The administrative state includes activist Big Business too

The administrative state includes activist Big Business too
© Greg Nash

“The swamp” has become a catch-all term for what’s wrong with Washington. The word — also known as the administrative state — evokes images of arrogant bureaucrats enforcing their preferred policies regardless of the desires of the voters. But a key component of the swamp isn’t housed in the granite jungle of D.C. but in corporate boardrooms across the country.

A leftist professor once claimed that “the myth of individual greatness is a myth.” The same could be said of the myth of the conservatism of Big Business. While thousands of small businesses chafe under heavy-handed regulation and onerous tax policies, many mega-corporations take a different view. The same policies that smaller companies see as oppressive appear to the big guys as opportunity. And when opportunity knocks, they scoot through the door and slam it before anyone else can slip in.

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America was built on capitalism. But capitalism requires competition, with its ever-present risk of financial reversal. Many large corporations have thus rejected capitalism in favor of an alliance with powerful government to protect their market share and profitability.

As we detail in our book, “Deconstructing the Administrative State: The Fight for Liberty,” this alliance comes into play when government has outgrown its constitutional constraints and assumed unwarranted power. If government can make or break an industry, corporations will naturally gravitate toward the government officials exercising the power. Lobbyists are hired, campaign contributions are made, all to influence government policy through either statute or regulation. The result is government largesse through either direct payment (contracts, etc.) or favorable regulations.

Obviously, the larger and richer the corporation, the more influence it can exercise. Smaller companies just can’t compete in that game. And too often, Big Business uses its clout not only to minimize the regulations to which its particular industry is subject, but also to enact regulations that will disadvantage smaller competitors.

The creation of ObamaCare illustrates how this works. Big insurance companies colluded with government officials, crafting a scheme that (the companies thought) would benefit them at the expense of their smaller competitors. Because Congress backtracked on some of the Obama commitments, the companies may have misplayed their hand. But their hearts were in the right protectionist place.

This kind of scheming has a long history. Our book relates the story of the steel industry of the early 20th century, when barons such as Andrew Carnegie actually sought government regulation to bring “stability” to the industry. Stability, of course, was accomplished by driving out the smaller companies that reduced the profitability of U.S. Steel.

Corporate-government collusion shows up throughout history. Under the mercantilist system of the 16th to the late 18th centuries, Western European governments imposed taxes and levies on large companies but, in exchange, enacted policies to protect them from foreign competition.

In Italy and Germany in the 1930’s, fascist (also called “corporatist”) governments operated on the same principle. Corporations would submit to heavy government regulation but, in return, would be protected from the vicissitudes of the free market.

In modern America, though, corporate-government collusion has taken on another dimension. The progressive march of the last century has achieved much of its objective: It has shifted power to the administrative state and away from the citizen and the legislature, it has made state government a federal functionary, and it has marginalized the citizen.  This has left Big Business with outsized influence and an incentive to curry favor with the elite opinion stream — mainstream media, Hollywood, and academia.

As Kevin Williamson observed last year, the 1950’s findings of Fortune writer William Whyte, who “interviewed dozens of important CEOs and found that they mostly rejected the ethos of rugged individualism in favor of a more collectivist view of the world,” are still relevant today. Some American CEOs believe, as they have “believed since at least the time of Frederick Winslow Taylor and his 19th-century cult of ‘scientific management,’ that expertise deployed through bureaucracy could impose rationality on such unruly social entities as free markets, culture, family, and sexuality.”  Like their corporate ancestors, such executives aren’t interested in defending capitalism or the American Experiment.

Thug-like, they threaten state and local officials with retaliation for opposing the corporations’ preferred policies, and hint at rewards for compliance. They’ve sought to dictate policy related to climate change, gun control, race relations and, as Williamson noted for one example, “the toilet law in the Tar Heel State.”  

During the controversy over the federally backed Common Core national curriculum standards, large corporations and the U.S. Chamber of Commerce ran expensive advertising to promote revamping American education along the workforce-development lines of Common Core. Indiana’s attempt to enact Religious Freedom Restoration Act protections, currently in law in 31 states, prompted a vicious corporate backlash. And the mad scramble to lure Amazon’s second headquarters has deep-sixed all socially conservative legislation in states such as Georgia.

It’s no wonder that politicians — even many of the most conservative Republicans — shun the ideological word “capitalism” in favor of the non-ideological, ambiguous “free market” descriptor. It’s hard to describe oneself as a capitalist when participating in these schemes.

Corporate executives who embrace America’s founding principles largely decline to use their businesses as a policy sledgehammer on matters that don’t affect the bottom-line. But the big guys revel in their wide-ranging clout.

The answer? Congress must deconstruct the administrative state, returning state functions to the states. It must restore the prominence of the citizen in federal and state government. And citizens must push back against corporate hyper-activism and demand that politicians once again defend capitalism – and the principles that built American greatness.

Emmett McGroarty and Jane Robbins are senior fellows at American Principles Project, a conservative group dedicated to promoting human dignity through public policy.