Life in the Corporate State

A European-style corporate state is typically ruled by a troika of large favored corporations, industrial and public employee unions, and long-time political insiders.  Most definitely excluded from power are consumers, entrepreneurs, small businesses, younger workers without seniority, and taxpayers.

I have argued that Obama is not a socialist, but is building a European-style corporate state.  Here is a great indicator, from my Princeton classmate Henry Payne:

For the first time in more than two years, SUV sales account for more than half of the U.S. auto market. ...

The trend comes even as Washington issued a new edict that vehicles average an absurd 62 mpg by 2025. The current absurd standard -- 35 mpg by 2015 -- has forced manufacturers to invest billions in new small-car development.

Today, manufacturers are in defiance of their own customers -- their marketing departments churning out small-car ads touting their new green products. This puts automakers in a tough spot: Continue to make cars for the government, or listen to their customers.

For now, manufacturers are sticking with the government, telling the Detroit News that "with a slew of new cars coming out, such as the Chevrolet Cruze, the Ford Fiesta and a new Ford Focus early next year, car sales are likely to outpace truck sales in the coming months."

If you want a deeper look at how legislation is made in the corporate state, read this fascinating (but very long) New Yorker report on the efforts to pass a climate bill this past year.  The author writes it in the spirit of lamenting lost opportunities, but I read it as a great inside view of the sausage factor.  Do we really want to give these guys more power?

In the same spirit, I commented thus on Kevin Drum's post discussing the growth of campaign spending this year, and lamenting that it is going to the nasty old Coke team instead of the Pepsi team:

There is a really simple solution to this -- reduce the coercive power of government to break individuals or corporations or to hand them windfalls, and all this spending goes away.

The spending has not gone up because the rules changed, because the Supreme Court rules did not substantially affect this kind of campaign spending (there is a ton of sloppiness in the media on this point).

The spending has gone up because Obama & the Democratic Congress has put more of the US economy in play in their attempts to form a European-style corporate state. When Obama and Pelosi engage in populist public speeches vilifying whole sectors of the economy, groups are going to try to defend themselves from the onslaught, either by throwing the current office holders out or buying the favor of those they can't unseat.


  1. DrTorch:

    Similar to what I've said about the lobbyists. If the gov't spends (far) less, then those lobbyists go away (and perhaps even do something productive).

  2. Dr. T:

    Obama's preferred economic system is fascism, not corporatism. He has engaged in some corporatism and some socialism, but the evidence shows that he prefers fascism (plus favoritism). The examples commonly cited to prove corporatism are either favoritism (pandering to unions to keep their support) or fascism under the veneer of corporatism. The supposedly favored corporations (certain commercial banks and financial institutions, GM and Chrysler, certain pharmaceutical companies and health insurance companies, certain agribusinesses, "green energy" companies, etc.) ended up with government-derived favors but also with more government regulations, more government oversight, and more direct control by the federal government. When even the favored corporations get treated this way, we have fascism overriding corporatism.

    Why does this matter? Because to fight corporatism one must slap down the CEOs and boards of trustees who seek favors. To fight fascism, one must remove power-hungry politicians and government bureaucrats. We need to focus on the latter.

  3. stuhlmann:

    Another solution would be a higher gas tax, which would increase consumer interest in more efficient cars and trucks. All things being equal, who wouldn't rather drive that big pick-up than a small Honda, but at $5 a gallon, maybe that Honda would make sense for getting to work and back.

  4. Stephen Macklin:

    "This puts automakers in a tough spot: Continue to make cars for the government, or listen to their customers."

    Of course when the automaker is the government making the wrong decision is probably inevitable.

  5. Mark Alger:

    As I've said ever since confronted with the first unconstitutional attempt to rein in campaign spending: the only way to get the money out of politics is to get the power out of Washington.


  6. Ignoramus:

    Obama is Juan Peron without the gold braid.

  7. Mesa Econoguy:

    The Democratic Party created a rather large mess in their actions of the past 2 years (beyond what we currently see): in their relentless mission to either control or destroy economic actors, and "empower" their union brethren, they have created a massive cacophony and set off a labor vs. management/shareholder civil war.

    The problem there is, they risk destroying the very businesses keeping them afloat. Without full-blown nationalization of many companies, this arrangement cannot long exist, and from the looks of the polls, they have about 3 more months until their corporate "allies" throw off their shackles.

    In fact, union labor and their allies face a violent backlash next month, and Obamalini is about 1 indiscreet phone call (paging Andy Stern, or Blago) away from impeachment. Blood is in the economic and political water.

  8. Matzpen:

    The individualist "freedom" for Corporations is merely the "Liberty" for Companies to make slaves of other people

  9. caseyboy:

    Stuhlmann, you don't really mean to say we should give more money to the politicians? With few exceptions what they receive from us is either wasted through inefficiency or handed out in political paybacks (more waste). Besides I don't want to have to go small car until the true economics take me there. Small cars are much less safe. I forget whose commercial it was, but it showed a dear limping away from the scene of an accident where the car was totaled. With my current car that dear ain't limping away and I probably just need to repair a headlight.

  10. jay:

    The initial 'SUV revolution' was not created by the auto companies. Customers gradually started buying trucks (in a different fuel economy category) instead of the dismal cars of the period (until by the mid 80s, the Ford pickup had become the single best selling vehicle model). I doubt that anyone in the 70s expected the pickup to become the vehicle of choice for office workers.

    Eventually the automakers started to catch on and the SUV era (including some really bizarre creations) was born.

  11. omnd:

    Good topic

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  13. budgeting sheet:

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