An influential figure in business and political circles recently made headlines by calling for an end to “corporate cronyism,” saying, “Where I believe we need to start in reforming welfare is eliminating welfare for the wealthy. That means stopping the subsidies, mandates and preferences for business that enrich the haves at the expense of the have-nots.”
It is the kind of language commonly heard among those who would call themselves liberal or progressive, but in this instance, they are the words of Charles Koch, CEO of Koch Industries and often identified as one of the billionaire Koch brothers, patrons of conservative and libertarian causes. Hearing Charles Koch channel Teddy Roosevelt might startle some. Are conservatives taking an abrupt left turn on the issue of wealth and income inequality, traditionally a pet cause of progressive Democrats like Sen. Bernie Sanders, I-Vt, and Sen. Elizabeth Warren, D-Mass.?
It’s not quite that simple. As Koch articulates, a free-market economy that allows participants a level playing field has long been an abiding conservative ethic, but special favors obtained through loopholes and subsidies — what political economists refer to as “rent seeking” — are antithetical to a truly competitive market. A lifelong student of market economics, Koch has long argued against corporate welfare. What is provocative is Koch’s decision to raise the issue heading into the 2016 presidential elections.
Should all parties come to agree that corporate welfare is a problem, the discussion can legitimately begin on how to fix it. The debate will be over the approach, and there will be sharp differences about what actually constitutes corporate welfare. Democrats have tended to favor efforts to protect labor and consumers through support for collective bargaining and regulation. Republicans have tended to focus more on the dynamism of market processes to lift all participants, disparaging regulatory intrusion into the marketplace.
It is interesting that Koch’s remarks were made before a group of GOP presidential candidates at a recent fundraising summit. Many business-minded Republicans have tended to support corporate subsidies and tax breaks on grounds that more profitable businesses create more jobs and lead the way to general prosperity. Koch brings something of a libertarian perspective, talking about the value of “principled entrepreneurship” and denouncing the influence of corporate money on policy.
In an interview with the Washington Post, he said, “I like a lot of the Republican rhetoric more than the Democrats’. But when they’re in office, it’s pretty much the same thing. It’s serving their supporters, it’s corporate welfare, it’s cronyism which is so destructive, particularly to the disadvantaged. I think the Democrats are taking us down the road to serfdom at 100 miles an hour, and I think the Republicans are taking us at 70 miles an hour.”
Could these challenging words bring a new dynamic to our political discourse? Could they help us recognize that inequality is an umbrella issue under which issues like tax reform and government-subsidized health care lie as incremental components of a much larger social problem?
For all the caricatures and invective leveled against him, Charles Koch is a man of extensive learning, experience, wealth creation and influence. His position — made so candidly and with the force of reason — makes it more likely the national conversation on corporate welfare and inequality may actually move into reforming specific areas of policy reform and away from an exchange of bromides about the plight of a disappearing middle class and “getting America back to work.” For that, we should be grateful.