Corporatism and Big Government are Co-Dependent

Anti-market critics often and correctly voice concern about the growing relationship between government and big business. Unfortunately, since most of them come from the left, their remedy seems to be more government. The problem is not, however, rooted in market forces.

Frederic Bastiat perfectly identified the relationship even in the 19th century. When the state is used for plunder, those who are plundered will understandably do everything in their power to reduce the plunder imposed upon them. Thus, those with the means to do so (big business) cater to those who plunder (big government).

It seems counter-intuitive, but the relationship is clearly fruitful. Big business, with their expensive lobbyists and lawyers, navigates tax codes and regulatory requirements while also assisting in their development. This is no coincidence. To them, inhibiting competition is more beneficial than the dollars paid for regulatory compliance and taxation.

The bureaucrats will piece-meal plunder to keep their voting base, but in the process play economic favoritism to the highest bidder. They’ll impose regulations and taxation, but subsequently pass a Farm Bill to “boost domestic agricultural production” and “create affordable access to food”. Never mind the billions in subsidies, protectionist tariffs, and import quotas – all of which serve to protect big agriculture.

There are a number of laws supposedly created to “protect the consumer” or “level the playing field”. Any time you hear politicians bemoaning the same catch phase, treacherous plunder is afoot. “Quality, affordable healthcare” is the most recent example. Of course, what really transpired were legislative guarantees for big insurance profit margins via “federal healthcare exchanges”.

The margins may have been reduced, but they’re still guaranteed. That’s the bottom line here.

This is an issue where liberals and libertarians can unite, but our remedies are starkly different. In a free market, which has never existed in the United States, profits are only guaranteed based upon competition for consumer patronage. This might transpire overnight or over-years, but it’s still the necessary force.

Liberals naively believe that government can remedy these ills via various reforms – as if these same reformers didn’t create the problem in the first place. Their solution is, of course, more plunder when plundering has in fact opened the door to special interest lobbying.

 

We must reject the notion that corporatism is a function of the free market. Crony capitalism does not exist in the nature of free markets, but rather government imposition. This does not mean that the free market would be utopia, but rather that it would inhibit corporatism through uninhibited competition. Protectionist laws only serve the establishment of power.

 

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