Crony capitalism update
The alliance between Big Money, Big Business and Big Government is something I will be giving a hard look over the coming a year. Two great pieces. First, Tim Carney on Obama and Immelt:
Subsidies are GE’s lifeblood, and Immelt’s own words make that clear. In his op-ed announcing his appointment, Immelt called for a “coordinated commitment among business, labor and government,” and wrote that, “government should incentivize … investment in innovation.” He also advocated “partnership between business and government on education and innovation in areas where America can lead, such as clean energy, are essential to sustainable growth.”
This is Immelt’s style. Days after Obama’s inauguration, the chief executive officer wrote to shareholders of a post-bailout “reset” in the global economy. “In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner.”
Sure enough, wherever Obama has led, GE has followed. Obama has championed cap and trade in greenhouse gasses, and GE has started a business dedicated to creating and trading greenhouse gas credits. As Obama expanded subsidies on embryonic stem cells, GE opened an embryonic stem-cell business. Obama pushed rail subsidies, and GE hired Linda Daschle — wife of Obama confidant Tom Daschle — as a rail lobbyist. GE, with its windmills, its high-tech batteries, its health care equipment, and its smart meters, was the biggest beneficiary of Obama’s stimulus.
To get these gears in sync isn’t cheap: The company has spent $65.7 million on lobbying during the Obama administration — more than any other company by far. So much for Obama’s war on lobbyists.
For much of the media, the nuances will be lost: You’re either pro-business or anti-business. But the distinction is crucial between making a profit through subsidy, regulation, and bailouts on one hand, and competition and innovation on the other hand. The latter creates wealth. The former consumes it.
And Mickey Kaus:
Shouldn’t Republicans hold hearings on the general threat of Putin-like corporatism—i.e., an insidious alliance between big government and favored corporate and labor interests? a) They could call GE CEO Jeffrey Immelt to testify and embarrass him about the myriad ways in which his slightly creepy role as CEO and presidential adviser might allow him to benefit his company and squash competitors; b) They could grill the various regulators who might be tempted to favor the auto manufacturers that the government bailed out (and which, in GM’s case, it still owns about a third of). Maybe some GM competitors would even be brave enough to testify. (Exhibit No. 23: Will GM and Chrysler claim all the remaining billions of “green” retooling loan money from Obama’s Department of Energy? Entrepreneurial startups need not apply?) c) They could question whether these bureaucrats and others are also doing favors for other Obama constituencies, like labor unions, or Google; d) They’d appear transpartisan–this is an issue where left and right populists unite. Do they love corporate-government alliances at Daily Kos? It’s also one of the legitimate worries at the heart of TeaPartyism. e) Hearings might help: There is no obvious answer to some parts of the corporatism dilemma, such as the too-big-to-fail part. If lots of firms are now too big to fail—or else their markets are unstable—and if during a downturn the government winds up investing political and economic capital in specific companies, what are you going to do? Bail the companies out and then let them collapse again?