As you might have seen, my friend and liberal sparring partner Bill Scher published a controversial op-ed in Sunday’s New York Times, titled: “How Liberals Win.” Sher’s op-ed is controversial because (a) many progressives inherently disdain corporate influence in politics, and (b) it confirms conservative fears about what Jonah Goldberg might call “liberal fascism”— and what others might call “crony capitalism.”
Scher argues that liberal ideas tend to actually succeed when they co-opt big business, and fail when they stand athwart corporations. “The necessity of corporate support for, or at least acquiescence to, liberal policies is not a new development in the history of American liberalism,” he writes. “Indeed it has been one of its hallmarks.”
He’s right — not just historically — but also in terms of current events. Would ObamaCare have passed without buying off the pharmaceutical lobby? Probably not.
And so, Scher explains why progressives should stop worrying, and learn to love big business:
[W]hen corporations are divided or mollified, reformers can breathe. The president can be heard. Business owners can be convinced that they will remain profitable. The dim prospect of perpetual gridlock can be trumped by the allure of regulatory certainty.
As conservatives like Goldberg and Tim Carney have pointed out, big business and free markets are not necessarily allies. In fact, they are just as likely to be adversaries. (This contradicts the commonly-held myth that conservatism and corporatism are one and the same, but stick with me here.)
Government regulations are often a boon for big business, inasmuch as they raise the barriers of entry for future competitors. Big businesses are, of course, able to logistically comply with onerous regulations, while upstarts cannot. (Thus, it is perfectly logical to expect big business to comply with — or even encourage — government regulations.) Ultimately, onerous regulations kill competition, which has a whole host of negative consequences, ranging from higher prices to fewer future innovations. (And don’t even get me started about bailouts.)
Interestingly, Scher’s column comes just as I’m reading Luigi Zingales‘ new book “A Capitalism For The People.” An immigrant from Italy, Zingales warns that America is starting to look more like his home country — which is to say we are moving toward a form of crony capitalism.
While the sort of public-private partnerships that Scher advocates might sound harmless, as Zingales points out, they are incredibly damaging for a variety of reasons, including the fact that they can ultimately undermine the meritocracy. (And a belief in the efficacy of meritocracy is vital for the general public to support capitalism.) As Zingales notes in the book, cooperation between big business and big government confirms to the public, “the sense that government and large-market players are cooperating at the expense of the taxpayers and the small investors.”
It also requires everyone involved to engage in a sort of charade — a kabuki dance, so to speak, where:
[T]o avoid being linked in the public mind with the companies they are trying to help, politicians encourage and even take part in the populist assault. No longer certain they can count on contracts and the rule of law, legitimate investors then grow scarce. This, in turn, leaves troubled businesses little recourse but to seek government assistance, thereby reinforcing crony capitalism. I saw this happen in Italy; a vicious cycle from which it is difficult to escape.
Ultimately, Scher’s argument — that liberalism is most effective when it co-opts big business — is both true and dangerous. As much as I like Scher personally, America would be better served if his progressive brethren were to dismiss his ideas as the sophistry of a corporate shill — rather than as the strategic road map of a prophet.
