March 16, 2022


The great economist Milton Friedman once said: the business of business is business.

It’s a zany one-liner that gets at something deeper, in particular on government regulation.

We see the best outcomes when governments limit themselves to setting clear, fair rules and enforcing them consistently. This approach is about principles above micromanagement, and it unlocks the power of markets.

The government has an important role to play in many areas from defense to our judicial system to the environment. But there are more and less obtrusive ways for them to pursue their goals.

For example, our thousand-page US tax code is tremendously complex. The tax rate is open to debate, but can anybody really argue that this arbitrary and byzantine tax system is good for the economy? Clear, simple, fair rules would be better.

Another example is efforts to reduce carbon emissions through a hodgepodge of tax incentives, subsidies, and specific rules related to oil, gas, and coal. What a mess. If the government wanted to drive effective change, they should set a single tax on carbon emissions and let the market figure it out. Companies will instantly understand the new rules of the game, and proceed accordingly.

Tariffs, subsidies, righteous regulations, etc. are all examples of the government picking winners and losers in the market. The record is clear that governments are not good at this. Even if their ideas are well intentioned.

Private companies, like Alliance, pick winners and losers every day. We’re constantly evaluating new properties and deciding how to increase the value of our portfolio. We work on behalf of our investors and are accountable for the results we deliver. This is not the same for government bureaucrats.

For generations, American companies have led the world, in part because the US government has known how to stay out of the way. Markets combine the collective wisdom of everybody, and everybody is smarter than any bureaucrat. Let’s not forget what works.

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