Cracking down on corporate power was once the exclusive domain of the Elizabeth Warren wing of the Democratic Party. Not anymore: Republican Senator J.D. Vance of Ohio, for one, now routinely collaborates with Senator Warren on new regulation of finance and rail safety, neither of which has made doing business any easier in the United States.
The anti-corporate turn on the right is not altogether new, nor is it uniquely American. When he was president, Donald Trump threatened Harley Davidson with special taxes if the company moved a part of its production overseas. Many Republicans have made known their dislike of “woke” corporations. In Florida, Governor Ron DeSantis has dragged the state into a protracted legal battle with Disney after he decided to curtail its special tax regime.
In Hungary and Poland, governments of Fidesz and the Law and Justice party similarly targeted banks, large retailers, and energy companies—most of them foreign-owned—with ad hoc levies and sought to bring the commanding heights of both economies into local hands.
In the United States, however, the turn against big business has been infused by the culture wars and not just by economic nationalism. In the aftermath of the Covid-19 pandemic, many on the right have grown comfortable with policies that are completely antithetical to the party’s earlier pro-business positions, such as DeSantis’ “Prescribe Freedom” law banning vaccine mandates by private actors.
The Right’s new thought leaders, such as Jordan Peterson, traffic in corporate conspiracy theories that could just as easily have emanated from the far Left. Sohrab Ahmari—the Iranian liberal turned Wall Street Journaleditorial writer turned Trump-friendly Catholic integralist—has now completed his intellectual journey along the ideological horseshoe by publishing a screed against the “private tyranny” of “woke corporations.”
To be sure, big business does raise questions that a simple-minded free-market orthodoxy does not address. Economic concentration matters. Antitrust policy exists for a reason. Private benefits and socialized costs have become a ubiquitous feature of America’s capitalism, particularly in the financial industry. Most importantly perhaps, while the giants of Silicon Valley give us some dazzling innovations, those have not been translated into economy-wide gains in productivity benefiting all Americans.
That said, a bipartisan consensus that sees corporations as enemies provides a poor foundation for sound economic policy. On the Democratic side, it is Senator Warren’s acolytes who are holding outsized influence over the administration’s policies. A case in point: The chair of the Federal Trade Commission, Lina Khan—who made her name by advancing a vision of antitrust policy that essentially ignores consumer welfare—is now seeking to break down Amazon, one of the undeniable success stories of the tech age.
In normal times, one would expect Republicans to be pushing against blatant instances of overreach. Yet, Senators Marco Rubio (R-FL) and Mike Lee (R-UT), to cite just two examples, are advocating for the unionization of Amazon’s workforce, essentially because Amazon and its founder Jeff Bezos have picked the wrong side in America’s culture wars.
One does not have to be a free-market fundamentalist to see the dangers of the newly emerging bipartisan consensus. The U.S. economy has always involved a mix between social democracy and free enterprise. Yet, the fact that this mix involves a heavier dose of market forces relative to most other advanced industrialized democracies has served the United States, and the world, well.
For one, the United States is considerably wealthier than its European counterparts. There is also an argument to be made that countries that have embraced cuddlier, more explicitly social-democratic forms of capitalism are relying on its U.S. “cutthroat” variety to produce the bulk of innovation driving economic growth around the world.
Over the period from 2016 to 2021, for example, over 64 percent of all new drug sales took place in the United States, which is home to five of the world’s ten leading pharmaceutical companies. The unprecedented speed with which Pfizer, Moderna, and Johnson & Johnson were able to create highly effective vaccines against Covid-19 and launch their production at scale is a testament to the upside of high drug prices and the sheer size of the corporations in question.
The corporate sector might engender little affection these days, but it still remains a central part of the American story, as economist Tyler Cowen argues in Big Business: A Love Letter to an American Anti-Hero. In the 2019 book he mapped the various ways in which large corporations and Wall Street directly contribute to average Americans’ wealth and well-being.
Or consider other unsung heroes of the pandemic—the likes of Target or Walmart, which were able to adjust their logistics to deal with a locked-down economy with vastly different consumption patterns and labor force restrictions. Barring initial frictions in March 2020 and shortages of various durables resulting from China’s extreme policies, the retail sector managed to quickly pivot to keep America fed, clothed, and supplied with necessities.
From a foreign policy standpoint, America’s corporate sector is the goose that continues to lay golden eggs. U.S. manufacturing was a decisive factor in the Second World War. It was America’s entrepreneurial churn that helped outcompete the Soviet Union. Today, Chinese companies are no match for American ones in terms of their innovativeness or quality of management.
And for all the rush to rethink globalization, it is undeniable that large U.S. corporations have been important instruments of American soft power. The presence of U.S. and other Western investors in post-communist economies, for instance, has not been marked by plunder and corruption scandals. Instead, foreign Western investment has exerted significant pressure on public and private entities to improve the rule of law, corporate governance, and myriad other standards, remaking parts of the world in the American image.
Conservatives, Republicans, and Americans at large have every right to be annoyed by corporations’ sanctimony and virtue-signaling. When their bottom line is at stake, companies are quick to respond to negative feedback from their customers. Anheuser-Busch executives will think twice before weighing in again on trans issues, for example.
More importantly, it is incumbent on those who would use the power of the state against “woke companies” to demonstrate that their putative cure is not worse than the disease. The separation between private business and politics is central to America’s pluralism. Breaching the barrier in search of short-term political gain might look attractive when “our” people are in charge but it is short-sighted, as it sets precedent for the other side to follow suit when it gains access to the levers of power.
Even more seriously, a politicization of the corporate sector and a generalized, knee-jerk suspicion of big business both on the left and the right all but guarantees that the United States ends up with a policy mix that undermines its long-term prosperity and makes it much harder to effectively compete against its geopolitical foes. Conservatives would do well to reconsider before jumping on the anti-corporatist bandwagon.
Dalibor Rohac is a senior fellow at the American Enterprise Institute and a contributing editor of American Purpose. Twitter: @DaliborRohac
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