Ushering in the Corporate State
Jane H. Ingraham
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The New American, September 21, 1992
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George Bush's duplicities are seemingly endless. After years of public posturing to the contrary, Mr. Bush in April 1991 formally committed the United States to a national industrial policy. The White House announcement signaled a drastic step away from the essentially American idea of a free, capitalist economy and toward the alien concept of a government-financed and directed corporate system.
Citing a list of 22 "critical technologies," Mr. Bush set the stage for the flow of federal subsidies to selected private sector areas of commercial technologies such as materials processing, aeronautics, biotechnology, computers, high-performance metals, and high-definition imaging.
Mr. Bush had to move cautiously in this power grab, for the American people would never countenance the establishment of something they knew to be a corporate state. For in another time and place the corporate system was known as fascism -- government control of the means of production without outright government ownership.
Too "Risky" for the Market
So Mr. Bush had to carefully explain that he had blocked federal subsidies in the past because they would have been "an intrusion in the marketplace." But now he sees it as "ideologically acceptable" to support budding technologies which are "pre-competitive," or "genetic," because they have nothing to do with "the market thing." New technologies that require years of development before they can produce commercial products, said Mr. Bush, are "too risky for private industry." Of course technologies that are "ready for commercialization" are taboo, because "government would have to enter the market and second-guess who's going to succeed or not."
Protected by this aura of distorted free-market rhetoric, Mr. Bush is proceeding to do precisely what he says he is not doing. Despite the fact that private, not public, financial risk is exactly the reason why the U.S. has developed into the world's leading economy, Mr. Bush assigned former Yale nuclear physicist Allan Bromley to decide how best to allocate $32 billion of government funds to take the private risk out of technological development.
But of course Bromley can't know how "best" to allocate our tax dollars in any economic sense. All he can do is decide who is going to succeed and who fail. This kind of political cronyism results inevitably in a mediocre standard of living for the masses with enormous wealth siphoned off by a corporate and governmental elite. No wonder our supposedly "capitalist" corporate leaders are solidly behind Mr. Bush's assault on the competitive marketplace!
The Japanese "Miracle"
For a preview of what George Bush has in mind, one need only look at Japan. MITI, the Japanese corporate/government clique which has an iron grip on the economy, is like one giant corporation in league with the government. Using an array of powerful governmental means including subsidies, tax breaks, bailouts, barriers to foreign competition, and extensive financing of research and development, MITI decides what will be produced and what will not. Small wonder that a few protected monopolies have performed impressively, giving the impression that Japan has discovered some kind of "economic miracle."
But this picture is one of economic weakness, not strength. What MITI is essentially doing is misallocating resources on an enormous scale, skewing the whole economy to exports, suppressing real entrepreneurial activity, limiting consumer choice and, above all, holding down the Japanese standard of living to far below the American. All the companies and consumer products that otherwise would have been created in a free market never come into being, while the absence of both foreign and domestic competition results in a superhigh price structure. Government subsidies and bailouts must be paid for. Thus, Japanese workers foot the bill for the upper crust as taxpayers, forking over 67 percent on earnings above $37,000 and 87 percent on anything over $150,000.
A New Slogan
This year the "in" word is "competitiveness." Everyone from Dan Quayle with his Competitiveness Council to Democratic presidential candidate Bill Clinton is demanding that U.S. industry be made "competitive," as if government intervention could make it so.
But this is where our "unfavorable" balance of trade with Japan comes in. This warmed-over 18th-century mercantilist theory has been trotted out to serve Insider purposes even though economists have long demonstrated that there is no such thing as an unfavorable trade balance; there are only individual traders buying and selling because each benefits. But, no matter; our "harmful" excess of imports over exports is said to prove that government must step in to make the U.S. more like Japan so that we can "compete."
It is true that Japan's trusts, monopolies, and cartels -- outlawed in this country almost a century ago -- do work after a fashion. But work for whom, and at what cost?
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