A few weeks ago I listened to a presentation by a smart fellow from the Federal Reserve Bank, commenting on economic conditions and offering a few predictions. As an expert in industrial economics, he was confident that federal stimulus spending is working the way it is intended to work, encouraging new industrial activity. Nor was he concerned (as I am) about inflation resulting from federal overspending, nor about low interest rates inhibiting banks’ willingness to lend.

This official maintained that the Fed’s monetary policies are in step with government policies to revitalize the private sector, and to make U.S. manufacturers’ globally competitive. He referenced manufacturers like Boeing, Caterpillar, General Motors, and General Electric as companies that need support now in order to keep their organizations globally competitive so that they’ll be anchors for the domestic economy.

I’m not buying it. I don’t have any disregard for companies like those; I wish them well.  But, no policy is going to encourage them to treat their domestic suppliers with the same sort of deference they are earning from the Fed and the Treasury. They meet their own goals, and they continue on. If a supplier falls by the wayside, they find a new supplier.

Over the past year there have been some confused and frustrated accusations that the federal government is rushing toward Socialism. I’ve pondered it. It’s not hard to understand why this has happened: federal officials have willingly taken ownership of financial and manufacturing firms, they have endorsed or threatened to implement aggressive plans to re-regulate labor and environmental policies, and at this moment they are working to expand the federal government’s authority over individuals’ health. It may not be classical Socialism, but it’s something.

But, that’s all so 2009. Getting a jump on next week’s inevitable In/Out Lists, I anticipate that next year’s anxious accusations will be about “Corporatism.”

Relying on the sometimes-reliable Wikipedia, I’ll insert here that corporatism “is a system of economic, political, and social organization where corporate groups such as business, ethnic, farmer, labor, military, patronage, scientific, or religious groups are joined together into a single governing body in which the different groups are mandated to negotiate with each other to establish policies in the interest of the multiple groups within the body.”

For the sake of my argument, what I mean is that we’re devolving to a point in our business and political activities where big, cash-rich interests are able to negotiate the terms of their survival and prosperity with a government that is willing to extend or withhold rights and privileges, according to its own whims. Smaller businesses and individuals are marginalized.  

Large global companies and large labor organizations like to be able to control their variables, which includes their competitors. They will manage costs any way they can. Thus, large global manufacturers are surprisingly indifferent to the possibility of Cap-and-Trade, EFCA, and they may even welcome a federal health-insurance program. They'll just budget for it after they negotiate the terms. Smaller manufacturing companies have to be concerned about these prospects.

The solution is not for the federal government to institute programs (like tariffs, or tax-breaks for selecting domestic suppliers) to balance things for smaller companies; that would merely extend its influence over our economic decisions.

The solution is for the government and business to stay clear of each other as much as possible.