A huge portion of the liberal political narrative is based on the Big Myth that Big Business simply wants to be left alone. Those who defend limited government and free markets are derided as shills just for doing so – liberal writer Jane Mayer calls the libertarian movement “a pro-corporate movement.”
That’s why this New Republic article on the history of business and government, is such a breath of fresh air. Check these passages out:
the largest meatpacking corporations also welcomed the FDA, knowing it would signal that their products were safe to eat while raising the costs of production just enough to drive smaller firms out of business.
Republican majorities in both Houses subsidized American industrialists by erecting high tariffs on goods made by their European competitors.
Conservatives detested the Keynesian policies that every president from FDR to Nixon adopted. But major corporations were quite happy to gorge themselves at the federal banquet table. Agribusinesses got crop subsidies and irrigation projects, aerospace and defense firms got lavish, cost-plus contracts to manufacture everything from H-bombs to lunar modules, and drug companies kept their prices high with the blessing of patent monopolies.
You might think I wrote this article: conservatives oppose Big Government, but Big Business loves it. But the author is liberal historian Michael Kazin, and his thesis is this:
Since the early nineteenth century, the government has helped fuel economic growth and corporate profit-making, and savvy businessmen and, recently, businesswomen have lobbied hard to keep those benefits coming.
There are three anchors to his argument. The first two are absurd:
1) Because the game has always been rigged, he argues, we should continue to rig it. (The silliest part of this article is that “Conservatives are supposed to cherish tradition” and so it’s “hypocritical” for us to oppose corporatism now. My brother John addresses that at CNBC.)
2) Because Big Business benefits from Big Government, we should embrace Big Government. This is the Kevin Drum, Center for American Progress argument – Hey, if even Big Business likes it, it can’t be that bad (today you see this mostly on light bulbs).
But the plausible and relevant point he makes is:
3) Collusion between Big Business and Big Government is good for the economy as a whole.
This is not self-evidently false. Good things have come from corporate welfare. But remember the meat-packing laws – the victims were small businesses and their consumers. Remember the protectionism caused us to pay more for steel and thus allowed us to spend less on other things.
Yes, government can make certain businesses profitable, and it can bring about certain desired means by favoring some businesses, but there are always costs.
Kazin never considers what was lost in order to bring profits to the steel barons. He never asks what might have been built with the money Uncle Sam used to build the railroads. He just assumes it wouldn’t have been as good as what we got.
But the cronyism aspect of this all is exactly why we should doubt that Big Business-Big Government collusion yielded optimal results. The men crafting the policies all stood to personally and narrowly benefit from the policies – the politicians got more power and the businessmen got competitive advantages. That doesn’t prove the policies were bad, it just means we ought to doubt that they served the rest of us well.
In any event, Kazin should be congratulated as a rare liberal to understand the true relationship between Big Business and Big Government.