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When the Left Is Right

Just because a far lefty has an idea doesn't always mean it's nuts.

By Petrarch  |  April 13, 2016

Conservatives can easily assume that the Left is composed of demented, mentally-retarded psychopaths whose position in our politics is that of the Orcs in Middle-Earth: mindless destroyers of all that is good - truth, justice, and the American Way.

Well, obviously there are some leftists like this; as the saying goes, some people just want to watch the world burn.  Most actual people who consider themselves to be on the left but aren't professional activists are much more thoughtful and humane than that.

And occasionally, even the activists - yes, even the leftist politicians - have a very good point.  Indeed, there's one issue on which the Left is right - and the Right, or large chunks of it anyway, are wrong.  That issue is big business, financial firms in particular, and the monopoly problem of "too big to fail."

Bernie's Big Beef

Bernie Sanders is the farthest left serious candidate the Democratic party has run in at least fifty years if not more.  Unlike any serious candidate for at least a century, he openly and proudly bears the label of Socialist.

Yet his signature issue is very much in the spirit of the a Republican president immortalized on Mt. Rushmore - Teddy Roosevelt.

If a bank is too big to fail, it is too big to exist.

  - Sen. Bernie Sanders

Why is this considered to be a leftist position?  More particularly, why do so many conservatives instinctively side with big business over the obvious harm that gigantic businesses can do and so often choose to do?

Of course, as conservative capitalists, we believe in free enterprise.  The problem is that if businesses become too big, you are no longer in a free economy.  At that point, you're instead in an oligopoly, because giant businesses have enough power and money to not only capture the regulatory agencies meant to keep them in check, but use those agencies to squash smaller, more nimble competition.

For example, Southwest Airlines was founded in 1967, but lawsuits to block their operation delayed their first flight until 1971.  More litigation delayed their first flight outside of Texas until 1979.  Customers benefited immensely from lower fares, but it's tempting to believe that Southwest's core competence in suing and being sued was at least as important to their success as skilled airline operations.

In addition to using the legal system to trash competitors, giant corporations also find it immensely profitable to bribe politicians to pass laws favoring their products.  American sugar growers have purchased laws banning cheaper imported sugar and ethanol providers have used government power to force uneconomic use of their products in our gas tanks.

We call this deadly combination "crony capitalism," and we think it's as immoral as armed robbery.  As The Godfather put it, "One lawyer with a briefcase can steal more money than 100 men with guns."  There is nothing whatsoever conservative about crony capitalism, and for the Republican Party to be known as the party of big business is utterly corrosive to our liberties - even though it isn't entirely accurate.

The left likes to blame the financial crash of 2008 which led to the Obama Depression, on greedy and dishonest bankers.  The right prefers to blame government interference in the free market through regulations forcing banks to make loans to people who had no hope of paying them back and creating moral hazard by letting government-backed Fannie Mae and Freddie Mac buy almost all mortgages regardless of security.  The banks making the dud loans had no apparent liability for the consequences so they loaned to whomever could breathe.  Remember the NINJA loans - No Income, Job, or Assets?

In reality, both accusations are true. It's a fact, proven in court, that a great many banks filed flawed mortgage paperwork.  And it's equally true that corrupt politicians joined forces with giant businesses to, ultimately, defraud the public for personal gain.

As conservatives, our instinctive approach to this wrongdoing is to shrink the size of government.  If government had less power, there'd be less cause for big businesses to buy politicians and bureaucrats to misuse them against competitors.

As useful as that would be, it's what conservatives have been trying to do for decades and failing utterly.  The record of government size, reach, and power is one of continuous growth for the entire modern era - even Ronald Reagan was only able to slow the growth, not reverse it.

Bernie Sanders, and Teddy Roosevelt before him, offer an alternative approach: Simply don't allow businesses to be so big that they can afford to own politicians and regulatory agencies.

Teddy Roosevelt's Shrink Ray

At the end of the Gilded Age, America's economy had a startling resemblance to the one we're in now.  There was a relatively small upper crust of enormously rich people at the helm of immensely powerful companies who controlled large chunks of the economy; a vast number of more or less interchangeable unskilled workers who toiled for peanuts; and a middle class which struggled to compete against the power of the corporations.

The answer, then and now, was economically obvious: competition.  The trouble was, most towns in America had little natural competition.  For example, there were several railroads that ran between New York and Chicago so the freight charges were reasonable.  Unfortunately, only one railroad ran through Middle-of-Nowhere, Nebraska, so the per-mile freight charges for shipments from there would be vastly more.  The farmer had no choice if he wanted to sell his produce at all.

Indeed, the Southern Pacific Railroad at times tried to refuse freight service "charges" as such, instead demanding to audit the books of companies desiring to ship goods and to collect a given percentage of revenues!  The railroad, in effect, demanded to be made a partner in the business, much as Mafia protection rackets and modern regulatory agencies do today.

It was these offenses against the common man that led to the political power of the rural Grange movement, and eventually to the Progressive movement.  Their reforms have gone much much too far today, but at the time, many of the political reforms in California were expressly designed to curb the monopoly power of the Southern Pacific and to curb the power of crooked mayors as found in New York and Chicago.

Today, we have similar problems in technology.  For instance, there are three main wireless carriers who operate a comfortable oligopoly across America.  There are a number of cable TV services, but most places are served only by one.  Yes, there's the option of satellite service, which puts a cap on the gouging, but that service is less reliable due to weather and is often unsatisfactory for Internet access.

And then there are the media companies themselves, all of which are vastly rich and powerful.  If you want to watch football you have to pay for the one contracted monopoly carrier.  If you want to watch news, you have to pay exorbitant rates to the cable company even if all you want is to stream it online.  Over the years, several innovative new services tried to offer alternatives, only to be squashed like bugs by the power of crony capitalism waging lawfare against their upstart competitors.

Teddy Roosevelt had an elegant solution to the monopoly problem in his day: "trust-busting."  He used the Sherman Antitrust Act to force giant businesses to break up into several smaller, separate corporations that had to compete with each other.

Standard Oil of [Your State Here]

The best known example was John D. Rockefeller's Standard Oil, which for a time controlled the majority of petroleum products sold in the United States.  Famous for driving competitors into bankruptcy and then buying their assets at firesale prices, Standard Oil was widely hated in the business community because it competed so effectively.  Consumers didn't mind so much because Standard Oil standardized product quality and, due to their massive volume, regularly lowered retail prices.

Yet Teddy Roosevelt rightly identified Standard Oil as a monopoly that restricted real competition.  It took a while for the US Justice Department to work up to taking on Standard Oil, but in 1911 under Roosevelt's hand-picked successor, President William Howard Taft, the Justice Department finally convinced the U.S. Supreme Court to order Standard Oil broken up.  And it was - into thirty-four separate companies that competed fiercely for many years.

A century along, Standard Oil rides again!  Today's ExxonMobil was once two separate firms, Exxon and Mobil.  Exxon used to be Esso, which stood for "Eastern Seaboard Standard Oil;" it originated as "Standard Oil Co. of New Jersey", one of the 34 pieces, then bought out other pieces up and down the Eastern seaboard.  Mobil originated as Socony, "Standard Oil Co. of New York" and did the same east to west.

For all intents and purposes, Standard Oil has been reassembled and we're back where we started.  Why haven't some greedy lawyers or ambitious Justice Department trolls scented opportunity?


Similarly, there was a time when all telephone service in the United States was provided by one company, American Telephone and Telegraph, known for short as Ma Bell.  What's more, AT&T owned all telephone equipment.  It was illegal to simply buy a telephone and plug it in: all phones were supplied by Western Electric, the manufacturing arm of Ma Bell, and leased with an outrageous but unavoidable monthly charge - somewhat like your cable box is today.

Readers with very long memories will remember an era when electric companies owned everything electrical in your house, including the light bulbs.  If a bulb blew, you called the company, and they'd come replace it.  The companies argued that they had to own everything "to protect the network."  Then some genius invented the fuse, the network could protect itself, and the courts spoke.  We can now buy light bulbs from wherever the government lets us and other electrical devices from pretty much anywhere, if occasionally to our detriment.

AT&T made the same "protect the network" argument but, like the electric companies, finally lost in court in 1982.  Instead of splitting it up into 34 pieces, the system was split into a mere 7 "Baby Bells," most of which have evolved into powerful monopolistic companies in their own right.

The important gain for consumers was that the court required that the system support a standard "network protection device" so you could buy a phone from whomever you liked.  Millions of telephones of all shapes and sizes poured into America over the next few years, providing variety and lowering the cost of extensions.

Over time, AT&T's remaining monopoly on long-distance service ended and competition from other carriers led to very low cost telephone calls.  However, the regional Bells that provide local dialup service mostly remained monopolies; it's just not a very effective monopoly anymore, since everyone now has a cellphone provided by somebody else.

The Sleeping Giant

Given this honorable history of protecting consumers from rapacious monopolies or oligopolies, where is the U.S. Justice Department?  The Sherman Antitrust Act has been in existence for well over a century - why won't our government use it?  Surely Democrats like Barack Obama don't want the rich to get richer at everyone else's expense - or do they, because bigger companies can afford bigger bribes?

Bernie Sanders wants to aim the power of the Federal government at the big banks that control, and can destroy, our economy.  Conservatives should applaud this goal: there's nothing conservative about a gigantic bank so rich that it can buy off anyone it wants to.

Indeed, we've recently seen a direct and palpable political hazard to giant corporations: look at the blackmail of North Carolina, Mississippi, and other states which are trying to protect the freedom of religion.  Companies like Disney, eBay, and even the NFL use their vast clout to force state governments to ignore the will of the people and allow men in girls' bathrooms.  It would appear that corporations don't just use their power to enrich themselves, but also to enforce the political views of the elites which run them.

Between financial fraud on the left and culture wars on the right, both left and right have a powerful reason to want big companies broken up.  Combined, the political force should be irresistible.

A Chance to Con The Left

Bernie Sanders, of course, is not attacking big companies because he wants to increase individual liberty; he simply wants to increase the power of government and reduce alternative power nexuses.

Fortunately for America, his intentions don't necessarily predict what will actually happen; the Law of Unintended Consequences applies doubly to liberals.  By breaking up big companies, a President Sanders would, unavoidably, reduce the power of one of the key allies of leftism - the crony capitalists who are happy for government to control everything so long as they control the government.

Giant businesses can force governors to veto restroom privacy laws because they are so enormously rich and powerful.  A far greater number of local small businesses, to say nothing of voters, wanted those laws - but there wasn't one single organization that could write a multi-million-dollar check, so money talked.

With more, and smaller, businesses, the playing field will be much more level.  No doubt there will still be liberal businesses, but there would likely be conservative ones too; and the existing conservative businesses would gain more relative power because the giants, almost exclusively far-left, would have been toppled.

We certainly don't desire to see Bernie Sanders in the Oval Office.  On his signature issue, however, he offers a lot to admire.

He's correctly identified a major systemic problem in our country - overpowerful giant corporations answerable to nobody, who have the ability and clout to force out all competition while enriching incumbent politicians.

He's sensibly proposed a solution that's been within the widely accepted purview of American justice for well over a century, used effectively by Republicans and Democrats alike - force "too big" businesses to break up.

Bernie hasn't talked about breaking up any giant businesses other than banks, and maybe he doesn't intend to.  Once you start a ball rolling it tends to keep going, however, and you know that the banks' lawyers will surely argue "Why are you picking on us?  These other businesses in other industries have just as much market share..."

And before you know it, without the Left even realizing it, we might find ourselves back in an economically more free America, with a major source of leftist power eliminated.

So why, at the very least, can't conservative candidates find "common cause" with the left and do something that needs to be done, which the left really wants to do, but which would help the right at least as much as anyone?  We aren't called the Stupid Party for nothing.