Who Do You Fear More, Big Business or Big Government?

OK, who do you fear more, big government or big business?  

Historically, Americans saw a relatively small government with regulatory powers as a check on monopoly and big business.  But the rise of big government because of the Great Depression, World War II, the Cold War, and the Great Society changed that.  Americans had a choice.  There was a general consensus that we had to spend a lot of money for national and international security during the Cold War.  But the expansion of the social welfare state and environmental regulations changed attitudes towards the federal government.  The two largest programs of the social welfare state, Social Security and Medicare, have been financed by very large tax increases. These tax increases are somewhat offset by federal income tax cuts.  

Since the 1980s, there has been a well-financed campaign to roll back the regulation of big business, especially the finance sector. This campaign has been successful.  Most populist outrage, despite the financial system causing a recession, structural unemployment and large federal budget deficits, is now directed at government, as opposed to big business in the past. Attention is focused on the effects, not the underlying causes, which are still there. 

Limiting government social welfare programs has somehow been tied to even less regulation and oversight of big business.  How did this happen?  

One reason is that much of the financing of the Tea Party movement and organizations like ALEC come from big businesses and the very wealthy owners and managers who control them. Many of them share the Tea Party and Christian right outrage over lack of government regulation and prohibition of personal behavior they find morally reprehensible.  Somehow, a generalized anger and rage over government protection and even support of this behavior has been channeled to limiting government regulation of business, including rollback of environmental legislation and regulation.

The logical Republican candidate for president, representing this generalized fear directed as loathing of government, is Donald Trump.

The American political nightmare in the past has been that big business and big government become partners rather than adversaries. There are exceptions. We accepted it in the areas of defense technology and infrastructure spending. We denounced it if it led to regulatory capture or was a barrier to technological progress. We were angry if we believed that the rich were using government to transfer income from the middle class to themselves.  We seem to have lost this outrage.

In addition, this cooperation has been raised to new levels with the need for huge sums of money to get elected and virtually no limits or accountability because of the recent Supreme Court decision allowing super PACs. They channel large sums of money to support candidates who tap into widespread fear and anger about American society and government.  These elected officials are also pro-business (reduce taxes on the rich and corporations, less environmental regulation, no anti-trust, no oversight of financial companies) or at least anti-government, which amounts to the same economic policies.

It really isn’t a question of “getting government out of people’s lives.”  Social conservatives want more government interference in individuals’ lives. It seems to be a question of big business not paying the social costs of a capitalist economic system. It’s a question of getting government out of big businesses’ lives. Regulatory capture has become total government capture.

The stagnation of middle class incomes and rising income inequality, the threat of widespread unemployment because of automation and AI, and the huge rise in temps and “consultants” without any benefits don’t seem to be major political issues. Why? Who makes the decisions that result in all this? Who outsources jobs to China and threaten American workers with more outsourcing, keeping wages down? Who eliminates pensions and other fringe benefits? Who wiped out home equity for ten million homeowners? Who is buying record numbers of robots to replace workers? Large corporations, most of which are multinational companies. The result? Record profits and bonuses even in a period of slow economic growth. This is a major reason for the redistribution of income from the middle class to the rich. No wonder the rich are willing to spend a great deal of money to protect this trend from possible government interference.

And deflect blame. President Trump reflects the belief that America's economic and employment problems are due to illegal Mexican immigrants and "China." "China" doesn't export to the United States; multinational corporations and Chinese companies do. About 60% of imports from China come from American and foreign multinationals. Much of the exports of Chinese companies are part of the global supply chain of American companies.

Perversely, the debate seems to be centered on conservative attacks on the increased cost of programs like unemployment benefits, disability benefits, Medicaid and Obamacare, nutrition aid for poor mothers and infants, and food stamps.  Programs for the poor, sick and unemployed.  Major reductions in social welfare and social safety net programs are at the heart of Republican budget proposals. These cuts are necessary to keep the Bush and Trump tax cuts for upper-income families and corporations without increasing the yearly deficits.   

The only realistic way smaller deficits will happen, let alone a balanced budget, is a combination of strong economic growth – creating strong growth in tax revenue – and tax increases, mostly disguised as eliminating deductions and subsidies.

The Republican rhetoric about smaller deficits is ideological cover for slashing social welfare and other programs that conservatives oppose. 

For the first time in American history, populist anger is aimed at government, not big business.  The federal government is seen as supporting programs and groups that are anathema to conservatives. Big business has supported this attitude in return for support for pro-business policies. You could call this ideological capture.

The situation is made worse by a zero-sum mentality. In a world of low growth and increased fear and insecurity, there is less room for compromise. There is widespread middle class perception that minority groups and the poor are getting unfair amounts of social welfare benefits that come out of middle class taxes. This is ironic since the two largest social welfare programs are Social Security and Medicare, which overwhelmingly benefit the middle class, and the lower half of the middle class do not pay any income tax. And, sadly, we seem to be losing any sense of shared community or compassion for others. 

We are seeing government in a period of disruptivd social and economic change.  Over the last 50 years, we have become a more tolerant, open and inclusive society. One result of this is behavior and culture that many people, not just conservatives, find distasteful or immoral. Combining this moral outrage with economic insecurity and a fear of the loss of power and status, is a potent political combination. The irony is that conservatives want to use the coercive powers of government to limit or outlaw some of these consequences.