On the 5th of March, 1770, a group of furious American colonists gathered in the streets of Boston. They were angry that their streets were still occupied by British soldiers.
So, in protest, they began hurling anything they could find at the soldiers. Snowballs, ice chunks … even oyster shells.
Soon, back up British soldiers arrived.
The colonists were unarmed, other than the snowballs.
Yet, the British opened fire on them anyway killing 5, and wounding 6.
This event, which fueled the colonists’ rage against the British, became known as the Boston Massacre.
Fast forward to mid-December, 1773. By now, the colonist’s rage had reached a fever pitch. For nearly a decade, they’d been taxed heavily by the British – yet had no representation in parliament. Their rallying cry became “no taxation without representation”.
In protest, the colonists dumped 342 chests of tea into the Boston Harbor.
As you probably know, this event became known as the Boston Tea Party. And it was the start of what led to the 13 colonies fighting for independence from the crown.
But there’s a side to this story you may NOT know…
The protest in the Boston Harbor that day was NOT actually about higher taxes.
Instead, the protest was about the special treatment of one company named EIC (East India Company).
EIC was a giant British tea company. It was heavily in debt. And the British overlords said it was “too big to fail”.
(There’s a phrase that should strike terror in the hearts of free market lovers everywhere).
So, instead of letting the company fail, which is what should happen in a true free market, the British subsidized them by eliminating their tax obligations.
They didn’t cut taxes for all tea companies – just EIC.
And that’s what infuriated the American colonists…
The tax cut left American tea companies at a disadvantage.
So, they protested by dumping EICs tea in the harbor.
What do people hate worse than high taxes?
Favoritism.
This kind of favoritism is known as Crony Capitalism.
Under a Crony Capitalist society, businesses only succeed based on the favoritism they receive from the government.
What kind of favoritism?
Things like special tax breaks … limited competition … barriers to entry for new competitors … and subsidies, to name a few.
This favoritism is designed to do one thing: move the wealth into the hands of a few elite.
Take Elon Musk. Musk is the second richest person in the world, with a staggering net worth of $169.9 billion.
But how did he get that way? Through pure free market enterprise and hard work?
Hardly.
Musk was given more than $5 billion in direct government support. 80% of SpaceX’s contracts have come from Uncle Sam. And Tesla was basically built on $7500 per vehicle tax credits.
In other words, the government unfairly gave Tesla an advantage.
Those tax credits came to an end under Trump – as they were capped at 200,000 electric vehicles.
But now, Biden’s new GREEN Act will allow a new $7,000 tax credit on 400,000 more vehicles!
So, Elon Musk will get even more rich off the back of the average taxpayer.
And Tesla stock will continue to rise, even though it’s a fundamentally flawed investment.
I could go on and on showing you more examples of Crony Capitalism in the US.
But here’s the point …
We do not live in a free market society. We live in a society controlled by the rich.
And, as always, there is only one solution…
Don’t play their game.