17 June 2010

Expanding the corporatist state

From a comment (subscription, I think) to the Economist:
All right, Obama is not a socialist: he is a corporatist. Is that better? He would yoke government and big business together, pulling towards objectives defined by the great and good.
I'd disagree to the extent that I think the great and good can sensibly define objectives: it's when the ways of achieving them are centrally planned that things go awry. As the commenter recognises. He goes on:
This ignores the fact that it was this collusion that primarily got us into this mess in the first place. For example: government mandates that poorer people get houses. The mortgage industry, which is backstopped by a government controlled (and now owned) "company," tries to devise ways to do this without losing its shirt. These new techniques seem to work so well that they generate a huge bubble. The bubble bursts. And what happens then? The government intrudes even further into the home mortgage industry.
Again, the problem is government prescribing how things shall be done, rather than prescribing what shall be achieved.
"Too big to fail" is a symptom of the corporatist disease; so are "national champions," propped up by the state, to the detriment of innovation and competition. And instead of unwinding the relationship between big business and government, we're entwining them yet more. This marginalizes small businesses, which is where most of the innovation and job creation takes place. How can a small business make any plans, or hire any workers, when every day seems to bring down a new government mandate that favors large corporations? The law is ignored (as during the Chrysler bankruptcy, when bondholders were slighted in favor of unionized workers) to bring about a politically favored result. Only large companies, with corresponding muscle, can play on this politicized field.
Exactly so. Government and big business on one side, versus ordinary people and small enterprises on the other.
Communism, socialism, fascism, corporatism: all branches of the same tree, and all based on the premise that a chosen elite must guide the average person, who will otherwise screw it up. The perversion of the Enlightenment and the long march back to serfdom continues.
I don't know about serfdom, but I do foresee a crisis. Government - and big organizations generally - are, it seems, instinctively against the 'creative destruction' of capitalism, which has done so much to lift people out of poverty. The largest corporations work more by manipulating government and trying to subvert markets. Government and big business collectively have become too big. Not 'too big to fail', but too big to ensure that, when they do fail, society can recover without crises and extremely painful transitions. Corporatism has created a policy monoculture, with all the fragility and potential for disastrous consequences that that implies.

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