How to Recognize Capitalists and Corporatists
Jimmy Carter should meet Freddie Laker. The jolly chairman of Laker Airways could regale him with stories about the differences between capitalists and corporatists. As a British capitalist, Mr. Laker is making heaps of money these days by transporting people back ‘and forth between New York and London at less than half the price the regular airlines charge. Freddie Laker’s determined drive of the past six years, culminating in his September 1977 low fart breakthrough, is weakening the international airline cartel called IATA (International Air Transport Association) and is bringing some price competition back into ‘the business. He believes in strict government safety standards but wide-open price competition in the marketplace.
Corporatists, on the other hand, reject’ Laker’s quaint beliefs. They want price security’ and if government protections can assure price-setting cartels, all the better. They want subsidies, tax benefits, free research and development, non-competitive government contracts, import quotas and other federal and state welfare supports as “incentives” to make profits. What government guarantees they lack, they try and obtain by collusive or anti-competitive practices such as price or product-fixing. Some call this welfare mentality of giant corporations in concentrated industries “corporate socialism” and its practitioners “corporatists”!
Corporatist ideology has increasingly shaped the White House’s economic policies. The President is supposed to stay out of the corporate economy but be responsible for its failings. His role is to provide “incentives” (read taxpayer. money) and “guarantees” (read taxpayer credit). Dozens of major corporate subsidy programs and over $200 billion worth of loan guarantees outstanding attest to the power of the corporatists’ “business confidence” test that is imposed on recent Presidents. Wall Street expects Uncle Sam to stay out of its hair but line its pockets.
Major industries in this country, from steel to oil, have become masters at placing the blame on Presidents for the consequences of their mismanagement, non-competitiveness or greed. Although the nation’s economic machine is still overwhelmingly in private corporate hands, the barons of industry and commerce make sure that governments coerce the small taxpayer and the consumer to bail them out.
President Carter has not escaped this corporate strategy whose code word is “business confidence.” His State of the Union message will recognize many of the same economic policies that a Ford administration would have urged.
PLAYING CATCH-UP with the powerful Business Roundtable mentality will never produce much more than costly palliatives and a demeaned presidential leadership. What Jimmy Carter needs to tell the corporate sector is to stop whining and start competing, stop milking the taxpayer and start serving the consumer, cease wallowing in waste and commence innovating for the real needs of people.
There was a glimpse of such thinking in the otherwise fawning remarks of President Carter on December 14 before the Business Council — a group of influential corporate executives. “I see the major redressing of our problem with unemployment being in your hands; in the private business sector. The major means’ of redressing the permanent underlying inflation rate lies in your hands,” Carter told them.
These words could signal a fresh approach to government economic policy. Some things the government has to do directly for the economic well being of Americans. But propping up a corporate welfare system constantly cloying at Washington is not the way to any economic solutions, whether intermediate or long range.
The absurdity of such cloying was reflected recently in a Wall Street Journal editorial railing against “Mr. Carter’s determination to attack the ‘three martini lunch’ and business-related entertainment.” The Journal observed that “keeping this drop of malice in the bill will not improve the confidence of business in future economic policy.” Since when should the taxpayer in this country be required to subsidize a wholly non-meritorious technique for selling goods and services. Should “martinis” be encouraged by a tax subsidy to become a competitive factor in winning a sale, not to mention their shoring up business confidence?
Mr. Carter’s Council of Economic Advisers needs to be provoked with a sense of fundamentals about the economic structure of this country and about the dislocating influence of concentrated industries. Trying to recommend policy based on corporate-defined indicators does little to advance equity, quality or productivity in our economy. However, it does serve further to encourage unjust corporate demands on Washington.
My father once told me that the more political power corporations possess, the less economically efficient and creative they become. Freddie Laker, the challenger of government-supported corporate cartels, would go along with that observation.