Joel Kotkin, hardly a wild-eyed libertarian, has an interesting response to the White House’s new plan to force corporations to pay higher wages:
From health care reform and transportation to education to the environment, the Obama administration has—from the beginning—sought to expand the power of the central state. The president’s newest initiative to wrest environment, wage and benefit concessions from private companies is the latest example. But this trend of centralizing power to the federal government puts the political future of the ruling party—as well as the very nature of our federal system—in jeopardy.
Of course, certain times do call for increased federal activity—legitimate threats to national security or economic emergencies, such as the Great Depression or the recent financial crisis, for example.
Other functions essential to interstate commerce—basic research, science education, the guarantee of civil rights, transportation infrastructure—as well as basic environmental health and safety standards also call for some federal oversight. Virtually every modern president, from Roosevelt and Eisenhower to Reagan and Clinton, has endorsed these uses of centralized government.
But what is happening now goes well beyond the previously defined perimeters of the federal government’s powers. Obama seems to possess a desire not so much to fix the basic infrastructure of the country but to re-engineer our entire society into the model championed by liberal academia.
There also seems to be a conscious design to recreate the country as a European-style super-state. Forged by an understandable urge to minimize chaos after a century of conflict, the super-state generally favors risk management through centralization of authority. This has traditionally been accomplished by ceding regulatory powers to national capitals, though lately more and more powers have been ceded to the European Union.
Initially the administration had hopes of imposing similar controls through acts of Congress. However, with the shifting political mood, this seems less and less possible. With its latest action the administration sends the message that it will now impose the desired results through the bureaucracy. Under the proposal, private firms that do not raise wages will be bullied into doing so through the manipulation of federal contract awards.
This marks a departure from our basic traditions. For most of our history the burden of expanding opportunity has rested with the private economy, albeit in conjunction with often necessary protections for workers and consumers.
Now the overall control of the economy is shifting to Washington—from government contracts to ownership shares in companies like General Motors and much of the financial sector.
This new order would transform the very nature of American capitalism. Now the economic winners will not be those working for the most agile or profitable companies, but those who gain the blessings of the federal overlords. In some senses this extends the corrupt, largely failed political economy of Chicago politics to a bastard American form of French dirigisme.
I don’t want to use this space to plug my book (though I will!), but this is precisely the sort of thing you would expect from a bunch of intellectuals so comfortable with progressive-style corporatism. The problems with all of this should be obvious to folks around here: Big business serves as government by proxy. Successful businesses are those that satisfy politicians, not consumers.
What’s most worrisome is that once you create this sort of system, it will be very difficult to unravel. Lobbyists will get into it like ants at the picnic. Just look at how difficult it is to fire bad teachers or cross government labor unions now (See: California). Now imagine if nearly one-fourth of American workers are sucked into the new politicized economy.