Originally published at Benfell Blog. You can comment here or there.
Sometimes I wonder why I do this to myself. I just received a Daily Bell newsletter which addresses me as a “free market thinker.”
Ahem. I’m not supposed to ask here for whom the market would be “free.” It certainly isn’t free for ordinary people whose jobs are shipped overseas, to be replaced, if at all, by Wal-Mart jobs that pay a fraction of what their old jobs paid. And while big corporations can relocate jobs where ever they can get the best deal, I can’t buy gasoline in Venezuela or Kuwait at under 50 cents a gallon either; I have to pay upwards of $3.00 per gallon here in the San Francisco Bay Area. But I’m supposed to compete with workers in impoverished parts of the world where there is much less environmental and labor regulation.
So anyway, the Daily Bell was criticizing Barack Obama, who apparently “called on Congress to pass the most wide-ranging changes to oversight of the financial market since the Great Depression and said the changes would help revive the economy and ‘put an end to the cycles of boom and bust.'” They focus on the illusion of ending what in my economics class way back when they called the “business cycle.”
As the Daily Bell put it,
It illustrates a fundamental rhetorical dishonesty, because even the socialist economist John Maynard Keynes did not directly associate regulatory policy with ending the business cycle. For Keynes, a recession was merely an indicator of lagging demand, which could be rectified having central banks rev up the printing presses. For free-market economists, recessions were an inevitable outcome of central bank manipulations of the money supply.
I don’t know about Keynes or these “free-market economists.” What I notice about the business cycle is that big corporations benefit from the downside in two ways. First, inevitably, some of their smaller competitors fail, reducing the competition they face. Second, there’s nothing like unemployment to moderate wage demands. Or to bolster arguments against regulation, like an initiative to appear on California’s ballot “to suspend Assembly Bill 32, which requires California to reduce greenhouse gas emissions to 1990 levels by 2020. Many firms did not support that change four years ago because they feared higher costs and now sense a chance to derail it as California struggles with a 12.6 percent unemployment rate.”
Elsewhere in the newsletter is a link for Ron Paul’s guest editorial on the difference between corporatism and socialism. He begins by writing,
Lately many have characterized this administration as socialist, or having strong socialist leanings. I differ with this characterization. This is not to say Mr. Obama believes in free-markets by any means. On the contrary, he has done and said much that demonstrates his fundamental misunderstanding and hostility towards the truly free market. But a closer, honest examination of his policies and actions in office reveals that, much like the previous administration, he is very much a corporatist. This in many ways can be more insidious and worse than being an outright socialist.
Socialism is a system where the government directly owns and manages businesses. Corporatism is a system where businesses are nominally in private hands, but are in fact controlled by the government. In a corporatist state, government officials often act in collusion with their favored business interests to design polices that give those interests a monopoly position, to the detriment of both competitors and consumers.
Wow. So maybe Obama promoted a giveaway to health insurance companies and made a backroom deal with pharmaceutical companies and escalated the war in Afghanistan for the military-industrial complex because the government controls and favors those corporations. But, according to the Washington Post, “President Barack Obama has no plans to reconsider his proposal for new offshore oil drilling in the aftermath of an oil spill in the Gulf of Mexico, the White House said on Friday” because, I am to understand, the U.S. government controls British Petroleum, which leased the drilling platform that “exploded and sunk [and now] spews oil at 42,000 gallons per day,” as well–I would assume–as all the other multinational oil companies.
It’s just so much simpler to understand it all Ron Paul’s way than to try to understand all those campaign contributions and lobbyists in Washington, D.C. Isn’t it?