I keep reading that big business wants government off its back. But that’s a myth. Here’s the truth:
"[B]ig business and big government prosper from the perception that they are rivals instead of partners (in plunder). The history of big business is one of cooperation with big government."
That’s Timothy Carney writing in a recent Cato Policy Report. He’s the author of a new book, "The Big Ripoff: How Big Business and Big Government Steal Your Money." Carney’s book shows that government and business are not antagonists but allies. They’ve always been allies. Politicians like it that way because they get power and prestige, and businessmen like it because they get protection from competition.
There was never a time in America when big business didn’t get favors from government, which means the taxpayers. Canal and railroad companies loved the big government contracts. Corruption was rampant, and work was often shoddy, but the contracts paid handsomely. The politicians prospered, too. Only taxpayers and consumers lost out.
The history books say that during the Progressive era, government trustbusters reined in business. Nonsense. Progressive "reforms" — railroad regulation, meat inspection, drug certification and the rest — were done at the behest of big companies that wanted competition managed. They knew regulation would burden smaller companies more than themselves. The strategy works.
Regulation isn’t the only form of protection that big business gets from government. Companies with political clout get cash subsidies, low-interest loans, loan guarantees and barriers to cheap imports.
Even foreign aid is a subsidy to big business because governments receiving the taxpayers’ money buy American exports. Fans of foreign aid say those exports are good for the economy because they create jobs. Don’t believe it. If the taxpayers had been able to keep the money, their spending would have created other jobs — probably more jobs.
Most people don’t realize that Enron favored the Kyoto Protocol on climate change and wanted energy regulations beneficial to itself; Philip Morris favors tobacco regulation; Wal-Mart’s CEO came out for a higher minimum wage; and General Motors embraces tough clean-air rules. Why? Because, as Carney points out, big companies with lots of lawyers and accountants can make the regulations work for themselves, while smaller competitors are hampered.
Carney’s is not the first book to bash big business. What makes his different is that rather than opposing the free market, he loves it — which is why he hates the business-government alliance. In a free market the consumer calls the shots. In the corporate state the business-government alliance restricts consumer choice.
Another friend of the free market hated the business-government alliance: Adam Smith. In "The Wealth of Nations" Smith wrote, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick. . . . But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."
There’s where things went wrong. The government does facilitate such assemblies. More than that, it provides big business something it can’t have in the free market: the power to restrict competition by force. Anyone worried about the power of big business should remember real coercion comes only from government.
The voluntary, competitive marketplace is better for us all.
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