Friday, January 18, 2008

Big Business Loves Big Government

Jay Hancock's commentary on the BGE/Constellation Energy ripoff of rate payers from the bungled "deregulation" plan in 1999 proves a point many conservatives have been making for a long, long time: BIG BUSINESS LOVES BIG GOVERNMENT!

First let's be honest with our use of language in this conversation. The electricity industry in Maryland was not "deregulated." Paris Glendenning, Mike Miller, and Mike Busch essentially legalized a one company electricity cartel for the benefit of Constellation Energy. You can't have a deregulated open market when you set rules that favor the existing monopoly, and make it impossible for competition to set up shop. Big Business loves regulation because they can absorb regulatory costs better than thier smaller competitors, eventually forcing them out of buisness.

Jonah Goldberg, in a take down of John Edwards deceptive campaign rhetoric notes:

Edwards then explained: “Teddy Roosevelt, a great American president — he
didn’t make deals with the monopolies and the trusts. Teddy Roosevelt took them on, busted the monopolies, busted the trusts. That’s what it’s going to take.”

Unsurprisingly, that’s not right on the facts or the argument. As I document in my new book, Liberal Fascism: The Secret History of the American Left from Mussolini to the Politics of Meaning, the progressives’ tale of eager reformers forcibly bringing Big Business under heel is an enduring myth that ultimately perpetuates the very problem the crusaders set out to cure.

Let’s start with Teddy Roosevelt. According to civics textbooks, Upton Sinclair and his fellow muckrakers unleashed populist rage against the cruel excesses of the meatpacking industry, and as a result, Teddy Roosevelt and his fellow Progressives boldly reined in an industry run amok.

The problem is that it’s totally untrue, a fact Sinclair freely acknowledged. “The Federal inspection of meat was, historically, established at the packers’ request,” Sinclair wrote in 1906. “It is maintained and paid for by the people of the United States for the benefit of the packers.”Or, as historian Gabriel Kolko writes, “The reality of the matter, of course, is that the big packers were warm friends of regulation, especially when it primarily affected their innumerable small competitors.”

A spokesman for “Big Meat” (as Edwards might call it today) told Congress, “We are now and have always been in favor of the extension of the inspection, also to the adoption of the sanitary regulations that will insure the very best possible conditions.”

The meatpacking conglomerates knew that federal inspection would become a marketing tool for their products — “Quality guaranteed by Uncle Sam,” as it were. Meanwhile, small firms and butchers who’d earned the trust of consumers would be forced to endure onerous compliance costs, while large firms not only could absorb those costs more easily but also claim their products were superior to uncertified meats. This story played itself out repeatedly during the Progressive Era.

Big Steel actually sought out government regulation because it feared free-market competition. During the New Deal, FDR supposedly carried on his (distant) cousin Teddy’s crusade against the “malefactors of great wealth.” But the truth is that big business often welcomed government regulation. Clarence Darrow, surveying the National Recovery Act’s record, found that the keystone agency of the New Deal had served only to help big business.


We see the same process playing itself out in our own time.

General Electric, Phillips, and Sylvania wrote the energy bill, recently passed by Congress and signed by President Bush, which outlaws the incandescent light bulb. Let's not forget the subsidies that went to ethanol peddlers like Goldman Sachs and Archer Daniels Midland. After this how is it still honest to accuse global warming skeptics of being the only experts in the pocket of big business. Especially when alarmist experts are out funded billions to millions.

How about the prescription drug benefit for Medicare. That bill was written in the middle of the night by pharmaceutical lobbyists, and passed by guys on my team who should have known better!

If governor O'Malley wants to show true leadership on reducing energy costs for Marylanders; he should propose initiatives that would give us a truly open and competitve electricity market. He could start by pressuring the legislature to repeal the provision in the BRA that allows counties to tax property that generates electricity; advocate measures that would entice competitors to build more electricty generating plants in Maryland to increase supply for a system that will not have the capacity to meet future demand (we are a net importer of electricity), and refuse to sign the Global Warming Solutions Act, which creates an articifical carbon market, and added costs to ratepayers.

We already know Martin O'Malley does not care about reducing electricity and energy costs for working/middle class Marylanders. To bring real rate relief to Marylanders would require the governor to turn against the special interests (big business and environmentalist) he courted during the campaign. We know he won't do that because he is a progressive.

2 comments:

Swamp Thing said...

Valid & important observations on MOM, but I have to say that your implication that "many conservatives have known that big business is.." bad for Americans is a little out of bounds. I grew up in rural VA in the 1970s, when Republicans would do anything - ANYTHING - to get tax breaks for Gwaltney, Perdue, and Smithfield Hams.

I'll give you that "conservatives" as a whole may despise big business, but think about Maryland conservatives' opposition to strong zoning laws, workers rights laws, and environmental regulations on development. Guess what laws Best Buy, Wal-Mart, and McDonalds also oppose? The same ones! So, you may personally & directly oppose big business, but big business loves conservatives!

And to be fair, big business loves all politicians. Democrats are famous for "making exceptions" to their stringet environmental laws to allow their donors to pave over the habitat of some endangered bird.

Mark Newgent said...

You make a fair point about Republicans handing out favors to corporations.

However, you conflate conservative principles with Republican politics. They are NOT the same thing. Many conservatives are Republicans because the party is merely the best available instrument to advance conservative ideas.

I made my argument from a conservative perspective, not a GOP talking point.

Conservatives oppose oppressive zoning and labor laws because they harm the free martket, not because they like big business. Wal-Mart et al oppose these laws not because they care about the free market (although they use the argument) but because it affects their bottom line. The same holds true for big government rent seeking on the global warming issue. Corporations are trying to get from government what it cannot from get on the free market.

The conservative position (not necessarily the Republican one), which I am arguing is still entirely consistent.