RALEIGH – Free enterprise creates the conditions for business to thrive. But don’t expect business organizations and lobbies to be consistent advocates for free enterprise and the principles of limited, constitutional government that make it possible.
The U.S. Chamber of Commerce, where I interned back during the Reagan administration, has the best record of opposing tax hikes, intrusive regulations, trade barriers, and wasteful spending. And even the Chamber has stumbled on occasion.
Other business groups and lobbyists have far less impressive records. Many are willing to cut deals with left-leaning lawmakers, either because they secure a special favor out of it or because they are afraid to buck the political tide. And many business groups spend much of their time actively lobbying for government intervention in the marketplace – in the form of subsidies, bailouts, or regulations that exclude or damage their competitors.
Last week, the Wall Street Journal reported that a number of executives and lobbyists are worried about the rise of the Tea Party movement. While increasingly hostile to the Obama administration and its growth-killing tax and regulatory agenda, these business groups aren’t entirely sure they will like the alternative, either. They fear that Tea Party conservatives will win enough congressional seats to threaten the availability of special tax breaks, marketing subsidies, and bailouts in the future.
I hope their fear is justified.
It’s about time candidates who espouse free-market principles show their willingness to act according to those principles. No more bailouts. No more corporate welfare. No more deficit-financed stimulus. No more scheming to line the pockets of special-interest groups.
One of the founders of economic science, Adam Smith, clearly understood the risk that a perfidious merchant class would seek to use political leverage to gain benefits at the expense of consumers and the public good.
In writing against the 18th century system of protectionist tariffs, subsidies, and royal favors that had all too often stifled British enterprise, Smith showed that he understood politics at least as well as he did the workings of the market:
It cannot be very difficult to determine who have been the contrivers of this whole mercantile system; not the consumers, we may believe, whose interest has been entirely neglected; but the producers, whose interests has been so carefully attended to; and among this later class our merchants and manufactures have been by far the principal architects. In the mercantile regulations…the interest of our manufacturers has been most peculiarly attended to; and the interest, not so much of the consumers, as that of some other sets of producers, has been sacrificed to it.
In North Carolina, state political power has resided for generations in a relatively small class of political operatives. They have held not only the key elective offices but also prominent positions in big business and trade associations. Rarely have the state’s business groups spoken up in any organized fashion against the growth of government. The relative proportions of acquiescence and agreement supporting their decision is beyond my knowledge. But their silence has been costly to our state.
Anyone who believes that the problems in North Carolina’s business climate can be overcome by a few subsidies to big business is willing to believe pretty much anything. In reality, even a billion dollars a year in tax incentives and corporate welfare can’t compensate for high marginal tax rates, inadequate infrastructure, mediocre schools, and a punitive regulatory system.
If there is a political revolution in November, liberal politicians and interest groups won’t be the only ones wringing their hands. Those in lobbying shops and business groups who have gone along to get along may perceive a threat to their cozy relationships and sinecures.
And they may well be right. Let’s hope so.
Hood is president of the John Locke Foundation.