Obama’s Corporatist Big Plans
Guess who's running the economy?
Win the future. What did Barack Obama mean when he uttered those ridiculous words in some form more than ten times during his State of the Union speech? Was it just an exhortation or does it have actual content? If “we” – who exactly? – are to win the future, does everyone else have to lose? If not, what’s his point?
Are we even meant to think about this?
Obama’s program is nothing more than a stepped-up corporatism, draped – as it so often is – in rah-rah red-white-and-blue, all the better to keep the public from looking too closely. If the people can be distracted by patriotic fanfare — cheerleader chants about being No. 1 — jingoist can-do-ism — maybe they won’t notice that the program is merely an updated state capitalism in which the government combines with well-connected business executives and anointed union leaders to manage the economy in hopes of preventing the crisis that could call into question the very legitimacy of statism. It’s a tall order considering the mess the economic managers have created.
Tuesday night Obama delivered a message punctuated with an aggressive nationalism that insults the spirit of cosmopolitan free-market liberalism:
“We need to out-innovate, out-educate, and out-build the rest of the world,” he said.
How repulsive! The liberal vision isn’t a zero-sum Olympic rivalry among nation-states, with governments alternately cajoling and cudgeling their populations to perform. It’s a positive-sum world where individuals, not countries, compete and cooperate in pursuit of their well-being within a division of labor and harmony of interests, unobstructed by governments and their sanctioned monopolies — and oblivious of political boundaries.
Corporatist Schemes
As I suggested, none of this is really meant to be analyzed. It’s meant rather to alarm the people about the dire future that allegedly awaits a United States that can’t dominate the world economy. And that domination cannot be achieved unless we all acquiesce in whatever corporatist plans Obama and his business cronies cook up. (To be sure, military domination is part of the program.)
Rough translation: “You want jobs? Trust us.”
Obama quite understands this is not the free market. His corporate partners would want nothing to do with it if it were. There simply is no way for the “country” to lead the world economically without a government-business partnership at the helm, picking the winners and rigging the system to accomplish objectives chosen by “our leaders.”
This will be an orchestrated economy (nothing new), and certainly not a “left-wing” anti-business agenda. (It’s certainly no variant of socialism, which was always aimed at the reigning system of privilege.) On the contrary, it will be more of what we’ve long had: the traditional American state-capitalist regime. The free market (they believe) can’t be trusted to pick the right winners. (Hayekian knowledge problem? What’s that?)
“We need a coordinated commitment among business, labor and government to expand our manufacturing base and increase exports…. [G]overnment should incentivize this investment in innovation.” writes Jeffrey Immelt, chairman of GE, who now chairs Obama’s Council on Jobs and Competitiveness (CJC). “Working with Boeing CEO Jim McNerney, who leads the President’s Export Council, the [CJC] will look for ways to harness the power of international markets.”
You can be sure that Immelt and McNerney, who regularly count on the government’s Export-Import Bank to finance their exports, won’t be lobbying for the free market. Neither will new White House Chief of Staff Bill Daley, whose corporate resume is as long as your arm, be working to move government off the stage.
Don’t be misled by Obama’s pledge to review existing regulations. The corporate elite will be happy to see the elimination of regulations that are burdensome — to them. But regulations are only half the corporatist story. The other half consists of the myriad subsidies, guarantees, and monopoly rents – such as from intellectual “property” – that buffer incumbent companies from the bracing winds of competition.
Phony Free Trade
And speaking of “intellectual property,” the next time you hear Obama or a business executive extol free trade, bear in mind that every multi- and bilateral trade agreement has as its centerpiece a stringent U.S.-style IP regime. Today the price of the free flow of goods is the stifling of the free flow of ideas on which freedom and progress have always depended.
Real free traders know that government agreements are subterfuges serving special interests. You want free trade? Drop all trade barriers and set a good example.
Obama says we’re at a “Sputnik moment.” Let’s remember, however, that the first Sputnik moment launched the biggest surge of government power since the New Deal. Every kind of intervention, including federal involvement in education, was justified in Cold War terms – and most people fell for it.
We should reject the false choice between corporate statism and stagnation, and say no thank you to the “big things” Obama and his business cronies have in store for us.
Pingback by Anonymous on 28 January 2011:
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Comment by Jon Ogden on 28 January 2011:
Brilliantly argued. And dead wrong on Free Trade. The assumption that we must reduce our standard of living to the level of the slaver states like China and India is, in itself, a version of corporate statism setting up as an economic model a small oligarchy of the well off controlling and, in many cases, owning the labor of the rest of the country.
Comment by Sheldon Richman on 28 January 2011:
How would real free trade — no government involvement whatsoever — lower Americans’ standard of living?
Comment by Philip Lewis on 28 January 2011:
Corporations like GE are part of the “problem” … not the solution. Immelt and his cronies are anti-competitive and pro-regulation … they have created oligarchic structures that enrich themselves and their friends. There exists a huge gulf between “big business” and “small business” in America. BHO is an advocate of the GE’s of the world … he very mistakenly thinks that Immelt will save his butt and get him reelected. Unfortunately for BHO, some citizens are quite aware of his scheme and are discussing the matter.
Comment by Denise on 28 January 2011:
“How repulsive! The liberal vision isn’t a zero-sum Olympic rivalry among nation-states”
I can’t believe you really wrote “How Repulsive!”. I can’t help but giggle and wonder if this all part of the plan to co-opt the progressives. For a second there I wasn’t sure what publication I was reading.
What “liberal version”? The one that sat down in the chair when Obama was elected and screamed racist at anywone who disagreed with his agenda? Or are you merely trying to re-co-opt the word liberal?
Thanks for the read, Here’s Sputnik to ya. (I made that up)
Comment by Joe Schmoe on 28 January 2011:
“The assumption that we must reduce our standard of living to the level of the slaver states like China and India is, in itself, a version of corporate statism setting up as an economic model a small oligarchy of the well off controlling and, in many cases, owning the labor of the rest of the country.”
The notion that lowering trade barriers reduces our standard of living is, in itself, a version of corporate statism setting up as an economic model a small privileged few who benefit from protectionism.
For sure, some industries may be hit initially by the open doors. The resulting lowered prices for all will probably mitigate some or even all of it.
The real goal of free trade and competition in general is to have sustainable, long-term growth. Prices fluctuate in the short term, but an ideal is perfect competition in the long-run. It’s easy to see the directly accrued benefits if an industry is protected from competition; what’s not so easy to see is the slow and steady degradation of value.
In short, free trade is like a free market: there may be a visible and easily-noticeable poor, but nothing goes further to help increase the standards of living of that poor over time than freedom.
Comment by Sheldon Richman on 28 January 2011:
Denise, “liberal” was the original term more or less for libertarian. Adam Smith was a liberal. Herbert Spencer was a liberal. It was taken from us! Today we usually say “classical liberal,” but I find that clunky.
Comment by Joe on 28 January 2011:
Denise,
You are not a liberal you are a socialist. If you follow the history of the word liberal as it pertains to politics you would be enlightened. Actually you should call yourself a progressive now because that is the latest fad for socialists.
Comment by Denise on 28 January 2011:
“Or are you merely trying to re-co-opt the word liberal?”
Did either of you, Joe and Sheldon, read that line? I wrote re=co-opt as my own cutesy way of saying take it back.
Yes Joe, I’m a socialist that’s why I come here rather than read the daily kos or huffington post, and what exactlw was it about my post that gave you that idea?
Comment by Denise on 28 January 2011:
sorry about the bad spelling, I should type with my glasses on.
Comment by Sheldon Richman on 28 January 2011:
Denise, so sorry. I missed the “re.”
Comment by Romina Boccia on 28 January 2011:
Dear Mr. Richman:
Great article! It goes straight to the heart of the matter. I, too, have been following the President’s tendencies towards crony capitalism — what most popular news outlets falsely call a tendency towards moderation and centrism. Far from that, the President’s rhetoric and actions point towards increased government involvement in the economy to the detriment of the American consumer and taxpayer.
I blog at: http://www.iwf.org/inkwell/
I look forward to reading and sharing more of your compelling pieces!
Comment by Sheldon Richman on 28 January 2011:
To Romina Boccia: Thanks! I’ll check our your blog.
Comment by David MacRae on 28 January 2011:
Sheldon, you said that, “today we usually say “classical liberal,” but I find that clunky”.
I like “true liberal”.
Comment by Dennis on 28 January 2011:
I too want to add kudos to Mr. Richman for such a fine piece. Nobody else has analyzed the President’s speech so well. BTW, as a classical liberal I think what scares me the most is that both sides of the isle offer such self-serving proposals.
I saw where John Stoessel recently wrote that he believes we are headed for a certain bankruptcy because no politician wants to take on the big 3 federal expenditures, Medicare, Socialist Security, and defense.
Comment by N. Joseph Potts on 29 January 2011:
Do not give politicos the undeserved compliment of supposing that they do not trust the free market to choose the right winners.
What they don’t trust the free market to do is to choose THEM as winners. I know that thought is somewhere in your mind; I’d be gratified if you gave it greater prominence instead of imputing any degree of benignity to our oligarchs.
Comment by John Steinsvold on 31 January 2011:
An Alternative to Capitalism (which we need here in the USA)
The following link takes you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy:
http://evans-experientialism.freewebspace.com/steinsvold.htm
John Steinsvold
Perhaps in time the so-called dark ages will be thought of as including our own.
–Georg C. Lichtenberg
Comment by Craig T on 1 February 2011:
Poor poor Joe is an uneducated conservative, but that is like stuttering isnt it? In my experience they are almost all uneducated.
Joe, go to the Ludwig Von Mises web site and begin to educate yourself, by a book or two and read! Liberal was the historical term for all those who were free market and libery adherents. Around 1940 the socialists began to co-opt the word. Since then it means socialist.
If you dont or wont study the history of political and economic philosophy, then dont come to more intellegent web sites like FEE. And especially dont comment.
Comment by Sheldon Richman on 1 February 2011:
Actually, Herbert Spencer lamented the change in the word “liberal.” That was well before 1940. Even today the word does not mean “socialist.” It means “interventionist,” which implies a range of possibilities. Mises took the word to entail abolition of the market. No liberal today wants to abolish the market. The word “socialist” is thrown around too loosely, particularly when you consider that there were free-market socialists in the late nineteenth and early twentieth centuries (Benjamin Tucker for one). Such words are all muddled now (capitalism included), which is why great care is to be exercised in their use.
Comment by Ed Roberts on 1 February 2011:
Excellent commentary on the SOTU address. Obama must be very disappointing to anyone who expected him to provide any change of course or of rhetoric from that of his predecessor. Our political class must be the most dismally ignorant such body since the fall of the Soviet Union.
It’s too painful for me to watch any coverage of political speechifying, so Mr. Richman has done me a kindness by watching and subsequently writing an analysis of the SOTU address.
Pingback by Free the Children, Cut the Budget | The Freeman | Ideas On Liberty on 4 March 2011:
[...] No school taxes and no compulsory attendance. That sounds radical, but what’s really radical is the State’s asserting the power of parens patriae over children and forcing everyone to pay for the outrage. As education historian E. G. West noted, it did not take laws to achieve virtually universal education in the nineteenth century (among the free population). But it did take laws to give us schools that function like indoctrination factories, preaching the glory of government while preparing children to be quiescent taxpaying citizens who will take their place in industry, the bureaucracy, or the military. Today the goal is to train the personnel necessary to assure that America is the undisputed leader of the global economy. [...]
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