Monday, May 25, 2009

This Administration's Policies: Corporate Fascism or Dictatorship?

"Fascism should rightly be called Corporatism, as it is the merger of corporate and government power." Benito Mussolini
Some members of the Republican National Committee have recently wondered…what name do we give to the direction in which Democrats and the Obama administration are taking America?…In 20th Century Italy and Germany, particularly during 1933-1945, fascism merged the self-interests of despotic, single-party rulers with large corporations for whom big war offered big profits. Mussolini called it Corporatism….Corporatism Comes to America, Lee Cary, American Thinker, 5/22/2009

In the sorry state of American politics, namecalling has become the de facto standard. The most popular insults are “racist”, “homophobe,” and “fascist”, the latter often replaced by “Nazi” or “Communist.” In most instances, such language is a cheat to get past critical appraisal by either a reporter or a constituent. In this sport, Corporatism is an old charge.

Variations of the term and its definition can be found well back in the 19th century. And before that, the great English companies, escorted overseas by Royal Marines and the British Navy, were a paradigm for the fusion of public and private interests. The system devised by Franklin Delano Roosevelt’s government to supply our armed forces in World War II fits perfectly with Cary’s conception of Corporatism. It was a command economy. Private interests were subsumed to profitability and willingness to carry out what the government described as the public good – the defeat of Germany and Japan, and the revival of the American industrial economy. The method was adopted as much here as it was in Hitler’s Germany, Mussolini’s Italy, Stalin’s USSR, and Hirohito’s Japan. It is more than arguable, as Herman Wouk observed in War and Remembrance, that war had become a corporate enterprise, with masses of men using millions of mass-produced arms, transported by mass produced trucks and aircraft, with civilians bombed by tens of thousands of bombers mass-produced in factories that were intended, under private investors and entrepreneur sbefore the war, to build civilian airliners and automobiles. Without this vast, corporate, industrial enterprise, neither side would have dared to wage war on such a scale.

This joint effort did not end with VJ Day. The integration of public and private introduced by the Roosevelt Administration went on in the Truman, Eisenhower, and Kennedy administrations to set up the vast bomber and missile fleets of the Cold War, sustaining a state of high alert for almost forty years to protect corporate and public interests from another world war. Economic stability was guaranteed by vast federal outlays for big programs like the Interstates and heavy subsidy of the housing market through tax rebates for home buyers. Far from being the golden age of private interest, as some on the right would have you believe, from 1941 to the late 1960s was the golden age of the American command economy created by the Depression in part, but in largest degree by the Second World War. A signal achievement was the Apollo program at NASA, a government-led consortium of thousands of private companies for an objective not one would have pursued privately, putting a dozen astronauts on a world so hostile that comparison to a previous age of exploration was silly. No one would live there. There would be no Massachusetts Bay Colony, no gold rush to California, no Wyoming homesteading, no vast new agriculture to feed the world. There was no affordable, hence no profitable, means to exploit what unusual resources the moon might have. Like the vast strategic and logistical operations of World War II and the Cold War, Apollo would not have been possible without the marriage of public and private interests. Apollo was regarded as a showcase of American know-how. Having succeeded, the program, except for the Big Science robot explorations, and the kick-starting of the communications satellite business, NASA went back to its role before Kennedy decided to use it as a competitive tool against the Soviets. And so, contrary to Cary’s thesis about something new and frightening in the current government’s interventions on behalf of banks, insurance companies, and that part of the auto industry based in the United States, it’s not new in America, and it embraces almost the entire history of Europe.

What actually makes the current administration’s approach to this profoundly disturbing is its willingness to disregard constitutional, legal, and contractual precedents. The last time someone in the White House tried to take over an entire industry, the courts responded with a resounding reversal. President Truman, at the beginning of the Korean War, countered a steel strike by declaring that the government, in the name of national security, was going to seize this key industry to keep it running. As they were now government employees, steelworkers were to come off the picket lines and return to work. No, said the Supreme Court, no President can seize private property in this manner; it’s a violation of fifth amendment rights under the United States Constitution, which the President was sworn to defend. Truman, who would have been impeached if he’d refused the court’s judgment, relented. The strike was subsequently settled with legal negotiations and a binding agreement accepted by the steelworkers’ union.

The controversies over eminent domain, whereby a government, in the name of the public good, forces a sale of property, are entirely different matters. A Mayor or Governor can’t just take someone’s property and throw the owners out. Legal filings are done. Negotiations take place. Formal agreements on compensation are drawn up. Yes, some people get cheated. Some have incompetent legal representation. But, eminent domain is a legal process. On the other hand, telling Chrysler and GM’s secured creditors, many of whom are city, state and private pension funds, that they have to take second place in a bankruptcy settlement to an unsecured creditor, such as the UAW, violates law and precedent on the treatment of creditors in a bankruptcy process. Spitting on the law for political reasons has predictable consequences, none of them in the long-term interest of either the government or private companies.

What pension money manager would ever again put depositors’ funds at risk in a company with either a union or the possibility of federal involvement? Money managers for these large funds have a legal, fiduciary responsibility to protect depositors. Investing in a corporation that bore those kinds of risks might put that manager in jail. What private investor would agree to any terms if they may be violated by fiat of the government, whether to satisfy a political constituency, or to intervene on the administration’s assumptions that it has a better idea of who should bear a risk than a contract drawn up between consenting parties?

This is not Corporatism at all. It is the action of a dictator who has decided that the government has the right to determine the market to fulfill its political objectives. In the case of Chrysler and GM, it is clearly the administration’s intent to reward political supporters like the UAW at the expense of both secured creditors and the law itself. There is no difference between this action and the seizure of private companies being undertaken by Hugo Chavez in Venezuela or by Fidel Castro in Cuba. And, in the context of America’s constitution, law, and precedent, this action is flagrant malfeasance in office. Scorning the law is a crime, an impeachable offense.

Further, the use of overt threats against those who disagree with the administration’s approach, whether the thugs are in the employ of ACORN, a labor union or living off a G.I.F.T. subsidy from Congress – one brownshirt fits every group, is all of a piece with this unconstitutional, lawless administration. Its leadership is apparently willing to follow a modern version of the advice of a Marine in Vietnam in 1965 who said, as he set fire to a hut, that “we have to burn this village to save it.”

Abstract arguments about one –ism or another will not stop this band from doing their dirty work. Concentrated attention and following actions within the rights and obligations of the law are required. We may have a beginning with Indiana’s public pension fund in its court fight with the administration’s imposed solution with Chrysler, but we need more. Holding out to get an extra penny in an illegal settlement is what small minds do in a dictatorship, protecting their income at the expense of the nation. Direct, legal confrontation is called for, and it had better get started now.


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