Competitive Advantages and Subsidies

I understand the concept and reality of the competitive advantage. I make regular recommendations to my clients with regard to identifying and then maximizing their competitive advantages in the marketplace. It is with that context I find myself reading the following from an essay (ca. 1970) by Gary North:

Why is it that private entrepreneurs involved in international trade want the government to take over the responsibility for organizing the terms of the monetary exchanges which govern the operation of their businesses? This is a familiar tale.  It is the old respected argument of the vast majority of people: let my suppliers compete, keep my competitors out of the market. Let others bear the burden of predicting the future. Subsidize me. I’m the important one. And governments do it. They take profits away from one group–international currency speculators—and guarantee the price of foreign exchange—almost. Unless there is a devaluation, of course. And then, it is every man for himself and any port in a storm.

Let my suppliers compete (to reduce the cost of my needed component materials) but keep my competitors out of the market (to increase the price at which my finished product may be sold). Pretty straightforward, isn’t it? And quite upsetting to the marketplace because everyone has the same lament, the same request for special treatment, the same desire to somehow be different from all the other businesses. When everyone is special, then no one is–and all that hardworking folks have to show for the “specialness” designations (for the most part) are increasingly complex and confusing laws and regulations which tend to result in no one but the government really getting ahead in the end. Is it any wonder government jobs are increasing while those in the private sector are decreasing? But I digress.

Let me say that there is nothing wrong with competitive advantages–if they are honestly gained and maintained. If, however, your competitive advantage comes from government rule or regulation A, it may be withdrawn by government rule or regulation B–and that is not to your advantage in the long term.