Government – for lack of a better word – is good.
That lesson will never impress itself on the Boston Globe’s Jeff Jacoby, whose column yesterday was Will the era of big government regulation every be over? But government regulation of the economy is good, as political scientists Jacob S. Hacker and Paul Pierson explain in American Amnesia: How the War on Government Led Us to Forget What Made America Prosper. Hacker and Pierson make the convincing case that American prosperity was at its fullest when we had a mixed economy that recognized roles for government and the market.
The strength of the mixed economy was based in a regulatory state that could restrain harmful effects of the market and step in where markets fail. The greatest threat to American prosperity, say Hacker and Pierson, is too little regulation of corporations seeking advantages by “gifts to companies or economic sectors that seem on the surface to be operating as ‘free’ markets.” Public resources in land, mineral, grazing rights, and bandwidth have enriched private interests. Government has provided handouts to agribusiness and the fossil fuel industry, and preferential tax treatment. Too-big-to-fail financial institutions borrow at low rates because the certainty of a government bailout makes them less risky to lenders. This is what that free market fundamentalist Senator Elizabeth Warren fought against unsuccessfully in 2014, when Congress pushed through a gift to financial services giant Citibank.
If you join Mr. Jacoby as a free market believer, you will not be lonely. The tobacco industry is a champion of free markets. Since the 1964 Surgeon’s General’s report on the toxicity of tobacco, cigarette smoking has caused about twenty million premature deaths in the United States. Even today about a half-million deaths are attributed to smoking annually – one in five U.S. deaths – and smoking related medical costs are estimated at $300 billion. Individuals making poor choices, I guess.
The automobile companies have also been strongly in the free market corner. In the Sixties over 450,000 deaths per year occurred on the roads; millions more were injured. Big Auto’s response was “let the market decide.” Seatbelts and air bags have saved countless lives, but were opposed by the free marketers of the auto industry.
As for the 2008 economic collapse that brought on the Great Recession, Hacker and Pierson quote the conservative but independent jurist Richard Posner: “The crisis is primarily, perhaps almost entirely, the consequence of decisions taken by private firms in an environment of minimal regulation . . . We have seen a largely deregulated financial sector breaking and seemingly carrying much of the economy with it.”
And that brings us to the fossil fuel industry, which realized the damage its products are doing to the planet decades ago. Excuse me, did I infer that global climate change is real and is caused by human activity? How contemptuous of free market ideology can one be? Dealing with this existential crisis threatens some of the most powerful business interests in the country, and they are well represented in Washington. Major “free market” organizations also have swung into action and produced books and articles denying the scientific consensus about global climate change.
One organization that contributes to climate change denialism is the Competitive Enterprise Institute. Why is that name familiar? CEI wrote the report on which Mr. Jacoby bases his case against regulation. In Dark Money, Jane Mayer identified CEI as a “pro-corporate think tank subsidized by oil and other fossil fuel fortunes including the Kochs.”
It’s not just CEI though – Mr. Jacoby cites a paper by economists from the Mercatus Center at George Mason University. Mayer writes that “the Koch family foundations donated some $30 million to the school, much of it going to the Mercatus Center.” A GMU history professor has described Mercatus as “a lobbying group disguised as a disinterested academic program.” Talk about dark money funding for the Department of Dubious Research!
Hacker and Pierson both hold named seats at their universities. Perhaps journalists should be similarly honored? Mr. Jacoby could be named the Koch Brothers Columnist for Free Market FlimFlammery.