Power Corrupts
I was reading an article this morning in my hometown paper, The Boston Globe, that articulated an idea that has been marinading in my head for some time.
Lord Acton once said, “Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.”
This concept is alive and well in modern America. Companies that start small and scrappy, playing within the rules of the game and altering the competitive landscape through innovation often grow into big companies that attempt to lock in their advantages through any means necessary.
This means hiring lobbyists and pushing through legislative changes to advance the interest of the company that, when looked at by any sane non-partisan set of eyes, seem outrageously ridiculous.
I’ve always thought that the deficiencies of our otherwise resilient economy stem from not allowing free markets to be, well, free. Freedom is not impeded by big government or high corporate taxes in America (at least not yet). Freedom is, in my opinion, impeded by companies or organizations that get big and then try to distort the free markets and corrupt a fair playing field to their advantage.
This is not a Republican or Democrat stance. It is a common sense American stance. America was built on fair playing fields, free and open markets. In America, it has always been easy for someone with an innovative idea to start a new business, redefine a market, and garner a well deserved piece of the economic pie for the owners.
But something has to be put in place to protect the rest of us from those same owners once they become successful and spend the balance of their existence trying to fight off the next round of innovators.
The Boston Globe writes,
As [Luigi Zingales] and colleague Raghuram Rajan laid out in their 2003 book, “Saving Capitalism from the Capitalists,” powerful companies, given the chance, work hand-in-glove with government officials to craft laws and regulations that protect them while limiting competition and transparency.
It’s a natural human, and corporate, instinct to do whatever is within your means to guard what you possess. When you don’t have anything, as an individual or a company, it’s much easier to take risks, swing for the fences and do things differently.
Last year, we explored the topic, Why is it so Hard for Big Companies to Innovate. My brother, Michael, wrote, “The issue here is one that befuddles corporate culture: once you corner the market do you batten down the hatches and defend your turf, or do you continue to take risks and branch out into into the perpetual unknown?”
Keeping the playing field level is healthy for the economy. It forces big companies to continue to innovate to stay relevant or suffer the consequences. It’s a core Republican value to create policy that ensures a healthy, frictionless economy. It’s not a Republican value to side with a specific company to tilt the playing field in its favor. The Globe argues that Republicans have too often been aligned with individual capitalists rather than Capitalism.
To take a movie metaphor, let’s go back to Jean-Claude Van Damme’s epic 80s masterpiece, Bloodsport. In the movie, JCVD’s character, Frank Dux, reaches the finals of an underground Mixed Martial Arts tournament known as the Kumate. His opponent is Chong Li, the resident bad guy champion.
Chong Li knows the weird foreigner with a Belgian accent and all-American name is the better fighter. So what does Chong Li do to win? He cheats to give himself an unfair competitive advantage by throwing cocaine in Frank’s eyes to blind him.
Think of Chong Li as the Wall Street Banks. Think of Chuck Schumer as the guy who provided them the legislative cocaine to blind America in exchange for campaign contributions to ensure his own election victories. Is our economy healthier when the playing field is level, or when it’s tilted in one groups favor so they can make ungodly amounts of money by distorting the system?
In the case of our financial meltdown, bankers pushed lenders to lend more and more, with crazier and crazier terms, so the bankers could then slice up those loans and repackage them at a hefty profit. The whole system was built on encouraging consumers to take out debt well beyond their means.
Peter Cervieri is co-founder of and Director of Business Development for ScribeMedia.Org. He has many fetishes. Among them is collecting business cards.
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