This post is also shameless working double-duty for me as my informational speech in one of my classes. That’s efficiency!
According to the Gospel of Matthew, Christ was asked whether it was lawful for Jews to pay taxes to Romans. He asked a crowd to produce a coin suitable for paying such taxes. One of them did and Christ asked whose name was on it. “Caesar”, the man replied. Christ then responded, “Render unto Caesar the things which are Caesar’s, and unto God the things that are God’s.” The two sides of this coin, so to speak, are power as represented by Caesar and wealth represented by the coin. When this relationship is strong, it is called “corporate statism.” It’s not socialism because that requires the state to distribute all wealth. It’s also not a market economy because capitalism requires that the state plays favor no company. There are three common components to any system which Jonah Stromberg describes in a 1977 pamphlet called the “Political Economy of Liberal Corporatism.” First, a nation is dominated by a small number of corporations which control a vast majority of resources. Second, an apathetic or scared populace allows a government to concentrate power. Third, the government works with corporations to establish laws which make those companies, in essence, extensions of the state. Typically, corporate statism is a response to a crisis after a country has already begun working outside of its governing documents, like a constitution. Because this type of cooperation tends to compound power in the hands of a few, it must take this power from individuals with the idea that they’ll benefit from the wise rule of a learned elite. Because this concentration of power tends to make it easier for less well-intentioned demagogues to enforce their will on the citizens, it is often the last observable step on the road to fascism. So, corporate statism is a transitional stage between social democracy and fascism, and can be observed in modern American politics.
Historically, many examples of corporate statism tell a similar story. In ancient Rome, pre-war Germany, Venezuela or modern Russia, the outcry of a concerned people led to the adoption of policies which allowed the state and private companies to cooperate in ways which violated the rule of law and the result has always been that wealth and power concentrate in the hands of a few.
Nowadays, The United States is looking more and more like these corporate statist arrangements. Take for example, the bailout of banks last year. The crash of the housing market bubble in 2008 led to a “credit crunch,” which essentially means there was little or no money to lend to business and individuals. In the panic that ensued, lawmakers passed legislation called the Troubled Assets Recovery Program or TARP. The bill was passed by both houses of congress and signed into law by President George W. Bush. It handed over trillions of taxpayer dollars to the banking industry. President Obama expanded these policies by making the Federal Reserve, a group of representatives from large banks with no Constitutional authority, responsible for protecting consumers and policing the financial industry. The result has been that large banks are unable to pay back taxpayers, and are instead buying up smaller banks that didn’t make the same mistakes. Joe Weisenthal of Investor’s Business Daily reports that profits for the investment giant Goldman-Sachs, Candidate Obama’s second largest campaign contributor, are up 125% this year. The firm, you see, provides the Federal Reserve with its chairman, Ben Bernanke and the US Treasury with its Secretary Timothy Geithner. Both men lobbied against using TARP funds to help their two largest competitors, Lehman Brothers and Behr-Sterns which both collapsed as a result.
If that’s no big deal to you, consider the auto industry. They make cars. In fact, General Motors, Ford, and Chrysler, America’s “Big 3” are among the largest corporations on the planet. Steven Malanga of Real Clear Markets reminded us in April that General Motors was; in fact, the largest and most profitable company in history during the 1970’s, a distinction that now belongs to Wal-Mart. But earlier this year GM and Chrysler entered a “structured bankruptcy” which meant acts of Congress and not existing bankruptcy laws would determine how the companies would pay their debts. President Obama also appointed a “Car Czar” who would work with GM’s CEO who had been replaced by the Administration. The Car Czar reports not to Congress or to the voters but only to the Office of the President. CAFÉ regulations that increase the miles-per-gallon requirement for American manufacturers followed. It might sound like a good idea it’s a clear conflict of interest for Congress to make extra-constitutional demands on an industry it now owns a competitive stake in. This philosophy is reinforced by a Supreme Court decision involving an Indiana-based pension fund for educators that sued Chrysler because they were getting 1/3 of what the company owed them and the United Auto Workers received a stake in the company worth twice what the union was owed. The Court dismissed it saying that upholding the law, in this case, was secondary to the public interest as defined by the President. In order for corporate statism to flourish, laws that protect people like bankruptcy cannot be allowed to interfere with the corporate-statist alliance.
Perhaps the biggest change is yet to come. The health care and insurance industry has grown to comprise about one-sixth of the US economy. Before congress gave tax breaks to employers to provide their employees with generic insurance plans, the cost of premiums rose at the same rate as the cost of milk. Now, they rise at about four or five times that. If President Obama’s cure for health care is anything like the auto and banking fixes, we’d expect a regulatory body to be placed over the insurance industry and have it staffed by corporate lobbyists and like-minded politicians. Ronald Bailey of Reason Online tells us that that it’s called “The Exchange.” He asks “Why would the industry agree to this preemptive surrender? Because it means the end of competition. Under the proposed agreement, the government would guarantee a certain level of profit for each health care producer” Throw out the unpopular “public option” and “America’s Affordable Health Choices Act of 2009,” also known as House Resolution 3200 is a corporate-statist monopoly that everyone is required to buy from or pay a fine. Concerning payment schedules negotiated as part of the exchange, section 223 of the bill reads: “There shall be no administrative or judicial review of a payment rate or methodology established under this section or under section 224.” In other words, if you don’t like the setup, tough. You can’t even challenge it in court.
Well, what does all this mean to you? Let’s suppose you have a great idea for a car company and you only need to build one model that gets 34 miles to the gallon. That’s too bad, back to the drawing board. Let’s suppose someone else has a great idea for an insurance company. Before you pay that first chemotherapy bill, you’ll need a team of lawyers and lobbyists. What you do now depends on your principles. Some of you might not mind, much; it’s simpler when someone else is making decisions.. If you want corporate statism, it’s easy: do nothing. On the other hand, you can get involved with movements that oppose this trend like tea parties or take part in online advocacy groups like auditthefed.com which seeks to allow taxpayers for the first time to see how the Federal Reserve spent all that money we floated them back in October. Or, do your own thing and start a group that focuses on corporate corruption. Call it the “coffee shop” movement and hand informative fliers out at a local watering hole. Poet Henry David Thoreau wrote in an essay called “Civil Disobedience” “if you are men of the State, and gladly enjoy the advantages of Caesar’s government, then pay him back some of his own when he demands it.” Thoreau says Christ’s answer left “them no wiser than before … for they did not wish to know.” Like Thoreau, I believe it’s important for you to know whether you’re a person of the state or something else. If you’re wondering where Thoreau stood on the issue consider this quote from the same essay: “it is the fault of the government itself that the remedy is worse than the evil.” As for me, I don’t think it’s a historical accident that concentration of wealth and power, even for good intentions, seems so often to end in the repression of the individual.