Guns, Walmart, and crony capitalism

From FDR to Obama, liberals tend to achieve their policy goals when they find a way to co-opt big business

Matt K. Lewis

When President Obama wanted to push health care reform, he didn't make the same mistake as his fellow liberals made in the past. He didn't attack or ignore big business. Instead, he sought to engage these "stakeholders."

Mandating that citizens must purchase health insurance (with no public option) was obviously a financial winner for the insurance companies. That box was easily enough checked. But the White House's collusion with the pharmaceutical industry was perhaps an even more impressive gambit.

As The Wall Street Journal reported last year, "The drug makers worried that health care reform would revert to the liberal default of price controls and drug re-importation that Mr. Obama campaigned on, but they also understood that a new entitlement could be a windfall as taxpayers bought more of their products."

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The message was simple: The drug companies had better get involved in crafting the deal before it passed.

So how did the White House and Big Pharma end up working together? The deal, according to the Journal, was that "the drug lobby would spend $70 million on two 501(c)(4) front groups called Healthy Economy Now and Americans for Stable Quality Care."

Ultimately, of course, Big Pharma ended up serving as the counterbalance to the Chamber of Commerce, helping blunt the attacks on ObamaCare.

What does that have to do with today? Plenty. If you substitute the name Walmart for Big Pharma — and the NRA for the Chamber of Commerce — you will understand why the Obama administration invited Walmart to a critical meeting last week.

When it comes to passing gun control legislation, Walmart would be a terrific ally for Obama. Perhaps that's why after initially declining to attend a meeting with the White House, something changed their mind. (A Walmart spokesman later said, "we underestimated the expectation to attend the meeting.")

The retail giant has already shown a willingness to play ball with the administration (Walmart supported an employer mandate for healthcare) and to bow to pressure on the gun issue (the company is also already a member of Mike Bloomberg's "Mayors Against Illegal Guns"). They make an attractive ally on the gun issue. Elites like the New York City mayor don't carry much weight in middle America. But Walmart is based in Bentonville, Ark. It's hard to portray the company as effete or elite. From an optics standpoint, Walmart's support in advocating for "common sense" gun control would make any proposals seem more moderate. So from a public relations perspective, Walmart — the largest gun retailer in the nation — would bring Obama's coalition some much-needed red state bona fides.

But what would Walmart get out of the deal? First, not cutting a deal could have negative consequences. If Walmart doesn't play ball, maybe one of its competitors will. Or maybe Obama would be more likely to push for the return of the so-called assault weapons ban — which would likely hit Walmart's bottom line. And if Walmart does cooperate, it could mean a lot of money.

Even liberals are predicting this alliance. "Clearly, the best of both worlds for Walmart would be a strengthened background check system that drives new customers to its stores, and no assault weapons ban, writes The Nation's George Zornick.

You don't have to be a rocket scientist to see the potential for how Walmart could profit from cutting a deal. As The Washington Post reported last week:

One potential strategy [for gun control] would be to win support for specific measures from interest groups that are normally aligned with the NRA, according to one person who works closely with the administration on gun-related issues and who spoke on the condition of anonymity because of the issue's sensitivity.

For instance, this person suggested, Walmart and other major gun retailers may have an incentive to support closing a loophole that allows people to bypass background checks if they purchase firearms at gun shows or through other types of private sales. That could result in more people buying guns in retail stores. [Washington Post]

Or as the DC Examiner's Tim Carney explained on Fox Business, "it's just like [how] car dealers would benefit if you made it harder for me to sell my car to you."

This might be a good time to explain why conservatives like Carney don't trust big business. (I know there is a stereotype that says conservatives love big business, but it's simply not true.) The fact is that big business loves regulations because they have a competitive advantage when it comes to complying. Their upstart competitors don't have that same capacity, and thus, cannot compete.

Some call this crony capitalism; others, such as Jonah Goldberg, have labeled it "Liberal Fascism." And it seems to be on the rise.

After years of fighting big business, some astute liberals have finally concluded that the way to advance liberal policies is to actually get big government to buy in.

In a controversial New York Times op-ed this summer titled "How Liberals Win," Bill Scher noted: "The necessity of corporate support for, or at least acquiescence to, liberal policies is not a new development in the history of American liberalism. Indeed it has been one of its hallmarks."

Scher is correct. From FDR to Obama, liberals tend to achieve their policy goals when they find a way to co-opt big business. This is good for liberals, of course, but for conservatives, it's a double-whammy. Not only does this give us more liberal legislation, but it also skews the free market.

Public-private partnerships might sound harmless, but as Luigi Zingales points out in his book, A Capitalism for the People, they ultimately undermine the meritocracy. (And a belief in the efficacy of meritocracy is vital for the general public to support capitalism, and its inherent income inequalities.)

When big companies like Walmart cut deals with government, they get special consideration. This obviously hurts not only Walmart's current competitors, but also future competitors not yet on the horizon. Near-monopolies don't serve the customers well. But they also undermine confidence in the economic system. Over time, Zingales writes, the actions of near-monopolies confirm to the public "the sense that government and large-market players are cooperating at the expense of the taxpayers and the small investors."

What is more, the danger is that at some point it makes better business sense to focus more on what economists call rent seeking (lobbying, etc.) as opposed to focusing on research and development and innovation — things that actually add value to our economy.

Whether you care about guns or not, there is a lot more at stake here than first meets the eye.

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