Big Government

I have long believed that the biggest problem we have in this country is that the government and the businesses that have captured the regulatory state have become one seamless monstrosity.

A lot of people have had a hard time getting their heads around this.

Lefties like to think that “business” is evil but that “government” regulates it to protect the people from pollution and defective products, etc.

Righties like to think that “business” = free enterprise, menaced by the evil “government” that is driving it to extinction.

Both are mostly wrong.

The government has turned into an amalgamation of iron triangles — regulators, legislators (or actually their staffs) and industries that are regulated. These work in tandem to their mutual advantage at the expense of the taxpayer and of truly entrepreneurial and innovative businesses. It is in the joint interest of this business/government crony capitalist complex to crush out potential rivals and created government sponsored, protected and subsidized monopolists.

This is precisely the hazard the USA was founded to fight against. The American Revolution was provoked by British monopolists authorized by the Crown — crony capitalism, 18th Century style. The founding generation was acutely aware of this problem. Further the major thinkers influencing 19th Century liberal thought in the USA, Canada and Britain were all focused on this problem: Jefferson, Edmund Burke and Adam Smith. (See the brilliant book The Transatlantic Persuasion: The Liberal-Democratic Mind in the Age of Gladstone by Robert Kelley, which explains this now-forgotten history.)

The greatest threat to our liberty is the uniting of government power and private greed, and that is exactly what we are facing now.

The creation of a regulatory state meant its inevitable capture by the industries it supposedly regulated. I remember having a life-changing intellectual moment when I read The Logic of Collective Action by Mancur Olson as an undergrad at the University of Chicago. (If you have not read this, you must do so. Really.) George Stigler’s analysis of the regulatory state was consistent with this picture. (See, e.g. The Citizen and the State: Essays on Regulation.) Once you see how this works, it is obvious that this process is inevitable.

The political class that services this machine has come to be known in Chicago as The Combine. Both parties service the machine, with no substantial difference between them. The Democrats tend to have more of what our co-blogger Carl from Chicago, in an excellent and prescient post, called stone-cold redistributionists, but neither party has any interest in making any basic changes in these arrangements. Mr. Bush, with the bank bailouts, then Mr. Obama, with Solyndra being just one of many egregious examples from him, has taken this process to a new level.

During the Cold War, people would argue that the United States and the Soviet Union were “converging.” The argument went that the Soviet Union would liberalize and become more humane, while the USA would become more socialistic, and we would all end up looking something like a utopian notion of Sweden. This did not happen. The Soviet Union fell apart. Mr. Fukuyama famously asserted that liberal democracy had “won” and that the ideological struggles of modernity were over, and history had ended.

But what if the final state is not democratic capitalism? What if convergence is right after all? What if Soviet communism fell apart and turned into a mafia state run by an alliance of government and favored businesses, which control the country by corruption and intimidation, a nomenklatura that strips out all the value in the country on behalf of a well-connected elite, immiserating everyone else. This amoral, vicious, greed-driven, undemocratic dystopia is what we are now converging toward. It is an Orwellian future, with an Inner Party of senior politicians and business executives, an Outer Party of government employees and business managers, and a vast, despoiled, proletariat with no opportunities, or assets or future. It sounds like the world Mr. Obama is brazenly pushing us toward. It also sounds like a future that no Republican has so far dared to point to, to name, to denounce and to oppose — because they would prefer to be in on the game than take the risks inherent in opposing it.

So, Fukuyama was right: We are approaching a single form of governance around the world. Unfortunately, it turns out, it’s fascism.

Until Gov. Palin’s speech on September 4, 2011, in Indianola, Iowa.

… there is a name for this: It’s called corporate crony capitalism. This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk. No, this is the capitalism of connections and government bailouts and handouts, of waste and influence peddling and corporate welfare. This is the crony capitalism that destroyed Europe’s economies. It’s the collusion of big government and big business and big finance to the detriment of all the rest to the little guys. It’s a slap in the face to our small business owners the true entrepreneurs, the job creators accounting for 70% of the jobs in America, it’s you who own these small businesses, you’re the economic engine, but you don’t grease the wheels of government power.

Please listen to this speech, or read it, if you have not done so already.

Today, Instapundit linked to a Facebook post entitled “Crony Capitalism on Steroids.”

She is pounding the same drum.

She is apparently going to make this theme the main focus of a Presidential campaign.

Say what you like about Mrs. Palin. She is the only person in public life who has successfully identified the threat, named it, shone a spotlight on it, denounced it, and begun to threaten it.

This is the first faint flicker of hope I have seen that our political order can be reformed democratically without a massive, system-wide failure happening first. Maybe the other candidates will be forced to respond to these denunciations, maybe there will be a populist response to this challenge raised by Gov. Palin. I hope so.

We do live in interesting times, and they just got a lot more interesting.

UPDATE: Paul Ryan had this excellent speech linked on Instapundit. Here’s an excerpt:

… if we surrender more control over our economy to the governing class then life in America will become defined by a new kind of class warfare: A class of bureaucrats and connected crony capitalists trying to rise above the rest of us, call the shots, rig the rules, and preserve their place atop society at the expense of working Americans, entrepreneurs, and the small businesswoman who has the gall to take on the corporate chieftain.

My highlighting. Sounds familiar.

More of this, please. Faster, please.