Faux Private Interests, Revisited

Social Memory Complex tears David Boaz a new corn chute for his typical display of vulgar libertarian public choice theory (or as Jeremy put it, "the old Cato Institute line that institutional analysis need only go so far as to frame up politicians, letting the other players in the politics itself go blameless"). Boaz writes:

When you spread food out on a picnic table, you can expect ants. When you put $3 trillion on the table, you can expect special interests, lobbyists and pork-barrel politicians....

Actually, I think it's the other way around. When you've got a centralized state that's amenable to control by a ruling class, you get $3 trillion on the table. Of course, it's something of a chicken-and-egg thing. Big business is a lot bigger and more cartelized because of big government. But big government is also a lot bigger because of big business acting through it to stabilize political capitalism. The synergy between them has been there since the moneyed classes created a Hamiltonian federal government, and both government and business have enjoyed cancerous rates of growth since the simultaneous corporate revolution and explosion of centralizing federalism in the 1860s.

Anyway, getting back to Boaz:

People invest money to make money. In a free economy they invest in building homes and factories, inventing new products, finding oil, and other economic activities. That kind of investment benefits us all -- it's a positive-sum game, as economists say. People get rich by producing what other people want.

But you can also invest in Washington. You can organize an interest group, or hire a lobbyist, and try to get some taxpayers' money routed to you. That's what the farm lobbies, AARP, industry associations, and teachers unions do. And that kind of investment is zero-sum -- money is taken from some people and given to others, but no new wealth is created.

If you want to drill an oil well, you hire petroleum engineers. If you want to drill for money in Washington, you hire a lobbyist. And more people have been doing that.

At Social Memory Complex, Jeremy responds:

And if you want to kill somebody, you hire a hitman. That doesn’t make it ok that people hire them, just because the service is available for purchase. This apologism for the corporate influence in - nay, the perpetuation of - state capitalism is the very portrait of the vulgar libertarian approach. Selling influence is bad. But buying influence is mere economic survival. Politicians should be more principled, but businessmen looking for a buck can be forgiven for looking at the short term gains of rigging the game.

In fact, Brad Spangler once argued not only that the corporate beneficiaries of statism are directly culpable in the state's coercion, but that it's misleading even to call one side of the equation "public" and the other "private." Rather, he referred to the latter as "faux private interests that are actually part of the state":

Let’s postulate two sorts of robbery scenarios.

In one, a lone robber points a gun at you and takes your cash. All libertarians would recognize this as a micro-example of any kind of government at work, resembling most closely State Socialism.

In the second, depicting State Capitalism, one robber (the literal apparatus of government) keeps you covered with a pistol while the second (representing State-allied corporations) just holds the bag that you have to drop your wristwatch, wallet and car keys in. To say that your interaction with the bagman was a “voluntary transaction” is an absurdity. Such nonsense should be condemned by all libertarians. Both gunman and bagman together are the true State.

Jeremy says something similar here:

Here’s the truth of the matter: mega corporations derive their existence, power, and modus operandi from the government from the get-go. Government charters corporations and protects them from liability, subsidizes, allows de-facto cartelization, etc. Big business has sought not only to expand their influence of gov’t, but to expand the power of that very state they are buying an interest in - using regulation to offset market mechanics, accquire sweetheart loans and bailouts, sieze private property through eminent domain, and otherwise manipulate this so-called free market. For every businessman who distastefully lobbies Congress there are at least 5 who see the dollar signs and are quite content to let our individual freedoms and pocketbooks take the hit.

Business is part of the problem. Corporations are quasi-states, using government to gobble up the market and returning the favor by funding the politicians who enable it. They’ve always been part of the political equation, from the Civil War at least.