December 31, 2015
sticker, spotted on a dirty and dilapidated subcompact: POLITICIANS SHOULD
DRESS LIKE RACE CAR DRIVERS SO WE KNOW WHO THEIR CORPORATE SPONSORS ARE.
it, another sticker: BERNIE FOR PRESIDENT.
Sanders is ticked that the “middle
class has been disappearing.” He’s steamed over “massive wealth and income
inequality.” He raged-tweeted that “Americans already work the longest hours in
the western industrialized world.” But it’s clear that what makes the socialist
senator sorest is ... corporations.
angriest man is an acolyte of what economist Alan Reynolds
called “the gospel according to Ralph Nader, which goes something like this:
The nation is at the mercy of a few hundred giant corporations, run by a
self-perpetuating oligarchy of managers who are not accountable to
stockholders, workers, consumers, or society at large. These ‘private
governments’ employ advertising to sell us things we do not need, with little
concern for the safety and health of workers or consumers.”
and his NPR-totebag-wielding followers have a tenuous grasp of rudimentary
economics to begin with, but when it comes to corporations, their unhingeness
is intense. To the left, the American economy all went wrong more than a
century and a half ago, when sole proprietors and small enterprises began to
give way to ginormous, continent-traversing businesses. Driven by the rise of
railroads, states started to enact general-incorporation laws.
Industrialization, combined with innovations in communications, created
companies so vast, many are still in operation
It was an
era marked by what the ignorant call “robber
barons.” But credible
economists and historians have a better understanding of the period. As Walter
Block and J.H. Huebert observed,
“there used to be something else of a completely different character called a
‘corporation,’ which … enjoyed unjust state-granted privileges.”
General-incorporation laws, the scholars wrote, served “to eliminate monopoly power that had been granted to … businesses
under the older, genuinely monopolistic corporate form.”
Steele Gordon, in An
Empire of Wealth, described the pro-consumer policies of John D.
Rockefeller’s behemoth: “[A]s the grip of Standard Oil relentlessly
tightened on the oil industry, prices for petroleum products declined steadily,
dropping by two-thirds over the course of the last three decades of the nineteenth
2003 column, Bloomberg’s
Peter Coy argued that where “competition is vigorous, even the largest companies
are slaves to market forces. They must charge low prices, respond to changing
consumer tastes, and embrace new technology as quickly as possible -- or fail.
Think about it: Who really has more power, giant Ford Motor Co. or Ford’s
customers, who can buy a Lexus or a Jeep?”
those still skeptical, two words: New Coke. But there are thousands
of costly, but far-less-notorious failures to peddle mediocre products and
services. In 2001, The Wall Street
Journal reported on Burger King’s multi-year, $70 million effort to overhaul
its French fries. The revamp fared disastrously. The fries “turned out to be so
unappetizing, so brittle -- some snap like potato chips -- that people are
passing on them in droves.”
corporations are the victims of revisionist history, and at the mercy of the
all-powerful consumer. But what about unbridled “corporate power” in
Washington? It’s undeniable that many fedpols gleefully dole out aid to
dependent businesses. A conservative estimate of the price of corporate welfare
billion. Appalling, but the sum is dwarfed by Sanders-approved spending.
Social Security and Medicare alone surpass
$1.4 trillion. In the sleazy game of rigging the tax code, Big Business loses as
well. In an analysis
released this summer, the Tax Foundation’s Alan Cole, using figures from
the Office of Management and Budget, estimated that $131 billion in “tax
expenditures” for corporations in fiscal year 2015 were offset by $1.2 trillion
in perks for individuals.
small-business lobby extols the nobility of its members, and their
contributions to jobs and GDP. But even in the “gig
economy,” working for the man remains common. U.S. Census Bureau data show
that more than half of employed Americans get their paychecks from firms with more
than 500 workers. In addition, a majority of us own stocks in publicly
traded companies, either directly or through pension plans. That’s a remarkably
sizable portion, given what the Great Recession did to Wall Street’s reputation.
and his followers yearn for an economy that resembles a farmers market -- locally
made, locally consumed. (And every vendor knows your name.) But that’s North
Korean economics. It’s a vision that cannot be grafted onto a nation built,
largely, by bigness.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
# # # # #