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The Conservative Curmudgeon
September 17, 2009

Which Side Is Big Business Really On?
by Allan C. Brownfeld

ALEXANDRIA, VA — Free enterprise is under serious attack. Government bailouts of the auto industry, banks, Wall Street, and other sectors of our economy — as well as the push to involve the federal government further in our healthcare system — provide ample evidence.

Many Americans, particularly Republicans who proclaim their belief in capitalism, think that big business — and Wall Street — are the primary engines of free enterprise and its natural defenders. This, however, is far from the reality we face.

In April, the U.S. Chamber of Commerce presented its annual “Spirit of Enterprise” awards to those Members of Congress who voted with the Chamber at least 70 percent of the time on its most important legislative initiatives of 2008. The Republican who scored lowest of all — that is, the Republican lawmaker supposedly least aligned with the nation’s business community — was Rep. Ron Paul (R-TX), well known for his strict adherence to a libertarian philosophy. Other Republicans who did not receive the award were Senators Jon Kyl (R-AZ), Jeff Sessions (R-AL), Jim Inhofe (R-OK), and Jim Demint (R-SC).

What caused these Republican legislators to incur the displeasure of the Chamber of Commerce? They opposed the various federal bailout programs — and the stimulus package.

Senator Jim Demint notes, “In an era of corporate welfare — which is lately taking on the characteristics of l930s-style corporatism itself — the interests of big business are veering away from the interests of economic freedom and toward the interests of big government.... For the past eight years, the Republican experiment in big government hollowed out our core identity.... Small-government conservatives were attacked by leading Republicans for choosing principle over poll-tested politics. It was in these battles that the... marriage between the Republican Party and corporate America was finally consummated.”

In Demint’s view, “Even the most socialistic of big-government Democrats can credibly ask why Republicans are suddenly so worried about the dangers of big government. The road back to Republican success is not to reinforce our weakened coalition of corporate interests, but to drop it altogether. Republicans shouldn’t be the party of business any more than they should be the party of labor -- we’re supposed to be the party of freedom. We should get out of the business of picking winners and losers in the marketplace. We should not care who wins in fair fights between Microsoft and Apple, between Citigroup and community banks.... All we should demand is a fair fight. If Goliath beats David, so be it -- just as long as he does it without corporate welfare.... In a system of corporate welfare, those who suffer most are Americans who pay higher taxes funneled to well-connected companies.”

Big business is now lining up in support of the Obama administration’s various bailout and stimulus programs. General Electric CEO Jeffrey Immelt states, “The interaction between government and business will change forever. It was a reset economy, the government will be a regulator, and also an industry policy champion, a financier, and a key partner.”

Discussing the administration's proposed health plan, former congressman Billy Tauzin, now chief executive officer of the Pharmaceutical Research and Manufacturers of America, states: “This is a great start. There are things we don’t like about it. But there’s time to discuss all that.”

The Capitol Hill newspaper The Hill reports: “Big business is lining up to support... Obama’s plan to stimulate the economy with the biggest spending spree on roads, bridges, and other infrastructure projects since the Eisenhower administration.”

Adam Smith once said that when two businessmen get together, the subject of discussion is how keep a third businessman out of the market. Business has long sought government interference in the free market to protect its own interests. Historian Gabriel Kolko discusses how the railroad magnates of the l870s and l880s petitioned the government to protect them from the headaches of “cutthroat competition” and relentless rate wars. It was the railroad lobby that promoted the establishment of the Interstate Commerce Commission, which the lobby quickly controlled. In l907, AT&T faced serious competition from other phone companies. AT&T president Theodore Vail successfully lobbied state governments — and the federal government — to let AT&T become a nationwide monopoly.

Big business has long resisted competition and sought to use the power of government to prevent it. In l909, Andrew Carnegie, irritated with competitors, urged “government control” of the steel industry. In l9ll, U.S. Steel chairman, Judge Elbert Gary, told Congress: “I believe we must come to enforced publicity (socialization) and government control... even as to price.” Adam Smith said, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Then, it was railroads, the steel companies, and AT&T. Now it is Citigroup, Goldman Sachs, AIG, and General Motors. Timothy Carney, in his book The Big Ripoff, discussed the ways in which the Obama administration’s cap-and-trade plan will enrich General Electric (GE). “Reviewing their lobbying filings, you might think you were looking at Al Gore’s agenda,” writes Carney. GE, he reports, spent nearly $20 million to lobby on such action items as the “Climate Stewardship Act,” “Electric Utility Cap and Trade Act,” and the “Global Warming Reduction Act.” The reason: GE has set up a business to sell carbon credits.

In his classic Capitalism and Freedom, Milton Friedman points out, “The kind of economic organization that provides economic freedom directly, namely competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other.”

Now, however, many in business and finance do not want to separate economic and political power, but to join them together. And both Republicans and Democrats have been eager to assist them in this enterprise. This is nothing new, as even a brief reading of history illustrates well.

The belief that business is an advocate of a genuinely free market is naive. Milton Friedman would not be happy with today's developments — but neither would he be surprised.

[A shorter version of this column is available upon request.]

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The Conservative Curmudgeon is copyright © 2009 by Allan C. Brownfeld and the Fitzgerald Griffin Foundation. All rights reserved. Editors may use this column if this copyright information is included.

Allan C. Brownfeld is the author of five books, the latest of which is The Revolution Lobby (Council for Inter-American Security). He has been a staff aide to a U.S. Vice President, Members of Congress, and the U.S. Senate Internal Subcommittee.

He is associate editor of The Lincoln Reveiw and a contributing editor to such publications as Human Events, The St. Croix Review, and The Washington Report on Middle East Affairs.

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© 2009 Fitzgerald Griffin Foundation