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More Examples of Corporatism. Goodbye Capitalism.

The New York Times recently posted a table that tracks the spending of the $700 billion bailout bill passed last October (see Tracking the $700 Billion Bailout). It lists, line by line, each of the companies that received money and how many billions each got. Here is the top ten:

Free Market Capitalism Is Gone
I was against the bailout from the beginning (and I’m certainly against putting the US in another trillion dollars of debt as the Obama administration is proposing) but it really hit home when I saw the report above. Capitalism is an economic system that gives you the freedom to thrive and the freedom to fail. If you work hard and have a good business, the sky is the limit, but there are no guarantees. Yet, in that bailout bill of October 2008, the government hand picked companies that it deemed were too big to fail. And the complacent American people went along with it for fear of economic ruin preached by politicians on both sides of the isle.

Government Controlled Corporatism Is Here
With billions upon billions of tax payer dollars flowing into these companies now, of course, politicians, media outlets, and a great many Americans want a say in how these companies spend that money. “No corporate jets.” “Salary caps for executives.” Etc. This all makes for a dangerous mix of government and big corporations as I described in my recent article on Corporatism.

Defining Corporatism and Examples in America

Defining Corporatism

Corporatism is a relatively new term for me and perhaps some of you readers as well. Wikipedia defines corporatism as “a practice whereby a state, through the process of licensing and regulating officially-incorporated social, religious, economic, or popular organizations, effectively co-opts their leadership or circumscribes their ability to challenge state authority by establishing the state as the source of their legitimacy, as well as sometimes running them, either directly or indirectly through corporations.”

Not a bad definition, but let me put it in a little plainer English. Corporatism is the collusion of big corporations and big government. Democrats call it right-wing when corporations exert undue influence on government. Republicans call it left-wing when government exert undue influence on corporations. But whether it comes from the right or from the left, corporatism stinks of progressivism and fascism.

Examples of Corporatism in America

Jonah Goldberg provides numerous examples of corporatism in his book, Liberal Fascism. In each case of corporatism, government power and influence grows while individual freedom shrinks. Corporatism gives more power to government and corportate bureaucrats and does so under the guise of helping the little people. Here are just a few examples:

  • During FDR’s administration, corporatism reached new heights as the government began imposing strict regulations on business. “The New Dealers invited one industry after another to write the codes under which they would be regulated…It was not only inevitable but intended for big business to get bigger and the little guy to get screwed…In business after business, the little guy was crushed or at least severely disadvantaged in the name of ‘efficiency’ and ‘progress.'” (p. 293)
  • In this same time period, “the meatpacking conglomerates knew that federal inspection would become a marketing tool for their products and, eventually, a minimum standard. Small firms and butchers who’d earned the trust of consumers would be forced to endure onerous compliance costs, while large firms not only could absorb the costs more easily but would be able to claim their products were superior to uncertified meats.” (p. 291)
  • A more recent example of corporatism is the ‘Big Tobacco’ settlement with the government. “Why would the tobacco companies agree to a settlement that cost them so much money and that forced them to take out ads disparaging their own product and pay for educational efforts to dissuade children from ever becoming their customers? The reason, quite simple, is that it was int heir interests. The tobacco companies not only had their lawsuits settled; they bought government approval of a new illegal cartel. ‘Big Tobacco’ raised prices above costs imposed by the settlement, guaranteeing a tidy profit. Smaller companies who did not agree to the settlement are still forced to make large escrow payments…The government in effect enforces a system by which small businesses are crushed in order to maintain the high profits of ‘Big Tobacco.'” (p. 308)
  • So-called campaign finance reform laws, such as the McCain-Finegold bill passed a few years ago, are also corporatist in nature. “Speech regulations in turn give an unfair advantage to some very big business–media conglomerates, movie studios, and such–to express their political views in ways exempt from government censorship…The New York Times is pro-choice and supports pro-choice candidates–openly on its editorial pages, more subtly in its news pages. Pro-life groups need to pay to get their views across, but such paid advertising is heavily regulated, thanks to McCain, at exactly the moment it might influence people–that is, near Election Day.” (p. 313)
  • Efforts to force private companies to produce “environmentally friendly” products, like efforts Obama is proposing to force car makers to produce “green” cars, is also corporatist because it imposes “technologies the government was smart enough to pick even though the market wasn’t.” (p. 342)

Corporatism on the Rise

With the bailouts of financial giants (like Citi Bank), insurance companies (like AIG), automakers, and home mortgage companies (Fannie Mae and Freddie Mac), it is becoming increasingly more difficult to tell where the private sector ends and government begins. Many companies that were once proudly free-market can suddenly find themselves making arguments in favor of protectionism and corporatism.

Some companies have fought the onslaught of government but it seems to be a losing battle. Take the example of Wal-Mart and Microsoft, again quoting from Jonah Goldberg’s Liberal Fascism. “For years both Wal-Mart and Microsoft boasted that they had no interest in Washington. Microsoft’s chief, Bill Gates…had one lonely lobbyist hanging around the nation’s capital. Gates changed his mind when the government nearly destroyed his company. The Senate Judiciary Committee invited him to Washington, D.C., to atone for his success, and the senators, in the words of the New York Times, ‘took a kind of giddy delight in making the wealthiest man in America squirm in his seat.’ In response, Gates hired an army of consultants, lobbyists, and lawyers to fight off the government. In the 2000 presidential election, Wal-Mart ranked 771st in direct contributions to federal politicians. In the intervening years, unions and regulators began to drool over the enormous target the mega-retailer had become. In 2004 Wal-Mart ranked as the single largest corporate politcal action committee.” (p. 303-304)

Corporatism, A Word You’ll Be Hearing More Often

Hillary Clinton, a high-profile member of Barack Obama’s new cabinet, has long been a fan of corporatist fusion of big government and big business. In her book, It Takes A Village, she states her belief that “socially minded corporate philosophies are the avenue to future prosperity and social stability.” Clinton further lauds the fact that “a number of our most powerful telecommunications and computer companies have joined forces with the government.”

I have long thought that the left’s stance regarding business was to have government regulate it to within a inch of its life. And while that is often the effect, I now see that they don’t want to kill business, they want to harness it for their own political purposes. And with liberal Democrats controlling both the executive and legislative branches of the federal government now, we can all, unfortunately, look forward to a lot more of the kind of socialism inherent in corporatism.