Should government be 'the ally of business?' A conservative says no

Despite his knee-jerk opposition to regulations and taxes, Republican columnist Jonah Goldberg has had some interesting things to say on the subject of crony capitalism since the financial panic of 2008. It was from him that I first learned the proverb, "the problem with socialism is socialism; the problem with capitalism is capitalists." Goldberg still thinks capitalism the best possible economic system but recognizes its potential for abuse by capitalists through the political system while predictably decrying the abuse of capitalists by politicians. He was probably unusual among Republicans this month when he took alarm at Mitt Romney's claim that the government had to become "an ally of business" rather than its "opposition." To most Republicans, I assume, that statement is unproblematic. Goldberg considers it one of the biggest gaffes to date of Romney's campaign. He thinks it might provoke another populist backlash if it's assumed, as Goldberg himself seems to assume, that Romney means that government should be an ally of "Big Business," Wall Street, etc. He also thinks that President Obama could plausibly claim to be a better "ally of business" in the worst sense of the term. Goldberg would prefer Romney to be pro-"free market" rather than "pro-business." What's the difference?

When government takes it upon itself to be the ally of business, certain biases often take over. For instance, existing industries have a huge advantage over ones that haven't been created yet. A more obvious bias is toward big companies over small ones. Big companies create constituencies and can afford lobbyists to make their case. Moreover, big business becomes a tempting vehicle for other policies like, say, providing health care. And why not: When government is scratching business' back, why shouldn't business return the favor?

A conscious alliance of government and business inevitably results in cronyism and obstacles to innovative competition, Goldberg believes. Rather than playing the ally or opponent of business, government should take a hands-off approach; its only interest in markets, Goldberg claims, is "to keep [them] free and fair." As a free-market idealist, he presumes that government can best play that role by exerting the least power and influence over markets. The libertarian remedy for crony capitalism is to deny capitalists the political leverage they would likely abuse by denying government leverage over the economy. Without government tipping scales by "playing favorites," the market will operate as idealist economists always expected. As I've written before, this would still require considerable vigilance on the part of citizens to keep business from expanding government for its own benefit, but government itself, to the extent that it's a creature of the people rather than the economy, has priorities that arguably take priority over any alliance with "business" defined as a clique of cronies or with the "free market" itself.

Goldberg isn't saying that Romney endorsed crony capitalism outright. He remains convinced that the Man From Bain is more faithful to free markets than Obama, and even applauds Romney's record of "creative destruction" at Bain. But Romney's problem all along, even as he goes from victory to victory in the primaries, has been that people have a hard time figuring out what side he's really on. Goldberg continues to grope toward an understanding that such ambiguity is inherent in capitalist politics, while such ambivalence toward a candidate like Romney is inevitable. Goldberg wants government to be neither "ally" nor "opponent" of business -- but shouldn't that really be up to business? Business interests change, but government's concerns are constant. Which should accommodate itself to the other is one of the fundamental questions of politics -- and "pass" is not an answer.