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Why would corporations, who believe in free enterprise, support a government policy of intervention?

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The concept of the free enterprise system implies that private factors, instead of government involvement, determine events within our economic system. While most businesses would claim to support the concept of the free enterprise system, their actions would suggest that they support this idea mainly when it is helpful to...

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The concept of the free enterprise system implies that private factors, instead of government involvement, determine events within our economic system. While most businesses would claim to support the concept of the free enterprise system, their actions would suggest that they support this idea mainly when it is helpful to them.

For example, when there is a surplus of workers, a corporation would be less likely to raise pay, citing a large supply of workers. In this case, by claiming that the corporation is following free enterprise principles, it is to the benefit of the corporation to do this, making it appear that the company really believes in the free enterprise system.

However, if a corporation is having financial troubles or is considering where to build a new factory, the corporation may very likely act differently. An example of this occurred during the Great Recession of 2008. General Motors was nearing bankruptcy and accepted the offer by the government to keep the company going. Both the Bush and Obama administrations provided loans to General Motors. In this instance, the company gladly accepted the help provided by the federal government, which would be contrary to free-market principles.

Today, businesses often play state governments against each other when deciding where to build a new factory. A good example of this was the decision of Foxconn, a Taiwanese company that makes flat screen televisions, to build a factory just south of Milwaukee, Wisconsin. The state government offered huge incentives to encourage Foxconn to build its factory in Wisconsin. In this case, the company gladly accepted the various incentives that the State of Wisconsin was offering to them. Foxconn had offers from other states, and they chose Wisconsin’s offer because they deemed it to be in the best interests of the company to do so.

These examples show that businesses will accept government intervention or involvement when it is beneficial to them, while, at other times, they will claim to support the principles of the free enterprise system when it is in their best interests to do that.

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First of all, I would argue that corporations do not necessarily believe in free enterprise.  Instead, corporations believe in free enterprise so far as it is beneficial to them.  This is an important distinction.  It explains why corporations would support the idea of government intervention in the economy.

Free enterprise is not necessarily a good thing for corporations.  The reason for this is that free enterprise entails competition.  Whenever there is free enterprise, companies have to compete with one another for customers.  This is not something that companies particularly like.  Companies would prefer to have customers who have to buy from them.  They would prefer to have predictable (and preferably limited) competition.  When companies have to compete, it puts them in danger.  Companies that have to compete can be defeated in the competition and can lose profit and can even lose their existence.  For example, Pan-American Airways was one of the biggest and most prestigious airlines in the world for a long time.  When it started to have to compete more with other airlines, it failed and it no longer exists today.  Companies do not want to risk this if they can avoid it.

This is why companies support government intervention.  If they already have a good position in their market, they will generally want the government to protect them from competition.  They will also want the government to help them be more profitable.  For this reason, they will be in favor of things like government tax breaks or subsidies for their businesses. 

Companies do not like the competition and uncertainty that comes with free enterprise.  They would prefer to have the government protect them from competition and/or help them through subsidies and other such things.  They prefer this because it makes them more likely to be profitable and less likely to lose out due to competition.

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