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Friday, January 28, 2011

Obama’s Corporatist Big Plans

Guess who's running the economy?


Win the future. What did Barack Obama mean when he uttered those ridiculous words in some form more than ten times during his State of the Union speech? Was it just an exhortation or does it have actual content? If “we” – who exactly? – are to win the future, does everyone else have to lose? If not, what’s his point?

Are we even meant to think about this?

Obama’s program is nothing more than a stepped-up corporatism, draped – as it so often is – in rah-rah red-white-and-blue, all the better to keep the public from looking too closely. If the people can be distracted by patriotic fanfare — cheerleader chants about being No. 1 — jingoist can-do-ism — maybe they won’t notice that the program is merely an updated state capitalism in which the government combines with well-connected business executives and anointed union leaders to manage the economy in hopes of preventing the crisis that could call into question the very legitimacy of statism. It’s a tall order considering the mess the economic managers have created.

Tuesday night Obama delivered a message punctuated with an aggressive nationalism that insults the spirit of cosmopolitan free-market liberalism:

“We need to out-innovate, out-educate, and out-build the rest of the world,” he said.

How repulsive! The liberal vision isn’t a zero-sum Olympic rivalry among nation-states, with governments alternately cajoling and cudgeling their populations to perform. It’s a positive-sum world where individuals, not countries, compete and cooperate in pursuit of their well-being within a division of labor and harmony of interests, unobstructed by governments and their sanctioned monopolies — and oblivious of political boundaries.

Corporatist Schemes

As I suggested, none of this is really meant to be analyzed. It’s meant rather to alarm the people about the dire future that allegedly awaits a United States that can’t dominate the world economy. And that domination cannot be achieved unless we all acquiesce in whatever corporatist plans Obama and his business cronies cook up. (To be sure, military domination is part of the program.)

Rough translation: “You want jobs? Trust us.”

Obama quite understands this is not the free market. His corporate partners would want nothing to do with it if it were. There simply is no way for the “country” to lead the world economically without a government-business partnership at the helm, picking the winners and rigging the system to accomplish objectives chosen by “our leaders.”

This will be an orchestrated economy (nothing new), and certainly not a “left-wing” anti-business agenda. (It’s certainly no variant of socialism, which was always aimed at the reigning system of privilege.) On the contrary, it will be more of what we’ve long had: the traditional American state-capitalist regime. The free market (they believe) can’t be trusted to pick the right winners. (Hayekian knowledge problem? What’s that?)

“We need a coordinated commitment among business, labor and government to expand our manufacturing base and increase exports…. [G]overnment should incentivize this investment in innovation.” writes Jeffrey Immelt, chairman of GE, who now chairs Obama’s Council on Jobs and Competitiveness (CJC). “Working with Boeing CEO Jim McNerney, who leads the President’s Export Council, the [CJC] will look for ways to harness the power of international markets.”

You can be sure that Immelt and McNerney, who regularly count on the government’s Export-Import Bank to finance their exports, won’t be lobbying for the free market. Neither will new White House Chief of Staff Bill Daley, whose corporate resume is as long as your arm, be working to move government off the stage.

Don’t be misled by Obama’s pledge to review existing regulations. The corporate elite will be happy to see the elimination of regulations that are burdensome — to them. But regulations are only half the corporatist story. The other half consists of the myriad subsidies, guarantees, and monopoly rents – such as from intellectual “property” – that buffer incumbent companies from the bracing winds of competition.

Phony Free Trade

And speaking of “intellectual property,” the next time you hear Obama or a business executive extol free trade, bear in mind that every multi- and bilateral trade agreement has as its centerpiece a stringent U.S.-style IP regime. Today the price of the free flow of goods is the stifling of the free flow of ideas on which freedom and progress have always depended.

Real free traders know that government agreements are subterfuges serving special interests. You want free trade? Drop all trade barriers and set a good example.

Obama says we’re at a “Sputnik moment.” Let’s remember, however, that the first Sputnik moment launched the biggest surge of government power since the New Deal. Every kind of intervention, including federal involvement in education, was justified in Cold War terms – and most people fell for it.

We should reject the false choice between corporate statism and stagnation, and say no thank you to the “big things” Obama and his business cronies have in store for us.


  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.