(June 9, 2017) A little history would help explain why big business spoke almost as one in favour of sweeping regulation by the governments of the world.
To the surprise of many, big business went ballistic last week when President Donald Trump pulled the U.S. out of the Paris climate accord. “Disappointed with today’s decision on the Paris Agreement. Climate change is real,” tweeted Jeff Immelt, General Electric’s CEO. Lloyd Blankfein, Goldman Sach’s CEO, was so moved that he uttered his first-ever tweet: “Today’s decision is a setback for the environment and for the U.S.’s leadership position in the world.”
The avalanche of corporate condemnation was so severe — countless top executives were moved to publicly express their outrage — that presidential historian Douglas Brinkley described it as “an absolutely bizarre and unprecedented moment in American history.”
Neither Brinkley nor the others should have been surprised. A little history — and an opening of the eyes — would help explain why big business spoke almost as one in favour of sweeping regulation by the governments of the world. Contrary to popular perception, big business overwhelmingly leans left. That is how much of big business gets rich and how most of it stays rich.
Some big businesses make their fortunes exclusively through direct government subsidies and government mandates. According to Bloomberg New Energy Finance, the renewable energy industry is slated to receive US$7.8 trillion in investment between now and 2040, more than double the investment expected to flow into oil, gas and coal combined. All of those trillions in the pipeline are entirely the result of successful lobbying by the likes of GE’s Immelt and Goldman Sach’s Blankfein — without government intervention, renewables would represent a trivial part of the economy, primarily occupying niches, such as solar-powered calculators and wind turbines charging battery arrays at remote tourist retreats.
They supported Paris for its central control, and the loot that comes with it
Likewise, without government intervention other uneconomic industries such as commercial nuclear reactors would disappear as major players, as would the industries that feed them, such as uranium mining. Many others, right-sized, would be severely cut back.
For the most part, big business and big government are two sides of the same coin, each dependent on the other for its funding, each scratching the other’s back, each seeing the world through the same eyeglass. They usually write legislation co-operatively, to gain advantage for the big businesses holding the pen. Little wonder that lobbyists have become indispensable wherever legislatures sit.
Over the last two decades, according to the Center for Responsive Politics, the pharmaceutical lobby has spent US$4 billion in aid of obtaining legislated advantages. The insurance industry spent almost US$2.5 billion. Other big-spending regulated industries include the financial sector, telecommunications, and real estate. The U.S. lobbying machine now supports legions of lobbyists who do their best to change laws and redistribute incomes at the federal, state and local levels. As a result, few areas of the economy operate as part of an atomized free market; mostly, all is skewed to the benefit of the big. The disbenefits go to the smaller businesses prevented by regulation from competing, and ultimately to the individual consumer, who is consigned to pay monopoly prices.
Adam Smith famously said that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” That observation of the 18th century was dramatically illustrated in the first decades of the 20th, when national socialism was very much in vogue on both sides of the Atlantic. Stabilization of Industry, a hugely influential book by General Electric’s president in the 1920s and 1930s, Gerald Swope, called for the compulsory cartelization of major corporations into federally controlled trade associations. Under the Swope Plan, backed by the U.S. Chamber of Commerce, the National Association of Manufacturers and the National Industrial Conference Board, central planning would be carried out by a national economic council of corporate and union leaders. A Chamber of Commerce poll of its members found that 90 per cent favoured central planning.
For those enthralled by central planning today, no star could shine brighter than the Paris climate accord, an agreement among 195 countries to not only control the production of energy, the world’s largest industry, but also its consumption, which is to say virtually every part of our daily activity. The exercise of such control is in the DNA of many leaders in major industries, as it is in many government leaders. When Trump sunk the Paris accord, he sunk the great hope of much of the world’s elites. The cries emanating from the CEOs weren’t for the lost chance to save the planet — they knew the Paris Accord, even if followed scrupulously by all the signatories, would have done little to lower temperatures. They were crying out for central control, and the loot that comes with it, that had just been snatched from them.
The extent to which these elites are out of step with the average person can be seen in numerous polls taken by Gallup and other organizations over the years. Time and again, climate change was rated at the very bottom of all concerns that the general public had. When the public wasn’t asked to rank climate change’s importance, the polls show the public to be split over climate change, with Republicans overwhelmingly dismissing climate change, Independents being mixed and only Democrats expressing worry. The big business CEOs now lamenting the loss of Paris are, by this measure too, firmly on the left of society.