Special Report

The Free Market Isn’t So Free

An interview with Timothy P. Carney, author of The Big Ripoff: How Big Business and Big Government Steal Your Money.

By 7.11.06

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Often as not in the broad strokes of the American political debate, Big Business is presented as Exhibit A in the case against free-market capitalism. Yet large companies' lobbying dollars frequently encourage more government regulation, not less, stifling pesky competition from non-behemoths, eliminating the all-important "loss" bit from the "profit and loss" and subverting the "invisible hand" which ideally creates market equilibrium. Thus, a convenient free-market bogeyman such as Enron fought for price-controls in the California electricity market as well as the Kyoto Protocol, Phillip Morris begs for FDA regulation, Boeing and Wal-Mart drink mightily at the trough of government largesse and farm subsidies for agribusiness still aren't dead.

In his new book The Big Ripoff -- out today from Wiley -- Timothy P. Carney explores in a meticulous-yet-highly-readable fashion how the collusion of big business and big government depletes the savings accounts of average Americans, fills the coffers of regulation-adoring politicians and damages the cause of free-market capitalism in the United States. Carney kindly took time to answer a few queries below:

Despite the unambiguous evidence you've collected in your book, the idea that "pro-business" is synonymous with "pro-market" is fairly pervasive in the collective American consciousness. You call it a myth. After decades of reinforcement, though, how difficult is it to pierce that fog and shine a light on the truth?

This is precisely what I hope to accomplish with the book. I want the reporter who sees Philip Morris endorsing FDA regulation of cigarettes to stop saying, "in an interesting twist...." Part of the problem is that journalists are scared of the business world. They distrust people who make money, and they also are convinced we would get another Great Depression if the government left us all to our own economic selves. As long as reporters keep putting both big businessmen and free-markets into the "scary" drawer in their brains, then the myth will stay alive.

Do people who believe themselves free-market conservatives unwittingly aid the forces of regulation with reflexive defense of big business against liberal attacks?

Yes, and if my book does any good, it will be to make sure big business stops getting a free ride from the advocates of free markets. In the book, I tell the story of a young conservative Hill staffer eager to meet with a Philip Morris lobbyist because of how much the media and the Left have vilified the company. Then he gets his heart broken when the company tells his boss to support FDA regulation of tobacco. Still, the next time Philip Morris comes calling, the Republicans and conservatives will open their doors much wider than they would to some consumer group. Companies win goodwill with the mainstream media, bureaucrats, and the Left by seeking bigger government. We shouldn't let business get that Left-love for free. There is a lot of profit for big business in seeking government protection. Conservatives and libertarians need to make sure there is also a cost in terms of goodwill.

Likewise, would liberals and the anti-capitalism/globalization crowd be horrified to learn how often big business is their ally? Or, at the very least, how big government aids Wal-Mart or how Jimmy Carter helped Rupert Murdoch find his American footing?

It depends. Many on the Left want government control for the sake of government control. If that helps Goldman Sachs, so be it. I think Chuck Schumer is the key example of this. On the other hand, most young liberals hate big business almost as a matter of principle. If these liberals read my book, they might begin to question the wisdom of big government.

Do both parties have a vested interest in maintaining the hardened stereotypes of liberal Democrats as foes of big business and Republicans as patrons of the unfettered marketplace, however little relation to reality either holds?

The Big Myth, as I call it, certainly is a useful thing for both sides. It allows Democrats to slander limited-government advocates as corporate hacks, and it enables Republicans to fool their small-government base. On the flipside, the Big Myth allows Republicans to attack big-government liberals as "anti-business," but also enables Democrats to haul in corporate cash while pretending to fight for the little guy.

From the outset of The Big Ripoff you declare the book is "about how the regular guy or gal is ripped off" and, indeed, one of the great strengths of the book is in the micro level human stories you found to illustrate your macro level point, especially in the sections on Eminent Domain and tax increases. Did that research and those interviews bring the negative impact of big business-big government collusion more to life for you?

If I were to write a second book, it would focus even more on the victims of the ripoff. Sitting down with Bill Brody in his hardware store in the Bronx as he described how the government took away his property -- his retirement -- really brought forth the human side of the kind of things we talk about in Washington all the time: the cost to regular people of central planning and big government. When landscaper Gary Rissmiller told me that a new state law on weed-spraying was costing him $20,000 every year that number loomed much larger than the billions I already knew regulation drained from the economy.

It goes beyond saving taxpayer money, though, doesn't it? You talk about how corporate welfare contributed to nuclear weapons proliferation, for example.

When a government does something, it implicates its citizens. If Motorola is aiding the Communist Chinese military, I can sell my Motorola stock and get a Nokia phone. If the U.S. Export-Import Bank is subsidizing a known proliferator of nuclear weapons materials, I don't have the option to stop paying my taxes. This means that you and I are aiding the China National Nuclear Corporation. We are complicit in the CNNC's activities.

You ably describe the bipartisan coddling of big business in Washington, D.C. FDR was in bed with big business. Nixon was in bed with big business. Carter. Reagan. Bush. Clinton. Bush, again. Yet America is still a fantastically prosperous country. Have we been kept from meeting our full potential? How would life improve in an era where big government plays by the rules of the market?

I suspect the main losses are in ingenuity, innovation, and entrepreneurship. It's a cliche, but small businesses hold the most potential for real contributions to this country's prosperity. Big businesses play great roles, too, in helping drive down costs and employing lots of people. But the key point here is that giving consumers and investors more control over their own money will result in a more efficient allocation of resources.

I've always felt that one of the challenges for true champions of civil liberties is that only one half of the country is ever interested in the cause at a given time. Do those who would like to see the big business-big government marriage annulled have a similar problem? Are partisans always going to give their team a pass on these issues as the price of victory? And if so, what is the prognosis for real change?

I think you exaggerate the problem. If you're talking about politicians, you're 99 percent right about the lack of principle. If you're talking about the media, activists, and the public, I think you're only 50 percent right. But still, high-stakes politics does hurt the cause of limiting government. The chance of changing things for the better? It's pretty low. I wrote this book and articulated the problem, but you'll notice I don't too much prescribing solutions. As a conservative, I am wary of "solutions."

We can do incremental things to make the situation better. We can start by no longer giving big business a free pass. I personally will start by trying to draw media attention to how much big business profits from regulation. The key is getting this information out there: regulations help big business and hurt little guys. Once that idea is more commonly understood, politicians will be less likely to do big-business's bidding in calling for big government.

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