Robert Reich is scared. So scared in fact, he has issued a "warning" that any Big Business in bed with Big Government should fear the Tea Party!

Why Business Should Fear the Tea Party

Even if it's now on the fringe, the tea party won't be for long. By fueling the Republican surge in the midterm elections, the tea party has become the single most powerful force in the GOP.

Beyond fiscal rectitude and less spending, tea party candidates are targeting the central institutions of American government. The GOP Senate candidate from Kentucky, Rand Paul, is among several who want to abolish the Federal Reserve. They blame the Fed for creating the Great Recession and believe that the economy would be better off without a single institution in Washington setting monetary policy. Even Maine's stolid Republican Party, now under tea party sway, has called for eliminating the Fed. In a Bloomberg poll a few weeks ago, 60% of tea party adherents wanted to overhaul or abolish the Fed (compared with 45% of all likely voters).

Another tea party target is the Internal Revenue Service. South Carolina Sen. Jim DeMint, who has emerged as the Senate's leading tea party incumbent, says that his "main goal in the Senate will not only be to cut taxes, but to get rid of the IRS." Mr. DeMint's goal is echoed by many tea party candidates, including Arkansas Rep. John Boozman, now running for Senate.

Gasp! Abolish the Federal Reserve, an unaccountable central planning organization with a track-record of destroying the purchasing power of the dollar, and otherwise all around complete failure? Why, how dare they!

And shut down the tyrannical and intrusive IRS? Why, how could Big Government possibly survive without stealing half your income? It can't Bob. That's the point.

At the least, business leaders who complain about uncertainties caused by Mr. Obama's policies might be concerned. John Castellani, the former head of the Business Roundtable who is now running the Pharmaceutical Research and Manufacturers of America, told Bloomberg Businessweek this month, with remarkable understatement, "This kind of extremism makes it much harder to plan from a business perspective."

GE's Mr. Immelt may be unhappy with President Obama, but he'll be far unhappier if the tea party takes over the GOP. Tom Borelli, director of the Free Enterprise Project of the National Center for Public Policy Research, a conservative think tank and vocal supporter of the tea party movement, has demanded Mr. Immelt's resignation, calling GE an "opportunistic parasite feeding on the expansion of government." Among Mr. Immelt's alleged sins: taking federal subsidies for clean energy. In a press release last week, the National Center for Public Policy Research stated clearly: "Liberal CEOs are the next target for tea party activism."

What? No more corporate welfare? But, but, how can a businessperson "plan" without sucking off the taxpayer teat? Why, that's just extreme! I've got news for ya Bob, stealing taxpayer money to give to corporations is what's extreme.

Obviously, Reich is "concerned" that the Tea Party represents a threat to Big Government corporatism. Good! Score one for the Tea Party!

H/T - Why Robert Reich Fears the Tea Party

A little background on Robert Reich ...

Economic Fascism

Planned industrial “harmony.” Another keystone of Italian corporatism was the idea that the government’s interventions in the economy should not be conducted on an ad hoc basis, but should be “coordinated” by some kind of central planning board. Government intervention in Italy was “too diverse, varied, contrasting. There has been disorganic . . . intervention, case by case, as the need arises,” Mussolini complained in 1935. Fascism would correct this by directing the economy toward “certain fixed objectives” and would “introduce order in the economic field.” Corporatist planning, according to Mussolini adviser Fausto Pitigliani, would give government intervention in the Italian economy a certain “unity of aim,” as defined by the government planners.

These exact sentiments were expressed by Robert Reich (currently the U.S. Secretary of Labor) and Ira Magaziner (currently the federal government’s health care reform “Czar”) in their book Minding America’s Business. In order to counteract the “untidy marketplace,” an interventionist industrial policy “must strive to integrate the full range of targeted government policies – procurement, research and development, trade, antitrust, tax credits, and subsidies – into a coherent strategy . . . .”

Current industrial policy interventions, Reich and Magaziner bemoaned, are “the product of fragmented and uncoordinated decisions made by [many different] executive agencies, the Congress, and independent regulatory agencies . . . . There is no integrated strategy to use these programs to improve the . . . U.S. economy.”

Government-business partnerships. A third defining characteristic of economic fascism is that private property and business ownership are permitted, but are in reality controlled by government through a business-government “partnership.” As Ayn Rand often noted, however, in such a partnership government is always the senior or dominating “partner.”

In Mussolini’s Italy, businesses were grouped by the government into legally recognized “syndicates” such as the “National Fascist Confederation of Commerce,” the “National Fascist Confederation of Credit and Insurance,” and so on. All of these “fascist confederations” were “coordinated” by a network of government planning agencies called “corporations,” one for each industry. One large “National Council of Corporations” served as a national overseer of the individual “corporations” and had the power to “issue regulations of a compulsory character.”

The purpose of this Byzantine regulatory arrangement was so that the government could “secure collaboration . . . between the various categories of producers in each particular trade or branch of productive activity.” Government-orchestrated “collaboration” was necessary because “the principle of private initiative” could only be useful “in the service of the national interest” as defined by government bureaucrats.

This idea of government-mandated and -dominated “collaboration” is also at the heart of all interventionist industrial policy schemes. A successful industrial policy, write Reich and Magaziner, would “require careful coordination between public and private sectors.” “Government and the private sector must work in tandem.” “Economic success now depends to a high degree on coordination, collaboration, and careful strategic choice,” guided by government.

As you can see, Reich's real concern is that our current system of government control and corporate welfare (economic fascism) is under attack. He's right, it is!

Waste and utter failure do not concern people like Reich, power and control is what they're after. Of course, Reich and his power-hungry cohorts don't have the facts on their side either. Not that facts ever get in the way of those who lust for power.


F. A. Hayek's greatest intellectual contribution was not The Road to Serfdom (1944). It was the article published the next year: "The Use of Knowledge in Society."

He argued that the amount of decentralized and highly specialized knowledge in society is enormous when compared to the knowledge available to a government committee. This should be obvious to anyone. What was not obvious to Western intellectuals was his conclusion: government planning is unable to match the efficiency of individual planning in a free market society.

This is a variation on Mises's argument. Hayek emphasized the free market's system of profit and loss. It elicits information from individuals who would not otherwise provide it or put it to socially positive uses. A planning board cannot get their collective hands on this information, he argued. Mises had emphasized that, even if the committee could get its hands on it, the committee would not know what to do with it. It could not put this information to its highest use.

The question then arises: Can a committee put this information to good use for the committee? Can its members feather their own nests? Can it achieve results that are sufficiently beneficial to the committee and those leaders it serves, so as to make irrelevant the fact that the committee cannot solve the allocation problem for the masses? In short, can the committee find a positive answer to the universal question: "What's in it for me?"

The results of all but two of the Communist economic schemes in the twentieth century was "no." The two exceptions were North Korea and Cuba. So far, these two systems remain Communist. But it is looking more and more as though this will end sometime in the next decade. Poverty in those two countries is overwhelming.

The only way for the rulers to keep this information from the masses is control over information. North Korea is better at this than Cuba is. It is also a poorer nation. We are back to the Austrian economists' analysis of the shortage of reliable information.

To run a really successful tyranny, the leaders must have increasing wealth as well as more reliable data. They need wealth to hire the programmers, the data collectors, and the police. Computer costs keep falling, but they fall much faster in the private sector (microcomputers) than the government sector (mainframes).

The government's computer systems are not integrated. Not even the Internal Revenue Service has a seamless system. (The two greatest lies in computer marketing are these: "seamless transfer of data" and "user-friendly.")

Yes, governments have access to ever-growing quantities of data. But the public has far greater access to low-cost information that it uses to increase the overall complexity of society. The task of monitoring what is going on becomes ever-more utopian. The government is always falling behind, for the reasons Hayek described. The greater the complexity of society, the less able the State is to monitor it, assess it, and use the data to control it.

Limited-government is more than just a governing philosophy, it is the acceptance of an undeniable truth: Government has limits. There are things government simply cannot do.

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  • John Carey

    CL this was great post and an eye opening article in terms of the left’s and right’s view of the free market system. Clearly they have very little use for it as they already know that too many companies have become dependent on the FEDS and their central planning. They have used politicians to write law that favors their position and inhibits or creates barriers for entrepreneurs and new products. These companies have become in a sense victims of their own success. They have become bloated and fat with success and have very little incentive to streamline and flatten the processes because government has regulated them and at the same time protected them using taxpayer dollars to prop up their failures. Let’s face it; these corporatists know that if the free market system was permitted to be the engine once again of our economic system they would not survive. This is why they need the government, and because the politicians need corporate money to help get re-elected, we a find a willing group of people ready to write the laws and give these corporations everything they need to survive. This is why the phrase “to big to fail” has become accepted as the norm in Washington. This phrase is the bane of the free market system. It flies in the face of everything the free market system represents. Just wait until the financial reform law kicks in.

    Great post CL.