Michigan and Special Interest

Everybody loves roads.

Elizabeth Warren likes to lecture about roads and President Obama loves speaking about investment in crumbling infrastructure. Get past the talking points and into the weeds and the MSNBC set will offer something about “rebuilding America” as their pet panacea for, well, everything. Even Rand Paul has teamed up with Barbara Boxer on a bill that would fill the coffers of the federal highway fund via revenue brought in by a lower corporate tax rate. Libertarians can hardly go five minutes without being condescendingly informed that our free market paradise could never happen because who would build the roads?!?!?!?!?

In Michigan this week, Republican governor Rick Snyder saw Proposal 1 – a ballot measure to hike sales taxes to finance road and highway improvement – go down by an 80-20 margin. The governor and his party supported this bill which would have increased the average household’s annual tax burden by as much as $545 a year. The key support for the measure came from a lobbying consortium representing several concrete, asphalt, paving and excavation interests in the state. They outspent the opponents of the tax hike by 30 to 40-1.

Proposal 1’s “sound defeat undermined the media assumption that Big Business and Big Government working together represents a public consensus,” says Tim Carney in a piece for The Washington Examiner. Carney ends his column urging conservatives to build on this and sees it as an effective way to make the case against cronyism more broadly: “This points towards the way to sell limited government: When government has more power, it empowers those with connections to government.”

It is naive to think special interest lobbies will ever be eliminated. As long as we put the people’s representatives forward, interest groups will be there to gain their favor. The only way to limit lobbyist influence is to limit the number of laws coming from Washington. Bastiat feared an overabundance of legislation would lead to “legal plunder” which would give incentive to special interests to use the legal system for its own advantage. Illegal plunder earns universal scorn whereas legal plunder is considered “democracy.” But because we are never going to convince self-interested politicians who think they are divas to curb their enthusiasm for passing laws, we might as well abandon the dream of a lobby-free zone in Washington.

Instead, we should focus our attention on the small instances where Big Government-Big Business collusion is exposed, as just happened in Michigan. And we should heed Carney’s advice to highlight how ballot measures such as Proposal 1 “undermine the common liberal trope that the push for lower taxes is the agenda of Big Money, and that higher taxes is the populist agenda.” This is a crucial point.

President Obama, that fierce populist champion and avatar of the working man, showed in his first major act in office just how comfortable Big Business is with the progressive agenda. The stimulus was nothing more than a massive special interest kickback to blue state governments, public unions and friends of the progressive left. The most infamous example is Solyndra, a solar panel firm granted half a billion dollars by the Obama administration for no other reason than the CEO was a huge Obama bundler. The federal bureaucracy is notorious for how it awards contracts to connected firms over more qualified bidders, a fact that became known to most Americans during the Obamacare website’s China Syndrome moment. CGI Federal, a subsidiary of a Canadian firm infamous for completely botching a Canadian gun registry, was given the insanely lucrative contract in part because a Princeton classmate of Michelle Obama’s was the Senior VP. Even Rick Perry was not immune to the special interest lure when he was governor of Texas. Despite presiding over the best economic record of all states since 2007, Perry routinely offered state subsidies to chic tech companies such as Tesla, Google and Apple to entice them to open plants in Texas. That many companies express interest in locating in Texas speaks to the favorable tax and regulatory climate, sure, but the subsidies certainly play a role too.

Conservatives are generally fans of federalism and celebrate the idea of states experimenting with distinct economic models. By foregoing uniform economic policies drawn up in Washington to be applied nationally, we encourage competition between states as they experiment in various ways. Illinois is probably going to have to walk back its progressive obsession with high taxes and oppressive regulations because they are bleeding jobs and capital to neighboring Indiana, Wisconsin and Michigan, all of whom have lowered taxes and cultivated friendlier business climates in the last several years. Unfortunately, state competition for business goes too far when it devolves into a circus of competing subsidies and special treatment, also known as the “Redevelopment Racket.” Cynics say this is the way the game is played, but Michigan offers hope for a brighter alternative.

As Rick Perry and other conservative governors prove, conservatives can also be guilty of catering to special interest lobbies. However, a conservative politician engaging in crony capitalism is straying from established principle whereas a progressive doing the same is adhering to the only principle he knows: grow government. And despite the myth progressives maintain about high tax policy equaling populism, Michigan reveals the truth of the matter. Special interests representing road construction lobby the Michigan government for more spending and more taxes to pay for it, all so they themselves can get rich off the exclusive bid grant. The government – in this case a nominally conservative one – agrees that improved roads are desirable and does the bidding of the special interest by insisting that the voters agree to a pretty stiff tax hike. Perhaps voters would be more open to the measure if they thought the deal wasn’t riddled with corruption and back-scratching to begin with? At the end of the day, governments rarely look for ways to get what they want on the cheap. Why bother being frugal when powerful lobbies are there to suggest a simple tax increase?

Corruption and cronyism know no ideology, but government itself is the engine that drives them. Therefore, the party of government needs to come to terms with this reality and perhaps reconsider their dogma surrounding the benevolent Leviathan. Until then, let us hope for more Michigan-style tax proposals being met with boisterous thumbs down and that they serve to show the public exactly how deals are made in politics and what always lies beneath calls for more “populist” tax increases.

Prescience

“But we had better be careful. An apparent verification by prima facie favorable cases which are not analyzed in detail may be very deceptive. Moreover, as every lawyer and every politician knows, energetic appeal to familiar facts will go a long way toward inducing a jury or a parliament to accept also the construction he desires to put upon them. Marxists have exploited this technique to the full. In this instance it is particularly successful, because the facts in question combine the virtues of being superficially known to everyone and of being thoroughly understood by very few. In fact, though we cannot enter into detailed discussion here, even hasty reflection suffices to suggest a suspicion that “it is not so.””

-Joseph Schumpeter, Capitalism, Socialism and Democracy (1942)

Schumpeter was arguing against Marxian orthodoxy which insists that every event and occurrence can be explained and predicted by the inherent logic of history that points to the inevitable endpoint of capitalism.

But while Marxists eventually, grudgingly had to give up on their “arc of history” fantasies, the appeal of the technique outlined above persists, most obviously on the matter of climate change. I have my strong opinions about it and people are free to theirs, but the point Schumpeter makes is instructive and should discourage climate zealots from being so self-righteously assured of their position. The scientific method was conceived in response to the understanding that the science is almost never settled and any honest broker must acknowledge that shutting down debate with the “denier” epithet is the opposite of good scientific norms and practices. It’s the mentality that got a whole bunch of heliocentric advocates burned at the stake in yonder eras.

So much of the modern left is ignorant of the degree that Marxist tenets and arguments still reign over their thinking. Those who know from whence their ideology springs are keen to disguise the heritage of their ideas and, more importantly, their tactics. If it was conventional wisdom that modern leftwing methods are just warmed-over Marxist retreads, far fewer people would embrace them.

Climate change demagoguery takes a page directly from the Marxist playbook and that makes sense once you appreciate how the rise of the green movement and its activist impulses directly correlates with the fall of the Soviet Union. All those Commies had to end up somewhere and in the environmental movement they found their home.

Schumpeter’s critique of the flaws of Marxian “synthesis” as a means of explaining the logic of history (an endeavor championed more by early 20th century Neo-Marxists than by Marx himself) were incredibly prescient. His analysis of mid-20th century Marxist tendencies translates quite well to those of the Western left today. Climate change is the most acute example of modern leftists channeling techniques from a time when unabashed reverence for their ideological godfather was a matter of pride and rebellion rather than a secret. But the left’s reliance on “verification by prima facie favorable cases which are not analyzed in detail” and which “may be very deceptive” extends to many other topics as well. Every lie told about Obamacare, for instance. The left’s entire economic model of redistribution is itself a barely-disguised Marxist policy founded on the ridiculous idea that there exist always and forever only two classes, owners (capitalists) and workers (labor), and that the obligation of government is to take from the owners – who only could have accumulated their capital through theft – and distribute to the workers. Their cultural agenda is rooted in the Marxist belief that tradition and social norms are the sole provenance of the bourgeoisie and must therefore be eradicated everywhere. Thus are we subjected to notions of “patriarchy,” “white privilege,” “systemic bigotry” and “us against them” populism aimed at nothing more than placating the jealousy cultivated by the Marxist idea of permanent class war. It does not end there. The family and religion are under assault everywhere you look, displayed most openly by MSNBC’s Melissa Harris-Perry in a fine bit of #Grubering that included this nugget of Marxian wisdom:

“We’ve always had kind of a private notion of children. Your kid is yours, and your responsibility. We haven’t had a very collective notion of ‘These are our children.’ So part of it is we have to break through our kind of private idea that ‘kids belong to their parents’ or ‘kids belong to their families,’ and recognize that kids belong to whole communities.”

Whether the nuclear family, religion, property rights, conscience rights or the Bill of Rights, the neo-Neo-Marxists that comprise much of the Democratic Party in the U.S. and many elements of Canadian, Australian and UK Labour are hell bent on burning it all down. Like all good Marxists they can never lose sight of the ultimate goal of bringing about the inevitable demise of capitalism, so for all the shiny cultural distractions into which they pour considerable energies, the animating impulse can always be traced back to the fundamental misconception that society is locked in a fateful struggle between classes, of which there can be only two. Having only two classes – like political parties – creates a situation of permanent adversaries, an alluring construct for the aggrieved and the charlatan alike, never mind that this construct has little tether to reality. Once established in the popular mind, it is exceedingly difficult for critics to persuade the converted that they are being sold false hope based on a lie. The intoxicating promise of seeing the capitalists ultimately succumb to their own evil system of theft and greed has endured to today. How else to explain Occupy Wall Street and the inchoate ramblings of faux-populist Elizabeth Warren?

The goal of the Marx-inspired left is simply to stand for the advancement of government interests over individual or traditional interests at every turn. If you adhere to a belief that social progress is fixed to a logical arc of history defined by the never-ending class war and that the “good guys” are predestined to triumph over the “bad guys” and their ill-gotten capital accumulation, you’re unlikely to be receptive to philosophical or economic arguments in favor of capitalism. Instead your concern falls to the “little guy” who can only be made whole by dint of an aggressive correction to the unjust and immoral status quo of market economics. The vehicle for the correction is the state. No matter how much academic evidence emerges to prove the fallacy of the project, no matter the real world evidence that confirms the futility of collectivism in practice, and no matter the human toll erected on the mantle of socialism, the cult of Marx persists because he offered a moral foundation to anticapitalism. The world was rigged in favor of the bourgeoisie and against the proletariat. Entreaties to trust the invisible hand or the beautiful twin phenomena of innovation and creative destruction would always be met with derision and contempt, for they purported to put the onus for solutions on the very class the workers had been indoctrinated to never trust. The same dynamic at play in 1914 is alive and well in 2014.

The left will not allow us to dissolve the broader class war narrative because it suits them to perpetuate. As Schumpeter might say about the left’s overriding world view today, “even hasty reflection suffices to suggest a suspicion that “it is not so.””