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Wednesday, May 14, 2008

Big Business loves Big Government

Michael G. Franc in NRO Online analyzes a seemingly suprising fundraising advantage by Democratic candidates among corporate CEOs - surprising given that Democrats continue to call for higher taxes, more government spending, and increased regulation, while corporate "fat cats" are usually portrayed as free-market advocates.

But this is hardly the case. Big business loves big government.

I recently hearing PA Auditor General Jack Wagner pander to a business group by lauding a corporate welfare program which his audit found to be flawed, unaccountable, and wasteful. Apparently many of the business leaders, while calling for lower business taxes, also have their hand in the taxpayer cookie jar and have received handouts. This made me realize that it is big business associations, not labor unions, radical environmentalists, or Karl Marx, that are to blame for big government.

In Federalist Number 10, Madison writes of the need for a large republic to protection against faction with republican institutions and a diversity of interests due to size. The factions he names are not rich vs. poor, property owners vs. the property-less, or labor vs. management, but business interests like manufacturing, mercantilists, farmers, and “monied interests” (i.e. investors). Madison hoped these special interests would never be able to form a majority to use the power of government for their own advantage.

Unfortunately, as public choice theory teaches, special interests have banded together to abuse the powers of government. Government is now so pervasive that if effects virtually every type of business. Today’s government has grown so as to have a pot of money large enough to hand out to numerous factions/special interests. Regulation is more often used to protect existing business than to help citizens (see, for instance, professional licensure).

Unfortunately, too many business groups want to have their cake and eat it too. They might want lower taxes, but they also want big government to provide them with corporate welfare handouts and use its regulatory powers to crush their competitors.

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