Much Ado about the wrong conflict

The recent hullabaloo about the religious protection legislation in Indiana and Arkansas has kinda irritated me. Not because I am a bigoted intolerant chap (which I am not), but because it is an iconic example of the war between government and the market that no one will talk about, even leaders of major businesses. There is obvious the ongoing conflict between cultural trends and Christians' desire to influence society with an "ethic" that is aligned with Biblical values. This is not my concern here. This has been going on for hundreds of years and most likely will continue.

The concern I have as a business scholar is with how society and its surrogate, the government, is so willing to use cultural trends to demand that businesses make certain choices that should be driven by market forces. The current uproar is not new to this concern, just illustrative. Here is the point, markets become less effective at delivering goods and services to society when society, through its instrument the government, interferes and manipulates markets instead of allowing the market forces to determine what happens.

This started years ago with labor markets. The civil rights movement had a valid role in delivering voting rights and public practice discrimination. It is when it moved into employment practices that it began to distort the forces of labor markets. In other words when the government begin to tell businesses who they should hire, who they should promote, how they should pay, what benefits they should offer, etc., the labor markets ceased to influence employment practices to reflect how laborers themselves would support or not certain businesses based on their practices. Businesses then became burdened with regulations and costs that made them less competitive in economic arena.

I recognize the government has a role in regulating markets to the degree that markets would cease being a market, such as price fixing and monopolies. However, when government moves into telling a business who their customers can and should be, then the market becomes dysfunctional and ceases to influence business practices that should exist for the purposes of fulfilling the desires of the capitalists via its customers.

Let me note that the voices we hear from business in favor of the government's role in protecting cultural values are from public companies, not private ones. This is a big difference. the executives of public companies are not owners. Ownership is diffused and distal in terms of identifying the business with personal values and mission. Public companies are more interested in abdicating practices to public opinion because of their concern for the effects of public image on economic success. Private companies, such as Chic-fil-a are very different. They generally are an extension of the owners' personal values and mission and desire to reflect in their business the views and desires of the capitalists. Whereas the management of a public company has little need to reconcile sales and profit issues with personal values of the capitalists, private companies do. Market forces should determine the degree a private business chooses to serve a customer or not based on their on personal values and the effect that has on their own economics. This is NOT the role of government and other surrogates of society.

This is what should be debated, not the cultural value conflict. That has its own field of debate that focuses on society's overall well being, justice, etc. I wish for once one of these governors would turn the debate to the real issue and quit getting hijacked by the public discourse on tolerance that is not the point of the legislation.  

OK, I'll quit pondering now, but maybe you can start .....