Who's To Blame for the Corporate State?

It's a topic we have discussed many times on this blog -- are politicians at fault for handing out taxpayer money, or are corporations at fault for taking it?  Are businesses at fault for asking for special favors or politicians at fault for granting them.  This article from the Federalist discusses this conundrum in the context of sports stadium subsidies.

Its a chicken and egg problem that I see more and more, and my general answer is everyone.  The real answer is that the fault lies with having given government these powers in the first place.  If the government has the power to transfer wealth and regulate by decree, then some businesses are going to access that power to squash their competitors and politicians are going to use that power to get reelected.

The classic retort that "if we only had the right people in office..." wears thin.  There are no right people.  Good people are naturally corrupted by the incentives of the office.   Further, they are increasingly weeded out of the political process -- when wielding power to aid political cronies is a prerequisite for winning office, then it is hard to fathom how we possibly could ever get people in power who will not ... wield power to aid political cronies.   According to the Left, this Administration was to be, finally, the perfect group that would wield power as it was meant to be wielded.  And the corporate state is worse than ever.

  • http://itsaboutliberty.com/index.php MNHawk

    It's the peoples' fault, for falling for the bulls*** disseminated from consulting types, who always promise something for nothing, if we just (insert rent seeking opportunity here.)

  • bigmaq1980

    "my general answer is everyone....the fault lies
    with having given government these powers in the first place"

    "'if we only had the right people in office...' wears thin"

    Spot on!

    So the obvious question is what to do about it.(?)

    It still comes back to getting the "right" people in office, but timing is everything. For instance, will the disaster of Obamacare be a moment that can be leveraged to create a sea change in attitude (at least through the "independent voters"). Are there enough voices left in Congress that can make use of this to turn around our government? Or, are they so corrupted by the system that got them there they cannot make a move?

    I'm not so pessimistic that change cannot happen. Part of our heritage is founded on ideals of liberty, individualism, and opportunity. When facing down King George, the challenge they faced was far greater.

    The only issue is do we have sufficient runway to make it happen before the economic consequences of our current entitlement approach and cronyism cause a collapse.

    At least we still have the opportunity to convince folks about the folly of our current path. That is where blogs like this help make a difference!

  • WillusM

    This mirrors the general problem with reporting on the effects of a small tax or fee increase. The change affects millions of people--usually in some very small way--which is essentially impossible to report. However, after all the tax revenues are collected and summed up, and perhaps spent on a small number of socially worthwhile initiatives, the story is packaged up and spoon fed to local media outlets.

    Likewise, the multitude of favors and breaks bestowed by government to the rich, powerful, and politically connected elite come at the direction of many officials, embodied in thousands of transactions, most all out of view of the public. But what emerges at the end of the day is a neat tidy sum of the cost incurred to the state, or the grotesque benefit to one particular recipient. We can write that in 5 minutes, it has a number with a lot of zeros, and will anger people who then stay tuned for the weather.

    I might call it a front-end/back-end problem. I've no idea how to solve it.

  • jon

    I've called Andy Tobin (AZ state representative) corrupt for handing out goodies to businesses. He doesn't see it as corruption of course, just politics and what's "good for the state." Hence the reason for stop voting all politicians are corrupt and don't deserve my consent.

  • Matthew Slyfield

    Take the power to hand out the goodies away from the politicians. It may not be a complete solution, but you can minimize the problem through smaller government. Smaller, weaker government means fewer goodies to give out.

  • bigmaq1980

    The problem is how to get there from here.

    Only way is if we get involved in the political process vs forgetting about it until it is time to vote.

    See my comments elsewhere to this post.

  • Brennan

    To paraphrase Milton Friedman, it's not about electing the right people, it's about making the incentives such that the wrong people will do the right thing. Repealing the 17th Amendment would be a good start.

    As an aside, I've been laughing at this parody (is it really?) site for a few days now:
    http://thekronies.com/

  • NL7

    I prefer the extrinsic, holistic perspective - look at the entire system and try to ignore the intrinsic baggage and framework of the system. It's all just people, some of whom have agents, guns, and administrators to enforce rules and some of whom ask for the support and intervention of those enforcing the rules. In that situation, the blame lies marginally more with the rules enforcers, but the applicants requesting intervention are certainly guilty as well for their part.

    The state naturally prefers larger entities to deal with. Larger entities are more efficient from the government's perspective. Better to hear from three large entities that represent 80% of an industry, so it's easy to create standardized rules and regimes. Those big companies have massive compliance arms, so new rules are easier to foist on the industry. And it's easy to find partners for new groundbreaking photo ops and investment press releases. A proliferation of small enterprises and individual startups is messy and chaotic, without large institutions to herd all the efforts in a desired direction. And the little independents usually have never heard of half the rules you've put on them, so compliance is especially spotty.

  • MingoV

    I remember when Microsoft cranked out software, made billions, and had no lobbyists in Washington. Then NetScape, a company with a free browser and no other assets, successfully sued Microsoft because Microsoft's inclusion of Internet Explorer violated anti-trust laws. Since then, Microsoft has spent tens of millions of dollars on lobbying and Washington lawyers. Microsoft tries for as much cronyism and deal cutting as possible. And who can blame it?

    This isn't a chicken or egg issue. Only the federal government can create and sustain federal cronyism.

  • A Realist

    I view this as a systemic problem resulting from societal and personal responsibility decay. I'm not religious, nor supporting any religion. However, the problem seems to stem from a general deterioration of personal responsibility and work ethic. Government feeds on this by giving out freebies and courting votes with those freebies. Let's face it, humans are basically lazy, needing an impetus to be more.

    Government couldn't court votes by cronyism if people weren't weak and seeking that. So, we allow the democratic model to gradually replace the difficult with the easy ... getting what we can for free and voting for those who provide it. Businesses are just like people. Show them how they can appeal to a "higher power" and get incentives, and they'll do it. Give that power to government, and government will wield it.

    As pessimistic as it sounds, it seems that we're in an irreversible spiral downward, and only reaching the bottom will yield a solution.

  • bigmaq1980

    Not sure repealing the 17th is as critical nor as efficient as addressing other things. For one thing, it would take a lot of ground work to even sell, as it "looks" like one is taking away some level of democracy.

    BTW...Thanks for the link...what a great idea for mocking the status quo!

  • Matthew Slyfield

    No argument there.

    Just as the tree of liberty occasionally needs watering with the blood of tyrants and patriots, the tree of government needs regular pruning.

  • tex

    Prior to the anti-trust suit Microsoft was warned by congress critters they should get involved in politics & Gates ignored those warnings until the anti-trust suite.

  • tex

    The first order is the power problem. If politicians have it they will sell it as typified by Blagojevich's first question upon learning he was to appoint a senator, "What's it worth?"

    Microsoft and others show that once you reach a certain size, the politicians will come after you for their royalties. Just recently Schumer held a lunch meeting of the wealthiest hedge fund mgrs to suggest they pony up. The hedge funds have been growing rapidly and were not much involved in politics. They've been put on notice.

    After reducing gov power, the next thing w/b to do away w/ representatives which are obsolete by modern technology. Representatives operate in their own self interest, not ours, the showing of which earned Economist Buchanan the Nobel. It would be tough for GE et al to get light bulbs banned or HCA to outlaw new doctor owned hospitals or their expansions, if we voted directly. A new library just opened in Texas - with NO books. A new DC with NO congressmen would be nice.

  • Steven Aldridge

    The playing field is so far from level that many businesses have no alternative but to seek representation on the Hill via professional lobbyists. Sure, both parties to the transaction are to blame but as this blog points out the fault is in giving government these powers to begin with. Legislators with no real world experience indulge their perfect society fantasies with the public purse. If they fail, tant pis, there are always lucrative post political careers in the private sector.
    As long as the public at large is amenable to handouts they will enable government to act as redistributor in chief.

  • http://itsaboutliberty.com/index.php MNHawk

    I thought Microsoft loaded itself up with otherwise unemployable School of Government types, starting a lobbying department, after getting the squeeze from Orrin Hatch.

    "If you want to get involved in business," Sen. Orrin Hatch warned technology companies
    at a conference in 2000, "you should get involved in politics."

    Hatch was referring to the shortcomings of then-software king Microsoft, which he had spent most of the previous decade harassing from his perch as Judiciary Committee chairman. The message was clear: If you become successful, you must hire lobbyists, you must start a political action committee, and you must donate to politicians. Otherwise Washington will make your life very difficult."

    http://washingtonexaminer.com/carney-how-hatch-forced-microsoft-to-play-k-streets-game/article/2500453

  • markm

    Power corrupts.
    Power corrupts.
    Power corrupts.
    Everything else is just details.

  • Larry Sheldon

    Taxpayers are at fault for electing the politicians.