Home > Politics > A New Public-Private Partnership

A New Public-Private Partnership

There has been a lot of talk in recent weeks about Obama’s appointment of General Electric President Jeffrey Immelt as head of the White House Council on Jobs and Competitiveness signifying a newfound dedication by Obama to create a more business friendly environment.  Here is an example.  This, however couldn’t be further from the truth.  Immelt is a progressive who has been at Obama’s side all along.  This is exactly how progressives have always operated.  Let’s take a look at the history.

Recall the true story of the robber barons from a previous post.  Most of the “exploitation” that happened in the 19th century was not carried out via free market capitalism it was a result of so-called “capitalists” buying influence in the government and using it to get subsidies, raise prices, restrict competition and form cartels/monopolies.  The market can’t exploit you because it can’t force you to do anything you don’t want to do.  The only thing that can force you to do something against your will is the government. 

Fast forward to the great depression and observe another so-called “capitalist” Herbert Hoover who explained his approach to economic recovery in his memoirs:

With the October-November stock-market crash the primary question at once arose as to whether the President and the Federal government should undertake to mitigate and remedy the evils stemming from it.  No President before had ever believed there was a governmental responsibility in such cases.  no matter what the urging on previous occasions.  Presidents steadfastly had maintained that the Federal government was apart from such eruptions; they had always been left to blow themselves out.  presidents Van Buren, Grant, Cleveland and Theodore Roosevelt had all remained aloof…*

Hoover, however, did not remain aloof.  Instead he formed a vast “public-private partnership”.”  In November 1929, speaking to a group of industrialists Hoover said:

[Your agreement is] an advance in the whole conception of the relationship of business to public welfare.  You represent the business of the United States, undertaking through your own voluntary action to contribute something very definite to the advancement of stability and progress in our economic life.  This is a far cry from the arbitrary and dog-eat-dog attitude of the business world of some thirty or forty years ago.

In January of the following year an editorial in the American Federationist, a labor union publication proclaimed:

The President’s conference has given industrial leaders a new sense of their responsibilities….Never before have they been called upon to act together…[I]n earlier recessions they have acted individually to protect their own interests and…have intensified depressions.”

Thank God industrial leaders didn’t intensify the depression of 1929 by acting in their own selfish interests, or it might have gotten bad…. Hoover’s treasury secretary Andrew Mellon (who was not really a supporter of Hoover’s interference) characterized the situation as follows:

In this country, there has been a concerted and determined effort on the part of both government and business not only to prevent any reduction in wages but to keep the maximum number of men employed, and thereby to increase consumption.

After several years of  “advancing stability and progress in economic life,” we were, not surprisingly, still in a deep recession.  The public/private partnership continued however under FDR’s National Recovery Administration.  That’s the name progressives gave to big business getting together and setting prices and standards for their industries that would not allow smaller businesses to compete and having government enforce them on everyone.  You may have heard of the dry cleaner who was thrown in jail for setting his prices too low.

Maged had been pressing pants for twenty-two years and his low prices and quality work had kept him competitive with larger tailor shops in the better parts of town.  The NRA Cleaners and Dyers Code demanded that 40 cents be charged to press a suit.  Maged, despite repeated warnings, insisted on charging his customers only 35 cents.  “You can’t tell me how to run my business,” Maged insisted.  When threatened with jail, he said, “If you can send me to jail, go ahead.”

Not only was Maged thrown in jail, he was also slapped with a hundred-dollar fine.  “We think that this is the only way to enforce the NRA,” said Abraham Traube, a director of the NRA code authority for the Cleaners and Dyers Board of Trade.  “If we did the same thing in New York City we would soon get the whole industry in line.”

Carl Pharis, the owner of a tire manufacturing company in Ohio described the act.

The Government deliberately raised our prices up towards the prices at which the big companies wanted to sell, at which they could make a profit… where more easily,  with much less loss, they could come down and ‘get us’ and where, bound by N.R.A. decrees, we could not use lower prices, although we could have lowered them and still made a decent profit.

Similarly the Agricultural Adjustment Act sought to raise prices of agricultural goods by destroying crops while people went hungry.

By the time the [Agricultural Adjustment Act] became law and key people were recruited, corn, cotton, tobacco, and wheat were already planted, and livestock operations were moving along.  The contemplated output restrictions wouldn’t take effect until the following year.  So some of the New Dealers began to think their only option, if they wanted to force up farm prices soon, was to destroy crops already planted… Agriculture Department officials signed up about a million cotton farmers, and they were paid $100 million to plow under some 10 million acres of farmland….Hog farmers were paid to slaughter some 6 million baby pigs.  Economic historian Broadus Mitchell noted that “Most of this pork, under agreement of the government with the packers, became fertilizer; less than a tenth was saved as food and distributed in relief.” Mitchell added, “Over 12,000 acres of tobacco were plowed under.  California cling peaches were permitted to rot in the orchard.

So now we have the White House cozying up to the CEO of GE.  GE the parent company of the “thrill up my leg” network MSNBC which sings the praises of the Obama administration and slanders its critics 24 hours a day.  GE the maker of those stupid “green” lightbulbs that cost ten times as much as an incandescent lightbulb which but which you will be forced to buy soon thanks to the latter being declared illegal.  GE the maker of windmills which cost more to maintain than the energy they produce is worth but which the government is paying to build all over the country. 

The reason we get confused about these things is that we have been trained to see only groups and not individuals.  We see a businessman and we assume that his agenda is to help business.  But that’s almost always not the case.  The business man’s agenda is to help his business.  If you have a different business then that businessman in a position of power might not be so great for you. 

The greatest lie in history is that greedy capitalists screw everyone over through free markets but the reason it has been so successful is that it’s largely correct.  It’s true that people are greedy that’s a fact of nature, you can’t change it.  It’s true that capitalists are screwing us over.  It’s not true that they are doing it through the free market.  They are doing it with the government.  With a free market and rule of law, people’s greed drives them to compete by doing a better job, making a better product, or offering a lower price than their competitors.    It is greed combined with government that breeds destruction and disaster.  The progressive dream is to create a giant government populated by angels and have it control the greed of the less virtuous peasants.  If you can find the angels that plan wouldn’t be so bad.  As it is we need to start focussing on controlling the government.

*The quotes from this post were all taken from Robert Murphy’s excellent book The Politically Incorrec Guide to the Great Depression and the New Deal.  They are all from other sources which I am too lazy to cite.  I can provide them upon request if anybody is interested.

  1. Klouddweller
    February 5, 2011 at 6:41 pm

    ” GE the maker of windmills which cost more to maintain than the energy they produce is worth but which the government is paying to build all over the country.”

    What source did you get this information from? 

  2. Free Radical
    February 6, 2011 at 8:21 pm

    That’s just a thing I said, it’s probably at best an over-simplification and at worst an exaggeration. The issue of wind power is kind of complicated. Obviously, there is a lot of variation in output among wind farms. It’s not that hard to find an example of one that cost more than it produced at some time:

    http://www.humanevents.com/article.php?id=41525 (I don’t know how to put links in comments)

    This, of course doesn’t prove much since there are probably other sites at other places for which this is not true. The biggest issue is that there are a lot of other costs associated with managing the wide variability in output.


    The real point is that with all the costs taken together, they are not efficient. The biggest evidence of this is that they require government subsidies and mandates in order to exist. In the absence of these interferences, the market would naturally select the most efficient energy sources and it is my personal belief that wind would not be a very big part of that mix. Here is a pro “green energy” site agreeing with me (for the most part).


  3. little fish
    February 21, 2011 at 1:31 am

    I don’t think you are exagerating Free Radical. The American Thinker recently had an article on the abandonment of wind farms once the subsidies run out for exactly the reason you noted – they cost too much to operate.


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