Tag Archives: Andrew Carnegie

Protesting for the problem they're against

The Occupy Wall Street protesters are voicing a very real and understandable grievance. Corporate America is far too involved in politics. I agree wholeheartedly. What these protesters do not understand is how or why corporations got involved in the government in the first place. In their calls to end capitalism they are showing a basic historical ignorance. We haven’t been a capitalist country in a long time. We started transforming into corporatism during Teddy Roosevelt’s reign and were done with the metamorphosis by the end of FDR’s presidency. Wasn’t Teddy a Trust-Buster? He certainly was. But a close look into US Steel during that time shows that they welcomed government intervention.  Carnegie even wrote an article in the New York Times asking for “Government control” of the steel industry. The collusion is due to the fact that the free-market involves risk, and government control means they do not have to worry about their smaller competitors who were hot on their heels. Third–party intervention into business favors the largest companies and often bankrupts the smaller companies.

This basic idea can be seen in the story of Upton Sinclair and his book “The Jungle.” In the popular narrative, his investigative journalism changed the meat packing industry. What is not known is that the industry itself wanted regulation. A Big Meat, as it would be called today, spokesman said as much to Congress. Government regulation behooved the major packers because the regulation pushed smaller and ironically more sanitary meat packers out of business due to the cost of the regulations, and also provided the commercial benefit of a federal seal by which to further sell their product.

Government meddling in business in fact causes corporatism. The free-market keeps business at a safe distance from the government. In other words, capitalism is what the Wall Street protesters should be begging for, not protesting against. The story of Microsoft is a modern example of this idea. For a long time Bill Gates bragged about the fact that his company, Microsoft, had no interest in government. He was being honest- Microsoft had but a single lobbyist- that is until he was attacked for being a monopolist. Now he has a veritable army on k-street. Wal-Mart is another enlightening example of this. In 2000, the company was ranked 771st in direct contributions to Federal politicians. After being attacked by unions and politicians, Wal-Mart had developed the single largest corporate political action committee by 2004.

The only people that are helped by government intervention are large companies and politicians. Small companies and consumers take the hit: consumers in paying higher prices and small companies by being pushed out of the market. It seems that the protesters are protesting for what they claim to be against. Economics and civics are complicated and the people funding these protests rely on those who join them to be too lazy or ignorant to understand either. For now it looks like they are right.