George Rebane
Corporatism is government supported assault on free market capitalism.
Corporatism, according to what the Left has been telling people for generations, is free market capitalism. Their support of corporatism, while pointing out both its obvious and surreptitious faults, is their main propaganda weapon to promote the collectivization of industry, and in the process growing Leviathan and its share of the nation’s subsequently declining GDP. For the recent arrivals, corporatism is the conspiratorial collusion of special interest business sectors, consisting of (usually) big established corporations and their unions, with governments at all levels through corrupt politicians who will pass laws/regulations that summon the government gun to tilt the competitive markets in their favor. In return, the politicians are guaranteed contributions from both corporate and union coffers, the payments of which are justified for ‘saving jobs’ in the politicians’ jurisdictions.
This type of market meddling is especially prevalent when new companies seek to introduce innovative products and services that better those offered by calcified corporations no longer nimble in the marketplace – especially in areas involving the application of new technologies. This has been going since time immemorial in the form of royal guilds to whose members the crown gave exclusivity in this or that area of commerce. Today the practice continues in the form of regulations, ostensibly for consumer protections, that are operationally the equivalent of ‘letters of marque’ which license some corporations to act rapaciously toward newcomers.
A recent and most egregious example of this is presented in Cato Institute’s Policy Analysis issue #834 (download here). In there, Will Zerhouni – attorney, former federal prosecutor, and entrepreneur – takes us through the case of Michigan’s attempt to exclude Tesla from its auto market in order to protect established dealers. Its executive summary reads –
In the area of technology and startup innovation, new market entrants routinely find themselves besieged by analog-age incumbents hijacking the levers of government in an attempt to squelch competition. Nowhere is that phenomenon more apparent than at the state and local level.
In recent years, states and localities have worked to undermine beneficial economic disruption by using state and local laws and regulations to bar startup companies from competing fairly and freely in the market. Trailblazers such as Tesla, Uber, Lyft, and Airbnb are finding market entry barred in places as diverse as California, Florida, Indiana, Louisiana, Texas, Michigan, New York, Utah, and Washington, D.C.
In one particularly egregious case from 2014, Michigan amended its franchise auto dealer statute specifically to exclude Tesla from the Michigan market. This amendment was introduced on the eve of the adjournment of the legislature, and it was passed with no debate, no legislator input, and no committee process. In response, and after multiple unsuccessful efforts to gain the cooperation of Michigan regulators and legislators, Tesla finally sued Michigan in order to be able to sell its cars in that state.
This policy analysis will look at the Michigan legislative restrictions on Tesla as a case study of state and local interference with free-market operations on behalf of established market participants at the expense of newcomers to the market. It will also explore Tesla’s legal arguments in its Michigan litigation and evaluate its prospects of success. (emphasis added)
Reading this analysis is an eye-opener for those of us not versed in that area of government perfidy. One takeaway is a set of tools (indicators) that lets the reader see the growing tentacles of corporatism already entwined in his own community, and to identify new ones spawning. Mr Zerhouni concludes his analysis with –
In the end, there is already an avenue for disruptive market entrants. The surest remedy for states overstepping their bounds lies not in new federal statutory or regulatory schemes but in courts applying more rigorous rational basis review. If courts adopted the rigorous rational-basis analysis … companies such as Tesla, Uber, and Airbnb would stand a fighting chance of enriching consumers with new services, products, and goods—and legislatures could focus their efforts on governance for the benefit of all citizens instead of the established few market incumbents.
rebanesruminations.com 
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