PrintJuly 17, 2010
Liberal Bipolarity
We live in a temporary moment of liberal bipolarity, in which Teddy Roosevelt's trust-busting progressivism has run smack into Barack Obama's too-big-to-fail statism. Truthfully, the liberal vote has been cast for statist corporatism, and only the odd, dim, and sentimental liberal still thinks he supports the little guy.
This bipolarity, then, is in form only, not substance. What remains is a marketing ploy that falsely suggests support for the underdog, the undercapitalized, and the up-and-comer. The ruse is dishonest, but, as Ernest Sternberg wrote, today's liberals have "proven their remarkable imperviousness to self-reflection."
Modern liberalism entrenches the mega-corporate. The economics of costs and scale make this so. Any incremental regulation or tax increases the fixed costs of the target industry. The bigger the company, the more units of production over which those new fixed costs can be spread, the less per unit price impact. Although all companies' costs may increase, the biggest company can pass these on and crush smaller competitors through price competition. As taxing and regulating liberals succeed, consumers will suffer an increasing cost of living, and smaller businesses will disappear.
For proof, look no farther than Walmart's support of ObamaCare. Why would Walmart favor adding health care costs? Given Walmart's duty to its shareholders, altruism is not the answer. Walmart supported ObamaCare because greater across-the-board health care costs disadvantage smaller competitors, magnify Walmart's price advantage, and increase its market share.
More proof is in the disparate impact of tobacco legislation. Phillip Morris was a supporter of the Family Smoking Prevention and Tobacco Control Act. Ted Kennedy disingenuously claimed Washington had "finally said 'no' to Big Tobacco." Through this legislation, Phillip Morris saddled smaller competitors with extra costs, regulation, and limitations on promotions. Kennedy really said "no" to competition for Big Tobacco.
The post-November 2008 liberal knows that Teddy Roosevelt-style company-busting is inefficient when the same company may be appropriated as a vehicle for his anti-human, enviro-pagan, socialist, plaintiff attorney, labor platform, and favor bank. So the tactic has evolved, with big corporate management offering assets to the administration in exchange for entrenchment. If not for property rights, the personhood of shareholders, that stealing is wrong, and it being a deal with the devil, this corporate "co-opting" might make sense. Also inconvenient is that such corporatism was embraced by National Socialists.
So far, the administration's hunt for big corporate game has been accomplished two ways -- outright theft and the imposition of a public utility model. In Chrysler/GM, theft was the route. Centuries of contract law and payment priorities were upturned to bequeath big auto to the administration's labor operatives.
With ObamaCare, the regulated utility model did the trick. Obama, Pelosi, and Reid decreed that insurance profits would be federally regulated, certain spending mandated, and minimum policy standards established. In other words, health insurance pricing, profits, and products are now determined by government, just like any other cost-plus public utility.
There is little difference between one government-run company (Chrysler/GM) and companies whose pricing, profits, and products are determined by government (health insurance). The theft and regulated utility models produce the same result.
BP will be interesting. The regulated utility tact is underway via voluminous regulations, fees, and taxes on the offshore industry. Morgan Stanley wonders what companies will be "big enough to drill." In rare candor, the Obama administration's Carol Browner echoed that sentiment, saying "smaller firms might no longer be able to drill in the Gulf of Mexico as a result of legislation moving through Congress[.]" Morgan Stanley[1] predicts:
We foresee more exploration consolidated into the hands of fewer players. ...We believe small players (sub-$10 billion market cap) will exit ... and Super Majors will be consolidators. ... As a group, the large cap names (ExxonMobil, Chevron, and ConocoPhillips) could well emerge as victors[.]
The Houston Chronicle agrees:
The irony is that in an attempt to make things safer, Congress may create an oligopoly in the Gulf. In doing so, it would reward one of the companies at the center of the current crisis at the expense of those that had nothing to do with it.
There's more. If, as Alpha magazine says, a BP bankruptcy is unavoidable, then we should expect a second step. In the event of bankruptcy, the trap has been laid for a BP asset theft that will be much cleaner than the GM/Chrysler conversions.
In a BP bankruptcy, various parties will seek payment assurance -- contractors cleaning up the Gulf, municipalities/states, and claims in excess of the established fund. Given these claims, another too-big-to-fail moment will be irresistible for Obama. The administration will almost certainly guaranty these obligations in exchange for ownership of BP assets.
Such a nationalization can happen without any of the rule-of-law flack experienced in the auto takeovers because a mechanism was established with the creation of the $20-billion fund, to which BP pledged its oil and gas properties as collateral. Should the Obama regime step up in a BP bankruptcy with a guaranty, the liens are already in place to effect a foreclosure of BP assets, thus circumventing any criticism about payment priority. Maxine Waters will be proud.
The Obama/BP two-step is clearly about using BP assets to fund the enviro-religious shutdown of drilling, fishing, and shrimping; a font of plaintiff attorney contingency fees; and the nationalization of an oil company on the backs of Louisiana and its formerly employed residents, who will be transferred to a dignity-crushing public dole. In this scheme, Louisiana's people are simply a necessary sacrifice, and we already see Obama's disregard for these people in his obstruction of boats, berms, and skimmers.
Thomas DiLorenzo says this liberal corporatism shares much with National Socialism:
Government-business "partnerships" were a hallmark of both Italian and German fascism. As Ayn Rand once noted, however, in such "partnerships" government is always the "senior partner." Government-business "collaboration" was supposedly needed in fascist Italy, explained Fausto Pitigliani in his 1934 book, The Italian Corporatist State, because "the principle of private initiative could only be useful in the service of the national interest." It is this "service of the national interest" that is the intended work of the newly appointed "Car Czar" in the Obama administration (along with twenty or so other "czars" so far). It is inevitable that the end product will be the world's worst cars, endless subsidies and bailouts, and mind-boggling debt piled onto the backs of the taxpayers.
Horrified liberals will howl on cue that they're not anti-Semites. That may or may not be true and is an interesting question, but it is insufficient to disqualify the comparison because both movements vilify the middleman trader and banker classes. The early version associated the profitable middleman with Judaism; the modern version explicitly does not. Nonetheless, both movements demonize a class of people.
Antipathy to some "other" is common in utopian schemes like liberalism and National Socialism, because such worldly schemes lack a positive eternal rationale (unlike our country's founding) and thus often require the motivation of someone to hate. Modern liberals don't appear to be race-based homicidal maniacs, but scapegoating fits well with their fondness for class envy.
It is time for disingenuous, sentimental liberals to ditch the act. Actions speak louder than words, and modern liberalism is the enemy of the small guy. In that regard, it shares more with individual-crushing regimes like National Socialism than is generally advertised.
