The Scorpion And The Frog: Scorpion claims that if it is, Both the frog and the Scorpion

The Scorpion And The Frog: but the scorpion claims that if it is, both the frog and the scorpion will sink, and the scorpion will drown.

The frog then accepts, but the scorpion stings the frog halfway across the river, dooming them both. When asked why, the scorpion explains that it’s in its nature to do so.”
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The Scorpion and the Frog Fable

Occasionally, even the brightest individuals forget that the government is not their ally.

For a time, the government can be your friend and ally against common adversaries, but eventually, just as the scorpion stung the frog in the famous tale above, the government will sting you.

This lesson appears to be repeating itself now in an obscure stock power play, and the lessons it includes should warn people, corporations, and industries that the government is not their ally and should not be recruited as one.

Pershing Square Capital Management is a hedge fund that has been at odds with Herbalife, a nutrition product manufacturer based in Los Angeles, for years.

The specifics of their conflict are unimportant, and most of it can be regarded fair game in the tumultuous environment of a free market system.

To use a phrase from Larry Kudlow, we want ferocious, knock-down Schumpeterian gales of creative devastation. As a result, we’re all better off. That’s exactly as it should be.

But then the government got involved, ostensibly at Pershing Square Capital Management’s request.

Newsmax reported in October 2014 that William Ackman, the fund’s president, has hired lobbyists and ideological pressure groups to push Democratic Members of Congress to press the Federal Trade Commission to investigate Herbalife.

Senator Ed Markey (D-Massachusetts) and others weighed in, and it was a success.

All is fair in love and war when it comes to investing. However, this comes to an end when an investor convinces the government to become involved.

It is not fair to hire lobbyists and radical pressure groups to stir liberal Congressmen against your business competitor.

It is, in reality, a form of bullying that should be prohibited in American corporate rivalry.

The frog, on the other hand, seemed to have deduced the scorpion’s actual nature.

According to recent news reports, the FBI and federal prosecutors are looking into employees employed by Ackman.

The investigation is looking at whether they made misleading claims with the intent of influencing Herbalife’s stock price.

The Wall Street Journal, Business Insider, and U.S. News and World Report, among others, have reported on this.

Competition and disputes in the corporate sector, even the most heinous ones, are not and should not be the domain of free market advocates (except insofar as we approve of the whole mess).

What concerns us is when the government is brought in to tilt the scales in one direction or the other. What you have then is a crony capitalist conclusion rather than a free market one.

The scorpion, on the other hand, has stung. That seems like a harsh form of justice.

However, the free market would have fared better if the spectre of government had never been invited to the party in the first place.