There is a popular narrative that treats pro-market and pro-business essentially as synonyms, thus seeing the most libertarian-leaning candidates as those most favored by major corporate interests. The idea is that big business both desires and benefits from an environment of total laissez faire, of cutthroat competition free from the control of meddlesome regulators.
The problem is that from a historical perspective, this story is complete nonsense. Established firms have consistently looked to government for protections, subsidies, and other special benefits in order to escape the unpredictability and risks of competition.
Today, we call this kind of intervention on behalf of big business “corporate welfare.” The phrase and the idea itself are unique to the modern era and its politics, the system of the nation-state, and the historically novel idea that there is — or ought to be — a clean separation of the public and private sectors. No such idea could have been possible before the modern era, for the right of the rich to rule in the political realm was treated quite unconsciously as perfectly natural and legitimate. Further, the distinction between political and economic power was never contemplated in the way that it is today; there was only power, a composite phenomenon with political, economic, and ecclesiastical aspects.
The contemporary assumption of fair play in a competitive market system, wherein the state isn’t supposed to pick economic winners and losers, is still a relatively new one, a product of classical liberal ideas about what a polity ought to do. That even the political enemies of free enterprise are now duty-bound to at least invoke it in their rhetoric says much about the ways that classical liberalism has changed our expectations about political life.
But is the conventional wisdom about libertarianism correct? Are our defenses of free markets and private property just a rationalization of corporate power?
In short, the answer to these questions is no. In fact, libertarians on the whole are much less amenable to big business favoritism than is your average partisan, whether he’s Team Blue or Team Red. We might even think of politics itself as the struggle of various powerful interest groups to squeeze as many perks and privileges from government as possible, to use the coercive power of the state to do things they couldn’t do through simple voluntary trade in an open, competitive market.
Not only are most Republicans and Democrats okay with such a system, they depend on it, standing to benefit as key participants in a game of elite collusion and graft. Still, we shouldn’t necessarily draw any wild conclusions as to the motivations of the participants in this game, casting them as shadowy conspirators, consciously hatching evil plots. Actually, we probably ought to take the politician’s account of what motivates him at face value, accepting that he honestly sees himself as serving the “greater good,” then asking whether the results align with this position of moral limpidness.
Such questions are especially pertinent given that, according to a study by the Cato Institute’s Tad DeHaven, “[c]orporate welfare in the federal budget costs taxpayers almost $100 billion a year.” And these billions, transferred in a way that we can actually see and measure, don’t begin to tell the whole story, don’t give voice to the forestalled potential competitors, the pulverized existing competitors, the inefficiencies and misallocations whose worst results won’t become apparent until years or decades from now. We simply cannot know how tax dollars redistributed to the corporate rich would otherwise be spent, or the hidden costs to consumers that result from the government’s unfairly favoring some firms with loan guarantees on special terms. While these interventions have deep, long-lasting economic impacts, they too often go unnoticed, hidden behind political language that conceals corporate welfare in the euphemistic language of creating jobs or promoting clean, sustainable energy; and there is never a shortage of politically euphonious justifications.
When the left cries out that libertarianism is just a thin ideological pretext for the abuses of big business, they may have us mistaken for their favorite congressional Democrats. How many “liberal” Democrats do you see coming out to oppose the Ex-Im Bank or green-washed giveaways to the energy industry? Democrats’ affected populist outrage softens to near silence when their favorite corporate welfare projects are perceived to be at risk.
Libertarians have consistently attacked corporate welfare in all its forms, even criticizing a corporate tax system that finds some major companies with a negative effective tax rate. Libertarians, of course, would like to see all tax liabilities reduced quite significantly (preferably abolished), with much smaller government translating to fewer opportunities for insider intrigues and preferential treatment.
But as long as we have various governments picking our pockets, it is especially inequitable to allow the richest and most well-connected companies a free pass while we little people pay. As Illinois Policy Institute’s Hilary Gowins recently argued, “Good tax policy shouldn’t be restricted to select industries… [L]ower taxes should be applied across the board, not just to the politically connected.”
Politically “pro-business” too often means being cozy with corporate America, free market principles be damned. And while we can’t be very surprised when America’s corporate giants take the special favors offered them, the ties that bind big business and big government should make us skeptical of politicians’ carefully cultivated populist personae. Contrary to popular belief, libertarians can’t be blamed for a massive warfare-welfare state, riddled with corporate rent-seekers and legalized corruption. Indeed, this system is the very antithesis of what libertarianism prescribes politically and economically.