Home / Government of Business, by Business, for Business – Part II

Government of Business, by Business, for Business – Part II

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Perhaps "the business of America is business" as some say, but the business of government should be governing.

The problem is that a "business" is an appetite, pure and simple. The "business of business" is to make a profit. Period.

A "business" is the closest thing to a land shark you’ll ever see – ask anyone on Wall Street if you have any doubts.

Letting the sharks loose in a system of unfettered capitalism, which we see more and more of in this country, is not a good thing. The deregulation and merger mania we’ve seen has produced monopolistic industries, raised prices, and exported our quality of life in the pursuit of profits.

The land sharks are in a feeding frenzy. (Teddy Roosevelt would have recognized them instantly a hundred years ago.)

The interesting thing, to me, is how easily businesses have managed to get Americans to support their growing powers.

All it took was a single word.

That word is free. Free is good, right? Freedom, freebies, and like that? So a "free market" and "free trade" must be good too, right?

Wrong, and we’re paying the price because our markets aren’t free, and neither is international trade.

We have monopolistic/oligarchic markets in the US, while this administration is signing restrictive, protectionist trade agreements with the rest of the world. It’s not free anything. It’s land sharks roving the world, leaving a trail of blood in their wake.

Realistically, we essentially have an oligarchic government in America. Rich people representing corporations shape and control America’s economic and trade policies for their personal ends. There’s documentation, but let’s look at a definition first:

Any system of government in which virtually all political power is held by a very small number of wealthy but otherwise unmeritorious people who shape public policy primarily to benefit themselves financially through direct subsidies to their agricultural estates or business firms, lucrative government contracts, and protectionist measures aimed at damaging their economic competitors — while displaying little or no concern for the broader interests of the rest of the citizenry. [Paul M. Johnson, Dept. of Political Science, Auburn University] (Story links open in new windows)

That pretty much sums up the Senate, the House of Representatives and the Executive Branch, doesn’t it? Not everyone, but most of them?

The $180 billion agriculture bill passed during this administration, with most payments going to huge companies like ADM, underscores the point. Even the right-wing Heritage Foundation says: "America’s largest and most wasteful corporate welfare program is farm subsidies."

These subsidies have put more than a million corn farmers out of business in Mexico, shut down hundreds of cotton plantations in Africa and wrecked agriculture in many third world countries while keeping prices higher in America. That is not "free" trade.

The pork-larded "American Jobs Creation Act Of 2004" does create jobs – overseas.

The soi-disant "Free" Trade Agreements Robert Zoellich has signed are protectionist to the core – but that’s okay with Americans because that good old word "free" is right up there, the first word in the title of every agreement, so never mind the reality – they say it’s free so free it must be. (Herr Mesmer had an explanation for this.) [For details see The "Cargo Cult" Is Alive And Well – Today It’s Called "Free Trade"]

The EPA initiates lawsuits to allow strip mining companies to keep filling in streams and pouring sulfates and other pollutants into Appalachian groundwater systems.

Secretary of Labor Elaine Chao claims "We serve the work force" but says the stock market is her most important concern (never mind that investors are rewarding companies who offshore jobs most effectively by re-investing in China, India and points east).

This trend started accelerating about twenty years ago, about when Newt Gingrich came up with his "Conservative Opportunity Society." This administration has given it a fresh impetus, with more than a hundred ex-industry lobbyists and lawyers overseeing the industries they lobbied and lawyered for (and which they continue to do but on our nickel now).

But, hey, that’s just the price of being free, right?

If you don’t think so, you might want to write your Senators and House Representative and give them some free advice. I understand that as few as 2-300 letters, calls and e-mails can get their attention, so it’s worth the effort.

If you aren’t too mesmerized.


Further reading:
Government of Business, by Business, for Business – Part I


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About Hal

  • I am struggling to see how the complaints about the myth of “free trade” simultaneously translate into complaints about so-called job “outsourcing.”

    The reality is that yes, governmental subsidies of certain U.S. industries (for example, the cotton producers) prevents producers in other nations from effectively competing: since the U.S. producers are propped up by the subsidies, producers in other parts of the world aren’t able to compete. Such things are generally protectionist in nature and are from a global perspective anti-trade and hardly “free” (and are among the many complaints other nations have against the U.S. and other “first world” nations).

    However, if you eliminate the subsidy, the reality is that most of the cotton production will relocate to another part of the world: i.e., it will be “outsourced.” Could you explain more clearly what your concern is here? If “free trade” is pushed more broadly and tarrifs and subsidies are eliminated, do you somehow beleive that this will create more jobs in the U.S.? Do you assume that “outsourcing” is good for corporations but bad for America, and thus counter to our national self-interest? Ultimately, isn’t the reduction or the elimination of a subsidy, while probably the “fair” thing to do on a global level, also likely to lead to further “outsourcing?”

  • Hal- Genuine laissez faire capitalism requires an *absence* of government assistance as well as the absence of regulation.

    I consider the corporate welfare a dire evil when coupled with deregulation, or the re-regulation that masquerades as deregulation.

    Interesting result of local outreach: I staffed a booth at a local high school where we administered the “world’s smallest political quiz”, which determines where you fit on the political landscape. To make the result most instructive, we ask the quiz taker to self-identify as Republican, Democrat, independent or Libertarian. Obviously, I’m trolling for Libertarians, but I also analyze individual questions to see where we have common ground with those who aren’t completely in our camp.

    It was most fascinating to me that among the self-identified Democrats, there was near-unanimity on one topic: that businesses should continue to receive corporate welfare.

    I was stunned. Adult Democrats & liberals are almost always in agreement with us Libertarians that corporate welfare should be drastically cut or eliminated.

  • Bill- Here’s an example of how a protective tariff can hurt the US economy, even though it is designed to help it.

    Take steel. US steel makers and steel workers unions begged for tariffs on imported steel. Their claim was that this imported steel was being illegally dumped on US shores, undercutting the heck out of their ability to compete.

    President Bush instituted tariffs on imported steel. The thought was to protect American jobs and industry.

    What happened? The price of steel shot up, to the pleasure of the steel industry. Who did that hurt? Every American industry that uses steel, and the workers of those industries.

    Think of cars, trucks, refrigerators, washers, dryers, nails, wrenches, screwdrivers, structural steel, bridges, the myriad military uses, etc. etc. Every one of these industries faced higher prices for steel, which in turn meant higher prices for consumers, which meant job losses across the list of industries that use steel.

    So, yes- I believe that the outsourcing of the production of steel would be enormously beneficial to American industry. This applies to so many industries it boggles the mind.

    Big business relies on the Phillips curve until it grows to the point of being unsustainable and uncompetitive. At that point, it lobbies for ‘free’ money, from the taxpayers in the form of subsidies. Their method is to use emotional arguments about outsourcing and the loss of jobs.

  • Perhaps you’d have struggled less, Bill, if you had read the “Cargo Cult” material, as I go into more detail on trade there.

    I’m not linking the subsidies to jobs losses, but rather using the subsidies as a point of evidence that we do not have free trade, even though tens of millions – maybe hundreds of millions – of Americans believe we do.

    The mantle of “free” trade has been used to mask the reality of offshoring jobs, when we know that offshoring of jobs is simply arbitrage, looking for the lowest costs.

    I’ve posted a few other items on trade and jobs that you might find interesting. The Blogcritics software won’t let me post a list of URLs, but this link opens a new window with a short list.

    “Neocons on jobs: are they totally losing it?” might strike your fancy.

  • There’s no gridlock, Mike, on corporate welfare and that’s totally bipartisan.

    The definition I included covers that.

  • Mike:

    While I can understand what you’re getting at, that doesn’t address the tension I find in Hal’s post, which decries both “free trade” as presently constituted and yet raises the specter of “outsourcing” as well. In other words, if business is borderless, jobs will undoubedly be “outsourced” to other regions. The ethics of this are generally regarded as beneficial on a global scale: in other words, by eliminating cotton subsidies in America, we might benefit Kenyan cotton producers who cannot currently make a profit, thus allowing them to make a living instead of starving. And it may well produce lower prices that might benefit American consumers and/or other industries (on the other hand, it may not, if subsidies managed to mantain an artificially low price on a global scale).

    Regardless, one cannot suggest that “free” trade should be more free than it is (which seems to be what Hal was getting at) while seeming to decry “outsourcing” as well. Job migration is arguably an inevitable component of a global economy: I don’t see how Hal can complain about both.

  • I am not advocating “free” trade – and certainly not the bill of goods being sold to us as “free trade.”

    I am pointing out that we’re being lied to for corporate profit, not to “benefit mankind” and certainly not to benefit Americans.

    The basic things to recognize are: There is no free trade. There never was any free trade. There never will be any free trade.

    We’re not even close to what Ricardo envisioned – “free trade” a fantasy used by corporations for manipulation. Ricardo’s theory required immobility of the factors of production, but that cannot be achieved. Capital and jobs move around the world at the speed of light today.

    On jobs, that means folks in Kalamazoo are competing for jobs with people in China and India.

    We’re seeing the beginnings of the effect of that in the lower living standards in this country. The situation will get worse before it gets better.

    It might be worth seeing what I’ve written leading up to this post at the link I provided earlier.

  • Hal:

    I posted my prior comment before reading yours. I will review those materials. However, I have to concede the validity of many of the objections to the protectionist subsidies of our farm and agricultural industry that provide inappropriate competitive advantages over international producers. That said, it raises conceptual problems for typical “anti-migration” arguments, most of which sound quite protectionist and which strive to “keep” jobs in industries where international competition offers a similar product at a lower cost. And so I’m still trying to see how you’re complaining of both the “lies” of free trade and also about job migration.

  • Hal:

    I read several of the articles you linked to and I *think* I have a better handle on what you’re getting at. 🙂

    Okay, you say you’re not in favor of “free trade,” and especially not the type of “faux free trade” we see today. You also say that there never has been free trade, and that jobs and capital move about at the speed of light (not technically true, of course: capital and jobs can move as fast as an electric pulse across a computer network, but that pales in comparison to the speed of light – still, I expect that’s a quibble).

    Meanwhile, goods do not move at such a quick pace: indeed, some 95% of trade still moves by ship across oceans. Neither point is particularly important to our present discussion, and I still do not see exactly where you’re coming from.

    You seem to oppose “corporate welfare,” which I take means you oppose subsidies and tarrifs. Is this this accurate? You would then oppose, I assume, both subsidies for cotton producers and steel tarrifs (ostensibly to benefit the American steel industry, although the “higher prices” Mike mentioned may not have been directly related to the tarrifs but the explosion on steel purchases in China, which is on a major developmental binge). Would you call for them to be abolished, with the corresponding risk that those “jobs” would be lost to foreign competitors now competing on a level playing field? Or are you suggesting that protectionism is a valid form of self-interest, since we must retain our jobs here in America?

    Likewise, in the context of “outsourcing” of jobs, what do you suggest as a viable option? I note that in both this post and your “neo-con” post you mention contacting congressional representatives, but you don’t actually offer much of a solution: you just want to see it stop. How will it stop? If we “keep” our jobs here, how do we go about it – and how is it feasible to thus compete in international trade for customers who might opt for lower cost options produced by competitors in other countries?

  • kuros

    :”Fascism should rightly be called Corporatism as it is a merge of state and corporate power.” -Benito Mussolini

  • Hal, Bill- Contacting one’s US Rep or Senator may be an act of futility, especially if this Congressperson is in a state that has a heavily subsidized industry.

    My own example with such a letter goes back four years to the beginning of the Bush Administration, and a letter to my US Rep in Cleveland, Dennis Kucinich.

    I made exactly the case to Kucinich that I made in my comments above- that tariffs on steel might be good in the very short term for the steel industry and the steel workers, but very bad long term for the auto industry/UAW, etc.

    Kucinich’s office replied with a form letter, saying “I voted with President Bush” on the issue of steel tariffs. My take on that form letter was that the Kucinich team figured I was a Republican, and that showing that he was “with the President” should be sufficient to shutting me up.

    I wrote another letter saying that I wasn’t a Republican, and that Bush was wrong on the issue. In response to this, I got the “thank you for your interest in this issue” form letter. My take on that was that Kucinich understood that he would get overwhelmingly more voter support for his position in favor of tariffs- friend of steelworkers *and* local big business… perfecta!- than he would for a sound economic position.

    Sure, if Reps receive an avalanche of letters on a topic against a popular position- and protectionism is popular- they *might* change their tune. The letters cannot look like astroturf, and they have to also go to the newspapers, and hopefully some traction is gained.

    It ain’t easy. That’s one reason I run for office- so I can get the floor and the press.

  • Radio waves (electro-magnetic radiation) and electrons, Bill, do travel at the speed of light. In fact, electrons can travel faster than the speed of light in some media.

    I admit I did not allow for various delays in switching transistors. Nor did I consider how long the software would take to make the actual deposit of funds. Nor the fact that if I sent instructions to hire on Thursday, it might be two days, depending on which side of the International Date Line the receiver was on, before anyone would even see them.

    But it was a figure of speech, Bill, and seems a strange thing to carp about.

  • Agricultural subsidies are one area I do advocate an action on: get rid of them.

    As I said, they’re bad for us and bad for the world.

    ADM is a nice example. This is the former Archer-Daniels-Midland, whose CEO said: “The customer is our enemy, our competitor is our friend.” He was talking about what would be most useful in aiding him to get more and more taxpayer funding.

    And they get billions. They get a subsidy for raising corn. They get a subsidy on the sugar substitutes they create from corn, allowing them to keep the price of that just below the price of (subsidized) sugar and make a neat profit. And then they get a subsidy for processing all the waste from the corn and converting it to ethanol.

    Billions of taxpayer dollars, folks. Some of which they spend in campaign contributions. And defeating Democrat Daschle and replacing him with Republican Thune isn’t going to change a thing – Thune will just join the other Republicans who sided with Daschle in keeping the subsidies high.

  • Tariffs and economic regulation are a different story and can have a positive effect.

    The East Asian financial crisis of a few years ago, brought on by the IMF and World Bank, missed Singapore, China and Malaysia because of their regulated trade and economic policies (particularly on foreign direct investment).

    The less-developed nations absolutely need protection from the West. (China is a different story and needs to let their currency float, a whole other issue but one that also defeats “free trade.”)

  • As for jobs being off-shored, it’s too late in many ways because globalization has achieved what was expected: American multi-nationals can essentially hire anyone they want anywhere they want. Labor at any skill level – more skilled than ours in India – is available for less than it would cost in the good old U S of A.

    One thing that can be done, however, is to stop subsidizing off-shoring. There’s no reason American taxpayer money should be used to fund corporate operations overseas. Republican Bill Thomas has spent two years pushing through a bill that does just that. [The “American Jobs Creation Act of 2004” does create jobs. Overseas.]

    I listed a few thoughts in The “Cargo Cult is Alive and Well – Today it’s Called “Free Trade”:

    1. Eliminate incentives and tax subsidies for off-shore operations of multinationals, and definitely don’t give them new ones.

    2. Lower the cost of doing business in the U.S. A good start would be introducing a single-payer health care system. This could cut health care costs in half while bringing health here up to that of other developed nations- we spend twice as much but have the worst health as a nation.

    3. Spend some money on research for alternative, renewable energy sources. This administration is cutting technology and science programs in the Department of Energy and the Department of Commerce, and “dismisses worthwhile efforts at the DOE to seek viable alternative-energy sources.” Energy costs are rising and will continue to do so as China requires more and more to support our off-shored jobs – we need to get competitive.

    4. Face up to the facts that the European Union is the largest economic entity on the globe, and China is now number three and climbing fast. We won’t be able to use our “absolute advantage” much longer (if we haven’t lost it already), so we had better come up with a better way to get along. Soon.

    But I’m not the Secretary of Commerce and have no background in trade or economics, so basically all I can say is: “I don’t know the answers, but do know that you folks in charge need to get on this.”