Ronald Reagan famously said the government often views business as something to first tax, then regulate, then subsidize.
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According to The New York Times, the kratom industry has taken that to heart — and it’s using the government to stop the competition from cutting into its margins.
A decade ago, kratom was the new plant on the natural alternative painkiller market. It fought tooth and nail against state and federal regulations to become a semi-respected product for those who wanted pain relief without the opioid devastation.
Part of what makes kratom so effective is 7-OH, an alkaloid that plays a key role in kratom’s pain reduction potential. Only a small portion of the plant is this particular painkiller, so a few innovative people decided that sucking 7-OH out of the original plant and selling it as a separate and more powerful product would be a good business model.
The kratom industry doesn’t like that 7-OH businesses are cutting into their profit margins. Instead of going back to their scrappy roots, companies are instead lobbying the Trump administration and state leaders to ban 7-OH — crony “capitalism” at its best. One of their key arguments is that 7-OH’s power makes it more addictive.
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But let’s be real…alcohol is addictive. So are cigarettes. Heck, so is kratom!
The impact with federal and state governments is mixed. For example, HHS secretary Robert Kennedy called Ohio governor Mike DeWine to ask him to lay off kratom…but not 7-OH. But — contrary to the Times’ screaming about the administration being prone to bribes over generically stated “science” — President Trump has indicated openness to 7-OH being regulated instead of banned.
I’ve never used drugs, and I firmly believe that government has a limited yet important role in society. Whether preserving fair competition, defending the rule of law, or earnestly regulating for consumer safety, government policies have a moral component that I appreciate as a Catholic.
From what I’ve seen, the most immoral part of the entire kratom/7-OH debate is using government to block competition. Cronyism inverts the producer-consumer relationship by telling the consumer indirectly whom he must buy from, at artificially (unjust) elevated prices. It also often ends up protecting players that were once scrappy but now are sclerotic industry giants that can’t get out of their own way.
You see this issue across industries:
- Taxicabs had virtual monopolies in cities across the country until Uber…and the response wasn’t to make taxis better. It was to sue Uber.
- Tesla had to battle the dealer franchise model to sell directly to consumers. Dealer franchise laws were established to protect dealers from manufacturers, so dealers used that political power against Tesla.
- Certificate of need laws restrict access and raise costs on consumers. Similar play: minimize competition, preserve elevated profits.
Reagan recognized the threat of big government 40 years ago. Big business similarly becomes a threat when it colludes with the government to restrict competition to make up for its own lack of creativity. Competition incentivizes innovation, and innovation leads to better, more affordable products for everyday people.
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Image: Tom Hilton via Flickr, CC BY 2.0.