Big Business as an Opponent of Free Markets

One never wants to take anything for granted, but it appeared as of Friday evening that "cap and trade," one of President Barack Obama's two key initiatives, is at death's door, while with statist health care, the president is attempting a resurrection.

It is more than a little sobering to realize that, but for a few gigabytes of purloined emails and one upstart candidate's upset Senate victory in Massachusetts, both measures might by now have received his final signature. It's downright frightening to realize that these leftist victories, had they been achieved (and one may yet be), would largely have resulted from big business' attempts to make peace with people who are capitalism's sworn enemies.

That business leaders are frequently all too willing to sell out the core principles of the free market system in the name of perceived and often illusory short-term profits is not exactly news. Adam Smith wrote over 200 years ago that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Too many businesses, when they reach a certain size and gain confidence that they are no longer just a few missteps away from serious financial problems, often put more energy into cementing their current market positions through anticompetitive means than into growing or expanding their enterprises. If they become big enough, they often turn into institutions inexplicably perceived as “indispensable,” which then enables them to lobby for unfair breaks from governments. Thus, at the local and state level, supposedly indispensable businesses that are sometimes as small as a few hundred employees receive tax abatements and other incentives.

At a much larger level, in the early 1950s, the country heard Charles Erwin Wilson, president of General Motors, essentially tell the nation that “what’s good for General Motors is good for the country.”

GM’s anticompetitive posture in the 1960s and 1970s, the heyday of Detroit’s Big Three, largely revolved around how “cleverly” it reacted to the federal government’s increasing appetite for regulation. The Wall Street Journal’s editorialists frequently pointed out during that era that any time a new and onerous safety or workplace regulation spewed forth from Washington, GM, instead of objecting on free market or cost-benefit grounds, would immediately and almost cheerfully announce that it would comply. Meanwhile, number two Ford would grumble that it would somehow figure out how to deal with it and much smaller Chrysler would howl with outrage. GM’s receptivity might seem odd, but it knew that it could absorb any new fixed costs associated with government rules and regulations far better than its two much smaller competitors.