Rational Actors vs Reality

A lot of conservative and libertarian objection to government regulation hinges on the assumption that business people always act in everyone’s best interests because of the profit motive, and that government never does.

Business people are always posited to be rational actors (rational choice theory), and would logically seek to maximize their customer pool and thus their profit potential. They theoretically are open to competition, and would be responsible stewards of our environment. By the rational actor model, they would of course ensure the quality of their goods so as not to risk killing their customers and having a bad reputation that would decrease their business.

But yet, historically and even today, businesses discriminate (reject customers) on arbitrary criteria and thus will actually turn away paying custom from people who are members of some minority. Woolworths lunch counter comes to mind. They cut corners to save costs even while knowing that people could die, or that environmental destruction could result. This is not truly a rational choice which takes in all data and evaluates the potential losses and damage versus the cost savings and biases of management.

In truth, business only answers to its owners/shareholders, and the government. Customers are deemed fungible.

On the other hand, government is assumed to have only one goal: Maximizing itself at the expense of all else. (IOTW, it is assumed to have the same motive that businesses have in fact, not theory.) Yet it’s shareholders (the public citizens) gain nothing from it doing such a thing, and are ultimately harmed by it. Furthermore, those citizens have more control over the government than your average shareholder does over a company — something about a constitution and the right to seek redress for grievances.

So why does the conservative/libertarian model get the two backwards? Why do they blame government for overreach, when it is corporations that are caught again and again going over the line? Why is government accused of elitism, when just a few oligarchs control hundreds of corporations?

The only thing I can think of is projection.

I still don’t understand it.