Constitutional Emergency

How to Get the Corporate Money Out of Politics Once and for All

By Daniel Greenfield

Politicians constantly love to talk about ways of getting corporate money out of politics, even as they go right on taking that money. But so far no law or measure stands a chance of accomplishing that. McCain-Feingold didn't lead to cleaner politics, it just decentralized where the money went, leading to the rise of 501c's and a more partisan brand of politics.

A recent poll showed that 80 percent of Americans disagree with the recent Supreme Court decision, but for all the alarmist rhetoric about corporate influence spread from Obama on down, the massive economy strangling bailouts happened before this decision. The Democratic congress proposed a health care bill which would make it compulsory for every American to buy health insurance coverage from health insurance companies. The US government has bailed out the banks, the airlines and the auto companies while running up the deficit. To put it bluntly, how much worse could it really get?

Corporate money plays a big role in politics. And that is the way it will always be until we change the reason why it plays such a big role. Because the problem has been misidentified. The problem is not corporate money. The problem is government.

In the sort of rhetoric you hear commonly from liberals, the solution to this and all other problems involving companies, is to send more "dedicated regulators" to Washington D.C., said dedicated regulators usually being lawyers who work for liberal think tanks or lawyers who get elected to public office, who will promptly whip those corporations into line. Which unsurprisingly is exactly the sort of thing that stimulates corporations to invest more into lobbying congress, not just to keep them at bay, but also to use them as weapons against their competitors.

When it comes to regulating business, the great liberal fallacy is that such regulating creates a one way relationship in which "idealistic" politicians and their appointees tell companies what to do, and they do it. But there is no such thing as a one way relationship in politics, unless you're talking about an absolute tyranny. And often not even then. When you choose to regulate, you enter into a political relationship with the targets of your regulations, as well as with various third parties who are affected positively or negatively by those regulations.

The more government regulates business, the more it becomes a player in a corporate environment, as different companies and industries compete for grants, propose regulations that would benefit them and harm their competitors, that would carve out exclusive new territories for them, give them tax breaks, or create disadvantages for independent operators or small businesses. This is an inevitable and unstoppable outgrowth of creating an extensive infrastructure of regulations governing every aspect of doing business in America. And there is no way around that.

To wield power is to turn yourself into a player in a given arena. The more power that government wields in the business world, the more government and business become integrated into a web of corporate socialism, that makes it hard to tell where companies end and the government begins, and vice versa. And there is only one way to stop that. By wielding as little power as possible. By deregulating and passing on those responsibilities to local communities where the interests of the people are more likely to come to the fore.

Prohibition's passage was helped along by associations of merchants and manufacturers of non-alcoholic drinks who assumed that if alcohol was banned, their share of the liquid business would only increase. This sort of phenomenon is not new, but it has gained momentum with every expansion of the regulatory powers of government, as many businesses and industries have discovered that they can exploit government regulations as a club to expand their share of the marketplace.

The current financial crisis was caused in part by the willingness of Clinton era Housing and Urban Development head Andrew Cuomo's willingness to do the bidding of the Mortgage Brokers Association by pressuring Fannie Mae and Freddie Mac into riskier lending strategies to poorer borrowers with a "grassroots" campaign that worked all too well. The level of complexities involved in this disaster show a little too well how the entanglement of government regulatory agencies and the business world can create multiple opportunities for exploitation through regulation.

While well intentioned people want to know how to get business out of politics, the answer is quite simple. It begins with getting politicians out of business. You cannot regulate an industry, without become entangled in its marketplace strategies, without becoming a player or a counter in that competitive environment. Regulators pretend that they can "clean up" that environment. In reality like Andrew Cuomo, who is now receiving the bulk of his donations from the very same real estate industry he helped "clean up", they become players in that same marketplace. Their decisions can change the playing field, which turns such posts into plum jobs for aspiring politicians like Cuomo, because it allows them to wield the whip on some and collect job offers and donations for their future campaigns from others.

For all their talk about campaign finance reform, very few politicians actually want to get corporate money out of politics. Since that would put them out of business. When Obama hands billions to Wall Street and then makes a show of agonizing over their bonuses as soon as the polls show that the public is angry over his spending policies, he's playing a very old game, in which politicians give with one hand and then slap with the other. A game that the corporations they're in bed with, are very familiar with.

When politicians have the power to tax or give grants and tax breaks, to force entire industries to buy particular products and services, or to subsidize those same products and services by forcing the public to buy them, to transform the playing field by banning certain practices while favoring others-- they place themselves in a position of power that they intend to fully exploit. That is of course why they wanted that position in the first place. They're not fighting for the "little guy", because the little guy can't afford to sign their checks, except helplessly by way of wealth redistribution.

The regulators don't wield their power in the name of fairness or the empowerment of ordinary Americans, though they claim both of these things on a regular basis. Instead they wield the power however the interests they and their political sponsors are indebted to, want them to. Sometimes this will involve crackdowns on corruption and abuses that will benefit the public. Much of the time it simply means using the government as a tool for rewarding the industry with the best lobbyists.

And this sort of regulation environment feeds a vicious cycle which encourages and rewards rent seeking behavior by companies. Competition among businesses become focused on transforming the marketplace by hiring lobbyists to pass their favored pieces of legislation, which give them preference, while disadvantaging emerging industries and consumers. And nothing can break that cycle, except to radically scale back the regulatory environment which makes this sort of Corporate Socialism possible.

The regulatory environment is premised on the old fallacy of a progressive notion of government in which an enlightened elite tackle the problems through aggressive regulation. This may occasionally work with a genuinely inspired leader such as Teddy Roosevelt, but 99 percent of the time this sort of enlightened despot theory of good government simply leads to corruption and socialism. Because human nature does not go away when you wrap it in idealistic rhetoric and controlling the economy simply means that the old abuses will go forward more aggressively than ever with government backing and under a new name.

Every abuse of the former system that Communism promised to undo in Russia, it instead worsened tenfold. A generation after they took power, the peasants had no land, livestock and no travel rights, workers had no economic freedom whatsoever, political prisoners were treated far worse than they had been under the Czar, and the black market share of the economy had increased so dramatically that there was hardly any legal economy left. By controlling all the industries, the Communist Party integrated all the old abuses of the capitalist system tenfold. And that is the end result of what government control over business accomplishes. It repeats all the old abuses, makes them worse and makes it impossible to protest against them.

We can get corporate money out of politics to the extent that politicians are willing to get their noses out of the business world. But the more liberals champion regulation, the more corporate money will control politics-- and they will only have themselves to blame for it.

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