Corporations, the Government, and Accountability

There has been a lot of public discussion lately about the federal government's role with private business. Banks, insurance companies, and car companies have all been bailed out. There may be deeper public involvement with the energy industry if a cap and trade bill passes. If health insurance is mandated and subsidized, billions of dollars will be going towards health insurance.

Conservative libertarians argue that all of this is bad, that any government subsidy of private business of any kind is wrong. Of course, conservative Republicans who claim to be libertarians still seem to be happy to subsidize farms in their home districts, military contractors still producing obsolete weapons systems, and oil companies who get subsides for drilling oil that they make billions of dollars of profit off of. I guess to these kinds of politicians, it's only big government if it's benefiting someone other than your constituents and campaign contributors.

For those of us who are not Ron Paul-style libertarians, though, there is no way for government not to have working relationships of various kinds with the private sector. The government needs to be hiring contractors to build/repair roads, bridges, schools, etc. Defense contractors are needed to supply weapons, ammo and uniforms. Companies are needed to build police and fire stations and supply the uniforms and equipment for the folks that work for them. And yes, in dysfunctional sectors of the economy like health care, finance, and energy (where the energy industry is dysfunctional enough to be destroying the planet), and especially when the economy is dysfunctional in general like it's been the last year, government has the duty to step in and play a bigger role.

What progressives would argue, though, is that when government and industry need to interact, industry needs to be accountable to certain rules and expectations the government sets up. Some examples come to mind:

• When a contractor builds a school building, they have an obligation to build it safely so that it doesn't collapse on the children inside.

• The weapons supplied to our police and military ought to work the vast majority of the time.

• If you are an industry that constantly cheats people when they are sick, or sells products that regularly hurt people, the government should change the rules of the marketplace.

• If you get bailed out and subsidized by the government like the Wall Street banks, and yet are showing no change in the problems that caused the crisis that forced the bailout in the first place, the rules need to be dramatically altered so that you can change your behavior and can't keep causing harm to the entire economic system.

These are basic rules that seem fairly obvious to me, but apparently aren't to some people. When Hank Paulson last year said there should be no restrictions on what banks could do with the bailout money being handed to them, I was utterly astonished, but I guess that just seemed to be the way of the world to the Wall Street guys. When the big insurers wanted government to force everyone to buy their products, provide subsides to those who couldn't, but then were rebelling at the idea that they would have any serious competition, I was stunned that anyone (at least in my political party) was taking them seriously. But hey, I guess that makes me a radical leftist.

This should be a basic rule, but apparently It needs to be a "new rule," as Bill Maher would put it: if government bails you out, subsidizes you, forces people to buy your product, or otherwise does business with you, we the people are owed some basic accountability on the other end of the deal. It should be painfully obvious, but apparently it isn't.

Comments

[VeryFairMOR]

This is a very sensible article. I agree.
We should note, that libertarians are a very small minority of the American people.
We shouldn't equate republicans with libertarians, although, I would agree that most libertarians are republicans.
This is a classic straw man. The republican libertarians are chosen as the target of the attack because they are easy to make the argument against.
The vast majority of republicans are not libertarians, and they recognize the need for the government to have a rule of law, regulatory role in private business.

[VeryFairMOR]

You're right that government has a very important role to take in our society, and that includes interaction with corporations.
My concern is a blind trust in all things government. That the left seems to always propose the government option, as it were, to almost any problem.
We have rule of law in our country. This is the primary role of government in business. The government should make laws, and already has a large number, of course, to outlaw clearly illegal behavior or corporations. Of course, we can't all agree just what is illegal at all times.
I'm always amazed when we see faulure after failure of the government in business, but we still want to turn over more to them. The post office, $1000 toilet seats, etc.
Private corporations are not better citizens than government run ones, or vice versa. The difference is that the government can take money from someone else, and give it to the government run business. The private business has to "make it's payroll" by getting free citizens to buy their good or service voluntarily.
A private business will cease to exist, unless the government moves in, unless it can make it's payroll. This, in the long run is good, because the alternative is for the government to tax it's citizens and give the money to the failing corporation, and the employess of the failed corporation will find jobs with companies that can make their payroll, without the government having to subsidize the process.

[hollybork]

Excellent article. Mike Lux outlines a political philosophy that is good common sense, which we all know is all to uncommon. Hard to imagine any republican or democrat capably arguing against the logic of Lux's philosophy. Thanks.

[lightningbolt]

Until we have full accountability of the government, including the Federal Reserve, there will be no trust in government. Anything that the government says should be taken with a grain of salt until we have a full transparency and accountability.

[wietog]

Yup.

[rad21]

The challenge we have: How to shrink with the least human and economic impact? To put it bluntly, can economists like Mike Lux, Nouriel Roubini, Robert Reich and others on both sides of the political divide, get top corporate management (and boards) to take a significant pay-cut, rather than lay-off their lower-tier workers. And how do we convince lower-tier workers to take a pay-cut across the board to prevent lay-off of their co-workers?

Clearly given the fiscal and management mess we are in the financial, auto, healthcare (insurance and health-delivery) and other sectors of the economy, the top management who are getting millions of dollars in pay are far from performing to their compensation. In other words the economy and public are not getting their monies worth.

The million-dollar men and women with their spokespersons, PR machine and political hacks (all on corporate payrolls) have all along sold us spin; rather than productivity, efficiency, and quality of the goods and services they provide.

[schatsie]

We do have a tax system in this country for social engineering to pay for the things we want and need to be a healthy country and to protect ourselves....

91% on Income over 1 milllion dollars works
50% on inherited wealth over 1 milllion dollars works
91% on capital gains over 1 million dollars.
$350,000 cap on the payroll taxes (after all we all know from the book The status syndrome that the rich live longer than the rest of us.) heck take if off entirely and call it a health security tax....

[VeryFairMOR]

I am not totally against some sort of salary control, but if we do it, why confine it to CEOs?
Why should a hollywood actor make a thousand times what the average worker makes? Why should a golfer make 10000 times what a groundskeeper at the golf course makes?
Why should businessmen be singled out? Why is their pay evil, or wrong, but the salaries of actors and sports figure not evil or wrong?
If we are going to control pay, let's control it for everyone at the top, not just the sector of society that we happen to hate.

[BradMaurer]

Mr. Lux -

I think there are two basic questions arising from your article. The first question, whether the government should have "working relationships" with private businesses, is purely ideological, and ideological debates ought to be settled by the outcomes of elections (except in the case of an absolute moral wrong, like slavery). President Obama ran on a platform of government involvement in private enterprise. That ideological platform won the general election as well as a hefty majority of congressional elections, but the answer to whether governments should act in this capacity could change with the next election. This kind of ideological question has no permanent answer.

However, the second question is whether the government should be honest about what its relationships with private enterprise are intended to achieve. The answer to this question is an unequivocal "yes." Take TARP - any person or business buried in debt will not take an influx of money and lend it to someone else right away unless their hand is forced. Paulson et al. knew this; they knew the TARP money would not be lent, but instead would be used to bring bank profits back up. The way to increase lending would have been to put strings on the TARP money pertaining to lending levels. Failing to doing so meant TARP was a program for increasing bank profits, not lending. The fact that TARP was passed under the auspices of increasing lending was nothing but stark dishonesty by the federal government.

[schatsie]

You know Bush and Paulson giving Goldman Sacks Fraternity a BLANK CHECK is just what you would expect when you realize that
Bush knew about 9/11 before it happened,
knew he was lying about WMD,
gave the 2.5 trillion tax cut to the top 5% (actually 1.5 in tax cuts and 1.0 in tax fraud that would never be pursued) and
the 8 billion dollars that disappeared in IRAQ and the 100 million dollar payoff right before Katrina hit...

[VeryFairMOR]

Very sensible post.
I don't agree that Obma was elected on a platform of government getting much more involved in private business. Obama, during the campaign, and currently, is always making very pro-capitalist remarks.
My concern with Obama is that he intends to take the country in a much more socialist direction, while telling us that he is not doing that.
You are very right that elections will settle ideological directions.
I am amazed, that after Bush almost single-handedly destroyed the republican franchise, Obama seems to have succeeded in helping it rise from the ashes and take flight, in a short 8 months.

[bioluminescence]

The lack of controls on the bailout is a misdemeanor. Let's talk about the real crime.

Frank and Jesse have nothing on these guys. The biggest robberies in the history of the world have taken place in the presidencies of a father and son team named Bush Sr and Bush Jr. The public treasury was bushwhacked in broad daylight to the tune of more than $2 trillion in total and given to a banking system that says it wants government to stay out of its affairs.

If we don't have "corporatism" as an Italian dictator once described it. Surely, we have the next best thing.

[schatsie]

you have to read Family of Secrets now that you realize what the Bush Wasp Mafia has done to the tune of 2 trillion dollars for the banksters..... This is the tip of the iceberg, you have to include the massive transfer of wealth from the bottom 99% to the top 1% and the fact that there are still Republicans out there who say that the capital gains tax SHOULD BE CUT....Frankly I want it subjected to the same taxes I pay, Payroll and Income taxes....WHY WARREN BUFFETT AND BILL GATES NEED ANOTHER TAX CUT IS LIKE SAYING MARIE ANTIONETTE was a SAINT.....

[VeryFairMOR]

You should be aware that capital gains taxes are a tax that is levied on money that has already had taxes paid on it. It's a double tax, so to speak.
You should know that ALL taxes are paid by the people. Not a penny of tax is ever paid by a corporation. When you tax a corporation all you are doing is raising their cost of doing business. This cost will be passed on to the corporation's customers. Where else can a corporation get funds to pay a tax? A corporation is not like the government. They can not, by force of law, by putting a gun to your head, take money from others to subsidize their enterprise.
That privilege is only given to the government.

[GrahamInCanada]

"For those of us who are not Ron Paul-style libertarians, though, there is no way for government not to have working relationships of various kinds with the private sector. The government needs to be hiring contractors to build/repair roads, bridges, schools, etc. Defense contractors are needed to supply weapons, ammo and uniforms. Companies are needed to build police and fire stations and supply the uniforms and equipment for the folks that work for them."

And for those who are really, really not Ron Paul-style libertarians, but who are more like Joseph Déjacque-style libertarians, the government needs to be establishing a construction corps to build/repair roads, bridges, schools, etc. The military needs to gear up to supply weapons, ammo and uniforms. Construction training programs need to be established to build police and fire stations, and felons in prison need to be supply the uniforms and equipment for the folks who volunteer there.

[Jodo]

It's a sad commentary, but I don't know why anyone would be shocked at what has transpired. Just like the economic collapse exposed Bernie Madoff as a fraud, it has exposed our government as inherently corrupt. How much more can the playing field be tilted before America is completely bankrupt and the middle and lower classes have become extinct entities? When the governments entire annual revenues are consumed by corporate welfare and war spending, it's obvious we have major problems. This did not happen by accident, it's corruption run amok. It's all a charade and we the people of America no more live under a viable democracy than the people of Iraq or Afghanistan.

[schatsie]

Inherently and INTENTIONALLY CORRUPT...and that was why the Republican Machine supported Bush and kneecapped anyone else....Jeb is in the Wings.... Read FREE LUNCH (David Kay Johnson is a national treasure) and Family of Secrets and get active...

[txrunner]

It's unconstitutional for government subsidy of private business. Furthermore, the Federal Government doesn't need contractors to build roads, schools, etc. - States need to manage that on their own.

It's funny that they are called progressives, when their ideas will tax us into depression then force Federal Government takeover. How is that really progressive?

I pretty much call them Socialist, Marxist, or Communists. Progressive would be the march toward less government having less control over the individual with the individual holding the Federal Government accountable.

Why should a private company be forced to be more accountable than the Federal Government? This government can't balance a budget, efficiently run ANY federal programs, then wants to tell businesses how to do it.

IDIOTS, or should I say PROGRESSIVELY STUPID

[Querent]

Typical right-wing post: define words to mean what you want them to mean, not what they normally mean. Claim that the Constitution prohibits things it doesn't prohibit, but which you don't like. Pretend that the other party has done things that they haven't, but that your party actually has done. Call those who disagree with you names which imply that they are disloyal to this nation. Don't bother to substantiate the name-calling. Accuse the Federal government of incompetence, but don't bother to cite specifics. Pretend that the accusation of incompetence is a universal feature of government activities. Finish up by attacking the mental capacities of your enemies.

The only tactic you neglected was attacks on your enemies' race.

[Aaror]

"It's unconstitutional for government subsidy of private business. Furthermore, the Federal Government doesn't need contractors to build roads, schools, etc. - States need to manage that on their own."

Realize that taking away government subsidies of private business would mean the end of farm subsidies, business subsidies, and subsidies for military contractors to keep vital defense industries afloat in the US.
As for states building and maintaining the interstate highway system, um, do I really need to explain to you why that is a bad idea?
Does the federal government need contractors to build military bases, ships, planes?
Likewise FBI buildings, FEMA emergency response centers, etc?

You call progressives idiots, and yet you expect all the government services you take for granted to be there, while decrying everything required to give it to you.
I suggest that you avoid using all government services (not just police and fire and postal, but roads and planes and banks...) for a while and see how you do.

[lightningbolt]

You need to stop watching faux news. They are lying to you.

[lgillooly]

I thought these issues would be obvious as well. I was shocked last year that Repubs still believed in unfettered, deregulated finance and blamed the whole thing on poor people that got loans.....­unbelievab­le. What is also shocking is anything that helps the majority of Americans is now Socialism and the saddest part is miilions of American have bought this propaganda hook,line and sinker. Allowing 90 percent of talk radio to debate facts that only support their position( oligopoly) without telling the Whole story with All of the facts has poisoned our air waves and dumbed down our citizens. If you think about who always wins at the end of the Beck,rush,­hannity,co­ulter,malk­in,savage one sided debate it is the same special interest groups
.Wall St.
Health industry.
.Big Energy
.Military Industrial Complex
They present their debate as if they are for the Individual, freedom and Patriotic, but they really are front men for the same old big 4 industries. It is sad that "Free Speech " on our public airwaves trumps integrity, propaganda, the whole truth,fear­mongering, inciting hatred towards fellow Americans and downright lies.

[LuKennedy]

Having grown up the child of rather communist-swinging democrats, who believed firmly that they were entitled to many things, I was essentially left to raise myself. At a very young age I came to understand that I am the master of my own fate, that I make my own choices and no one else chooses for me, and that any decision I make, good or bad, I must own completely. I'm proud to be a republican, to know that I earn my way through this life--every breath of it. I am not the frontman for any industry; I am simply personally responsible. It is amazing to me that for a party alleged to be so progressive and tolerant and fair, people like you continue to paint me with a tarred brush, assuming that I am either too ignorant to have come to these conclusions of my own reasoning, am merely looking for some means of profiting by you, or that I must be some deluded religous zealot.

[1izzard]

Your world view completely ignores the social fabric upon which your "personal responsibility" rests. How far does personal responsibility get you in say, Somalia?

The other half of personal responsibility is community responsibility. They are 2 sides of the same coin. Claiming one without the other is just foolish.

"We must learn to live together as brothers or perish together as fools." - Martin Luther King, Jr.

[lgillooly]

I also have earned my way through life. Own a business,pay my taxes,raised 4 Children and neve asked for a dime. That is not exclusive to Republicans.
I never called you a religious zealot or assumed you were ignorant. The fact remains that if 9 out of 10 voices are cherry picking facts to support their position it stands to reason that a vast majority listen to the 9 vs 1. Unless these listeners read and fact check they will not realize what they have NOT been told. When you let 5 companies own 95 percent of media you put too much power and control in a small group. They decide what information and which stories to push.
I voted for Reagan and Bush 1, but I would never be associated with the current Republican Party. Rush, Beck etc are far from a William F. Buckley.

[Choicelady]

How far would you have gotten without school teachers, police, firefighters? How far without clean water, pure food, safe streets, stoplights, road traffic controls? How far without consumer protection so your wise choices in purchases don't come with lethal defects? How independent ARE you if you live and work and worship in places that are shoddily built so they cannot be relied upon to stand up when you sit down? How personal are all your choices? You, as a pretender to the title of "self made" RELY on the security of government to let you MAKE those choices and decisions for which you take "personal responsibility". Except - you don't have to take it for all those things and far more since the government has assured your safety and well being. When government stopped - we could not even rely on our peanut butter. You want an entirely laissez faire life? Find an island, take nothing with you (even knives have been produced under quality control) and see how you do. And good luck to ya!