Competition and Cooperation

Competition is often used to describe market activity, and cooperation is often used to describe political activity, but competition more accurately describes politics and cooperation more accurately describes markets.

Market activity is based on voluntary exchange, and transactions take place only if all parties agree. Parties engage in voluntary exchange for their mutual benefit, which is cooperation at its finest. All parties benefit, or the transaction does not take place.

In politics, it is almost always the case that people involved have conflicting agendas, and when one side wins, the other loses. This is obvious at the national level, where the Republican Congress finds itself at odds with the Democratic president. At first it might appear that the conflict comes from party differences–Republicans versus Democrats–rather than being an inherent characteristic of politics, but a look at Florida politics provides evidence that politics leads to conflict.

Florida’s state government is solidly Republican, with a Republican governor and solid Republican majorities in both houses of the legislature. Yet, the Republican House and the Republican Senate have reached an impasse on the state’s budget, leading the Speaker of the House to adjourn three days prior to the scheduled end of the legislative session, without passing a budget.

The only thing the Florida legislature is constitutionally required to do is pass a budget, so the legislature will have to reconvene in a special session to do so. It’s not Republicans and Democrats who are disagreeing; it is Republicans who can’t reach an agreement among themselves.

They agree on almost everything, but politics causes people to focus on areas where they disagree, whereas markets cause people to focus on areas where they agree.

Their main disagreement is over Medicaid funding–an interesting story in itself–which stands in the way of their cooperating even in areas where there is no disagreement. In markets, two people could disagree about almost everything, yet cooperate because they only interact based on their mutual interests.

Think about it. When you go to a restaurant, or a store, you might disagree with your server, or store clerk, on political views, religious views, and a host of other issues; yet, it never comes up because both parties are interested in completing a mutually advantageous transaction. Meanwhile, in Florida politics, disagreement among Republican legislators on one issue keeps them from moving ahead on other issues where they do agree.

The next time you hear someone talking about competition in markets, or cooperation in politics, take a moment to consider how misleading those labels really are.

Randall G. Holcombe is a Research Fellow at the Independent Institute, the DeVoe Moore Professor of Economics at Florida State University, and author of the Independent Institute book Liberty in Peril: Democracy and Power in American History.
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