I agree, and this is an important distinction. When politicians pass legislation which seemingly hurts business (tighter regulations on banks, as an example) people think it must be because those politicians are fighting for the people to the businesses detriment. The opposite is usually the case – even though the regulations hurt the businesses, they hurt the businesses’ competitors more. So even though the big banks face higher costs to comply with the regulations, the smaller banks literally go out of business because of the costs. In this case the big banks win because they face less competition.

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