By Adam Young
Ludwig von Mises Institue
October 1, 2002


Lately, pundits and commentators have suggested that the
scandals that brought down Enron, Global Crossing, and
WorldCom simply are more proof that trade and enterprise are
inherently corrupt and pose a danger to the public. Some have
even seriously claimed they represent the failings of a
society with too much freedom, as if there could be such a condition.

Until the latest recession, this was just a shared sentiment
of the second-hand dealers in ideas, laboring mightily to
miseducate the public, as usual. Now along comes polling info
that of course provides popular approval for their
views--though is it really surprising that the public would
agree with the media's spin after they have spent month after
month advocating their anti-capitalist take on events?

It's a neat trick: the media sell a certain viewpoint, then
take a poll and cite public opinion to illustrate that, yes
indeed, the public agrees with what it has been told, and that
the only solution is more interventionism. This is a
democracy, after all.

In her story "Polls Say Workers Uneasy With Economy,
Executives" published on Tuesday, September 3, 2002, Kirstin
Downey Grimsley highlighted the results of several recent
polls conducted by various organizations. The American
Enterprise Institute found that only 48 percent of the
Americans asked agreed that "what is good for business is good
for the average person."

And a Gallup poll in July found that 38 percent considered
"big business" to be the "biggest threat to the future of the
country," up from 22 percent in October 2000. This percentage
had never before been so high in the 48 years of polling on
that question. In contrast, in 1954, only 16 percent
identified "big business" as the biggest threat, while 46
percent said "big labor" was the greater danger. In July 2002,
only 10 percent rated big labor as the nation's greatest
threat. Presumably, this is a result of the labor movement's
failure to cartelize American employment--and its inability to
shut down the economy with widespread strikes--and its
subsequent focus on public-sector workers.

While all polls must be taken with a grain of salt, they are
probably reliable as a gauge that the anti-capitalist
mentality is alive and flourishing. But where would the public
get the information it used to come to this conclusion that
big business poses the most danger to Americans?

The vast majority of the American public have been fed a
steady diet of economic ignorance, especially so since the
bubble burst. And typically, it has been the media who failed
the public again. From their reliably statist bent when it
comes to economic questions and alleged free-market sins, to
showcasing the fantasies and conspiracy theories of
politicians who's only claim to expertise is gaining election
to Washington or appearing on television, the general media
have played an invaluable role as allies in the drive for
increased interventionism in the wake of the bust and the 9/11 attacks.

But where were the "Big Media" during the boom phase?
Certainly they weren't warning or educating the new
"investor-class" that jumped into the stock market, as the
middle class always does during a boom. George Reisman
described what happened:

"... as the new firms swarm into the latest investment
fad--in one era, canal building; in another, railroad
building; in a third, electric power-plant construction; in
a fourth, radio; and, most recently, in our day, the
'dot.coms' and the Internet--a host of observers is always
on hand, in all eras, to trumpet the arrival of the 'new
era,' or the 'new economy,' or the 'new' something or other
that allegedly explains why it has become all right to throw
all rational principles of investing to the winds...."

Lured by the prospect of easy riches in an ever-higher-rising
stock market, "... a public many members of which believed
that they knew something about investing because gains had
showered down upon them..." once the bubble popped, would turn
on a dime against the "greed" of CEOs that their stock frenzy
had turned into media celebrities and household names.

The average person presumably fears "Big Business" because he
knows for sure that the political system is corrupt and that
his congressman is more likely to respond faster to a stack of
twenties than to a handwritten letter from a lowly
constituent. And the larger the firm, the more resources it
has on hand to buy favors from the state against the interests
of the common man. It may even be that, the larger the firm,
the more it may have to buy influence just to stay in business.

Many firms do use their size to seek out favors from the
state. But it is also a dirty truth that the alleged "friends
of the working man" are perfectly content with the situation,
in order to destroy that feature of capitalism that directly
threatens their continued rule by misinformation and
dependency--that is, the opportunity for individuals that
actually free markets provide.

Sometimes statists claim that an age of "Big Business"
requires "Big Labor" and "Big Government"--the former to
protect the workers, and the latter to protect the ... what ?
the general public? Or could it be,to protect Big Business
from whatever might threaten the continued existence of those
firms and their employees?

As Murray Rothbard wrote:

"With a few honorable exceptions, big business jostles one
another eagerly to line up at the public trough.... Big
business support for the Corporate Welfare-Warfare State is
so blatant and so far-ranging, on all levels from the local
to the federal, that even many conservatives have had to
acknowledge it, at least to some extent.... Big businessmen
tend to be admirers of statism... because a good thing has
thereby been coming their way. Ever since the acceleration
of statism at the turn of the twentieth century, big
businessmen have been using the great powers of State
contracts, subsidies and cartelization to carve out
privileges for themselves at the expense of the rest of society...."

And

"... the vast network of government regulatory agencies is
being used to cartelize each industry on behalf of the large
firms and at the expense of the public.... The liberal
reforms of the Progressive-New Deal-Welfare State were
designed to create what they did in fact create: a world of
centralized statism, of 'partnership' between government and
industry, a world which subsists in granting subsidies and
monopoly privileges to business and other favored groups."

Of course, it's not the size of a business that is the
problem; rather, it is its relationship with the state. This
is something the media fail to comprehend. It's difficult to
know whether Enron was from the start a taxpayer-looting ring
or if it simply became one later as opportunities arose. With
its extensive collection of celebrity/media "consultant"
boards, troupes of lobbyists, and a Rolodex of politicians
always eager to lend an ear, Enron tapped into the security of
the federal government's public/private initiatives of loans
and subsidies from the public treasury.

What is easy to know, however, is that Enron was a typical
example of the distortion in expectations and corporate
planning that accompanies the boom phase of the fiat credit
business cycle. WorldCom and Global Crossing met the same
fate, as their executives and shareholders bought into the
"New Economy" pitch from the very same media organizations and
pundits that have now become their most ferocious critics --
now that their hindsight is 20/20, that is.

Certainly the "Big Media" had no clue that the surging Dow and
Nasdaq and overvaluation of these firms signaled widescale
manipulation of banking and credit by the federal government.
The Big Media were the biggest cheerleaders for Greenspanism
and their pet project, the Clinton presidency. And when the
edifice collapsed, business took it on the chin, as usual,
with accusations of "greed," thievery, and corruption.

What the American public does not know or understand is that
what they are calling for with a new round of interventions in
the form of new regulations, agencies, and other controls is
the creation of a new round of government and industry
partnerships, where the state "partners" with business to
further isolate them from the consequences of free-market
activity, under the popular notion that business cannot be
trusted to oversee its own affairs. The state will act as
monopoly partner in reassuring the public of the reliability
of its corporate partners.

As Reisman points out, big businessmen, rather than being a
threat, are instead the most valuable representatives of the
free-market system, because it is these men who have
demonstrated the talents and abilities necessary to coordinate
the vast amount of information that the structure of prices
provides to the system of production to create ever more
efficient and profitable processes that raise the standard of
living for consumers.

And rather than the image pumped up by the Big Media--that
many firms were sunk by the "greed" of their CEOs--Murray
Rothbard again made the point about the nature of corporate
management: "[the shareholders] hire managerial labor to
supervise their workers.... A manager is just as much a hired
laborer as any other worker. The president of a company, just
like the ditchdigger, is hired by the owners [of the company]."

The vast sums paid to these now-disgraced CEOs was, on the one
hand, capital that belonged to the owners of the firm, and on
the other, the reflection of the competitive pressures on
wages created by the inflationary boom. The shareholders
ratified compensation packages for what they believed was a
worthwhile exchange--to attract and keep managers who could
create profits and prevent losses, which is the goal of every investor.

Absent the Fed and fractional reserve banking, the fear of
"Big Business" would be misplaced. Without the regime of
privileges, subsidies, guarantees, and legislative loopholes,
where mutually beneficial exchange is replaced with coercion
and exploitation, business could not find shelter from the
entrepreneurial actions of talented and ambitious individuals,
and the laissez-faire system would be able, without exception
and equivocation, to refute the accusation that what is good
for business isn't good for the average person.

"Big Government," which used to be feared but seems to be a
rarely heard concern nowadays, is the real threat and danger
to the public. And it gains support and assistance from the
media, who act as loyal apologists for the collusion between
political interests and businessmen under the deception of
"protecting the public."

Which is the greater threat to American liberty, prosperity
and happiness: Big Business, or the clueless Big Media? With
their broadcast licensing privileges to restrict competition
and cartelize the presentation of the news, to their access to
politico's that the average person could never have, the
influence of the print and broadcast media themselves starkly
illustrate the dangers of politicized "big business."