Big Business, Koch, and free markets

The New York TimesKate Zernike and Center for American Progress’s Lee Fang both “obtained” a guest list from an event this past summer where I spoke. I was invited to speak on the condition of confidentiality, but now that the guest list is out there, I’ll fess up.

Yes, I was the speaker at a dinner. Earlier this year, without disclosing the venue, I wrote about my talk:

I was the main speaker of the night at a fancy dinner. The crowd included millionaire business owners and corporate executives. And the man who introduced me, and who had invited me to speak, was billionaire industrialist Charles Koch.

My topic was what it always is: the evils of corporate welfare and bailouts, and the destructive influence of the Big Business lobby in Washington. In my talk, I blasted “regulatory robber barons” and “subsidy sucklers.”

Today, Matt Yglesias, a colleague of Fang’s, blogged about my presence there and my reporting in general.

even while ostensibly covering the intersection of big business and the political system, Carney’s done a remarkably good job of ignoring the big picture that America has one political party whose agenda is unduly influenced by big business and another party whose agenda is indistinguishable from big business.

You’d think that’s something he might have noticed at the Koch retreat…

Review that guest list again from the Koch event. Here are some company names you don’t see: Wal-Mart, Exxon, Chevron, or General Electric. Those are the four biggest companies in America, so they might count as good representatives of “big business.”

I’ll come back to the Koch confab, but let’s talk about the agendas of the biggest big businesses.

Wal-Mart — a donor of at least $500,000 and possibly as much as $999,999 to the Center for American Progress, which employs Yglesias and Fang — teamed up with CAP in 2009 to push for an employer mandate on health-care. This mandate threatens smaller retailers (and everyone is smaller than Wal-Mart), but Yglesias, celebrated it as “an important sign of change in the air.”

But this wasn’t a recent change for Wal-Mart. As I pointed out at the time, the company had backed climate legislation and minimum wage hikes for years. So, contrary to Yglesias, I’d say the agenda of the nation’s largest company is pretty darn distinguishable from that of the Republican Party.

Exxon and Chevron tend to be pretty closely in sync with the GOP, although individuals from those companies gave more to Obama than to McCain in 2008. They are also mostly free-market companies (good for them), unlike their more rent-seeking competitors BP, Conoco, and Shell, which have pretty solid big-government resumes.

Then there’s General Electric. This one is too easy. Let’s see. GE has teamed up with the Democrats on cap-and-trade, light-bulb regulations, embryo-destroying stem-cell research, subsidies for rail, and many other “green” subsidies. Considering that GE spends more on lobbying than any other corporation, it’s a fair representative of big business’s influence in Washington. And GE is pushing for more big government and allying with Democrats against Republicans. Then there’s the matter of that MSNBC channel that GE owns.

But enough of the truly biggest companies. Back to the Koch event.

These businessmen, as far as I could tell, mostly owned their own businesses. Many of them had been shockingly successful. I’ve often said — and I said it at the dinner — that privately held businesses tend to favor free markets, even when they get big; while publicly held businesses (like those on the Fortune 500), tend to want bigger government as often or more often than they want free markets, depending on the industry and who’s in power.

This may be the most important point that folks like Zernike, Yglesias, and Fang miss: many of these businessmen could profit even more under the policies the Left favors than they do under the free market. But many of them — like those of us non-wealthy folks who fight for economic liberty — believe that a genuinely free economy is best for prosperity and the common good. There is also a moral element here: interfering with others’ liberty is a bad thing to do.

Many of the businessmen on the guest list were natural gas folks. These people would profit from cap-and-trade. In fact, I met a few who made exceptions to their free-market beliefs when it came to supporting policies favoring natural gas over the market. But many of the gas moguls opposed cap-and-trade on the moral and the economic grounds I sketched above.

On the Kochs specifically, I suspect stricter rules on oil refining would profit Koch Industries by crowding out smaller competitors. Consider this passage from the LA Times in 2005:

California refiners are simply cashing in on a system that allows a handful of players to keep prices high by carefully controlling supplies. The result is a kind of miracle market in which profits abound, outsiders can’t compete and a dwindling cadre of gas station operators has little choice but go along.

Indeed, the recent history of California’s fuel industry is a textbook case of how a once-competitive business can become skewed to the advantage of a few, all with the federal government’s blessing.

“They don’t have to collude, they don’t have to form a cartel, they don’t have to be monopolists,” said Stanford University economist Roger Noll. “All they have to do is take advantage of the crazy rules.”

And then this one:

Thomas D. O’Malley, whose Tosco Corp. owned a refinery in Northern California, was among the first to see how he and others would profit from the new regulations.

In a speech to fellow oil executives in Reno less than two years before the new gas was introduced, O’Malley, then Tosco’s chairman, predicted that the in-state supply would barely cover demand and that the new formula would command 6 cents a gallon more than the old.

“This is a very finely balanced system,” O’Malley told the group. “If any of the large refiners in California experiences an unplanned shutdown, the premium of 6 cents could easily be two or three times that number.”

O’Malley underestimated: The premium in times of duress has been more than 40 cents a gallon, Energy Department statistics show.

“My view for the industry was: Why in the world would you fight clean fuels? That’s what the consumer wants,” O’Malley, now the chairman of Connecticut refiner Premcor Inc., said in an interview. Make no mistake about it, the more stringent you make specifications, those become barriers to entry…. Strong companies would have an advantage.”

Yglesias frequently oversimplifies and mischaracterizes my arguments, but I’m glad he didn’t abuse them here. Instead, he oversimplified the landscape of corporate lobbying. I’m sure I often over-simplify and leave readers or listeners with the impression that Big Business always wants Big Government — but I chalk up my occasional oversimplification to the fact that I am swimming hard against the conventional wisdom.

Are Republicans too cozy with Big Business? Absolutely. That’s half the reason I cover this issue. Similarly, I was happy to speak to this Koch-organized group in order to let them know that when they turn to big government for profit — as Wal-Mart, GE, and hundreds of other companies do — someone is going to call them out.

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