The U.S. Economy Is Rigged

Milton Ezrati
·31 min read

IT IS no secret that Americans have rebelled. On both the left and the right, people have made clear their disgust with business-as-usual. For the Republicans, the Tea Party rebellion began to alter the established party, and the election of Donald Trump rendered the change nearly complete. A comparable rebellion against established practice has pulled the Democratic Party far to the left. Polls show a common complaint: that the system is “rigged” in favor of a self-serving business and government elite. While the public cannot identify exactly how the system is rigged, it is nonetheless correct: elites in business and government collude regularly to run the American economy to their own advantages and have increasingly done so for decades. Public disgust and resistance to this pattern is entirely understandable. Indeed, for all the disruption and frustration brought by this resistance, it is welcome.

Though collusion might usually spring from a conspiracy, the economy’s movement in this direction seems actually to have developed with little malice and in many respects even unconsciously. When politicians, corporate executives, pundits, journalists, academics, and activists alike propose ways to make society more just or efficient or globally competitive, they invariably call for some kind of government-corporate cooperation. But the cooperation, once initiated, seems always to lead to collusion. The pattern has built over time so that a corporatist approach to economics has come to dominate this economy—to the detriment of all, except, of course, the colluders. Little wonder, then, that the public, whether leaning left or leaning right, has had enough. Given what is at stake, the struggle against this government-corporate elite promises to go on for a long time.

HOWEVER INNOCENTLY and naturally these collusive, corporatist arrangements have developed in the United States, there can be no mistake about their origins. The approach was pioneered in the 1920s and 1930s, first under Benito Mussolini in Italy and later in Germany under Adolf Hitler. Popular imagination immediately and understandably links fascism to government-sponsored violence and worse. America is free from such horrors, but the economic impulse nonetheless looks remarkably similar.

The fascists wanted control of their economies. Having rejected government ownership of industry—the means by which the communists and socialists achieved centralized control—Mussolini, and after him, Hitler, settled on something subtler. They allowed private ownership and acquired control by offering huge benefits to firms that cooperated with their agenda—government contracts, protections from foreign and domestic competition, freedom from certain regulations (even from the law), and help in calming labor disputes—effectively all the advantages of monopolies. It was a prize hard for managers and stockholders to resist. Fascist agendas were, of course, very different and far uglier from those of the United States, but that is a different matter from the means used to serve them.

Except in wartime, no U.S. government has ever insisted that business follow its lead. The only demand on businesses is that they follow the laws and rules made by the government. Obey these rules, and a firm can proceed by its own lights. That still goes for many companies, particularly smaller ones. But as our government has grown, it has developed three mechanisms central to a corporatist approach. First, it has acquired an increasingly explicit social and economic agenda. Second, government presence has become pervasive because of its control over extraordinary amounts of contracting dollars and an ever-increasing regulatory structure and body of business law. Third, it has reserved for itself considerable discretion in how it spends its funds and applies its rules.

Washington has come to press on all economic activity and also direct a great deal of it. Through its contracts in defense, research, technology, and many other activities, it decides revenue flows for much of the business community. By applying, more or less severely, the rules and regulations embodied in a federal regulatory code (which verges on 180,000 pages), it has exerted enormous influence on the profitability of all businesses and, consequently, on how they behave. Washington, for instance, recently gave Apple a partial exemption from the China tariffs. Other companies must pay in full. When the legality of collusion among automakers to comply with California’s fuel economy standards came into question, Congress—for its own political reasons—objected so strongly that anti-trust concessions for the automakers are now more than likely. In these ways, Washington, for decades now, has picked favorites and directed economic activity—often in directions contrary to market expressions of what people want.

Legally speaking, a business can choose to ignore government preferences and follow its own prerogatives—presumably market signals. But managers are neither blind nor stupid: they see what government wants and the benefits it offers to firms that cooperate. Government exemptions from difficult regulations have become commonplace, and they bestow on some firms a powerful competitive edge. Administrative decisions to stay anti-trust action have given favored businesses license to merge or expand in ways that less-favored businesses have not enjoyed. Over time, these government-business interactions have created a virtual merger of government and business power, something Mussolini described as the essence of fascism when he wrote, in the 1932 Enciclopedia Italiana: “Fascism should more properly be called corporatism, because it is the merger of state and corporate power.” It may be just this association that prompted President Dwight Eisenhower to warn publicly on January 17, 1961, of what he called a “military-industrial complex.”

When I label the present American economy a corporatist system, I do so without the enthusiasm exhibited by political radicals when they fling those terms around. My own feeling is one of sadness. I am a forty-five-year veteran of Wall Street and a conservative economist. I believe that an economy’s strength lies in its ability to follow market signals about what people want, and not what political interests want. I have long understood that markets are far from perfect, but because I believe they do the best job of creating prosperity and getting people what they want and need, I long resisted evidence of our economy’s reality. But I can no longer deceive myself. For me, the last straw was Washington’s behavior during the 2008–09 financial crisis, in which the government ignored ways of proceeding equitably in favor of ad hoc measures that gave grants to favored firms, forced others into bankruptcy, and even took over the management of one.

IT SHOULD then be no surprise that Americans, who in many ways are very different from each other, find the existing corporatist system so obnoxious. Collusive economics is certainly contrary to past American practice. From this country’s beginnings, it has resisted the concentrations of power that typify the present system, whether in commerce or government. Our founders, of course, had little concern over commercial concentrations. Though Adam Smith’s 1776 bestseller, The Wealth of Nations, warned about commercial monopolies and state-sponsored corporations, these were less of a threat in undeveloped America than in Great Britain. The United States, having just won independence from the British crown’s abuses, worried mostly about concentrations of government power. James Madison, in The Federalist No. 10, made his concern about government monopoly crystal clear. If governments were administered by “angels,” he wrote, people would have no need to worry about concentrations of power. The natural goodness of government administrators would serve as a safeguard against abuse. But because human beings administer governments, he saw a need for institutionalized checks on power. A “greater variety of parties and interests,” Madison argued, “would make it less probable that [any one of them could] invade the rights of other citizens.”

Efforts to create such competition for power framed the entire political organization that Madison and the other founders created. The federal system gives the various states “sovereign rights” which, the founders expected, they would jealously guard against pressure from the federal government. The U.S. Constitution made this explicit in the Tenth Amendment: the central government has only those powers delineated to it in the Constitution, with the rest given to the states or the individual citizen. The founders created a senate in which voting power was diffused among the nation’s various regions so that the more populous areas, those presumably having a common commercial or ideological agenda, could not force their wishes on the rest of the country. The Electoral College reflected similar concerns. The founders famously also established “checks and balances” within the federal government. If the Senate provided a regional check on the more population-centered House, the two houses of Congress could check the power of the president, and the president, if necessary, could bring a countervailing competition—the power of the veto as part of it—to Congress. In turn, federal courts, led by the Supreme Court, could check the power of the administration, the Congress, or even a combination of the two.

The history of the nineteenth century, most especially the Civil War, made the imperfections in these efforts clear, but showed also how the founders had nonetheless accomplished many of their aims. However, by the last third of that century it had become apparent that developing capitalism had presented society with new concentrations of power that the founders did not envisage. These would require a different check. Corporate monopolies, and the aggregation of businesses into great trusts, had created loci of power that came near to challenging the political authorities. These capitalist machines manipulated financial markets, abused workers, and forced higher prices on consumers even as they limited consumer choices by controlling the flows of products to market. True to the ideals of the founders, the government moved to check the growth of such concentrations. Senator John Sherman made that link clear when he promoted his Sherman Anti-Trust Act of 1890: “If we will not endure a king as a political power,” he argued, “we should not endure a king over the production […] of the necessities of life. If we would not submit to an emperor, we should not submit to an autocrat of trade.”

Despite Senator Sherman’s efforts, the U.S. government had only spotty success in checking concentrations of commercial and financial power. As fast as the senator’s legislation broke up some trusts, new ones formed. Commercial and industrial monopolies thwarted government efforts by corrupting politicians and administrators, practices that today we call “crony capitalism.” Yet, at the same time, Washington saw how concentrations of corporate power could serve its aims. In a forerunner of today’s cooperative-collusive arrangements, Washington offered the railroads vast tracks of land if they bowed to government direction. The most successful check on concentrated commercial power emerged not from the government but from the countervailing and competitive power of newly formed labor unions, which began in the 1860s with the Knights of Labor and grew into a broader movement with the founding of the American Federation of Labor in the 1880s. In this way, the nation recovered Madison’s goal of checking power with a “variety of parties and interests.”

WASHINGTON UNDER Franklin D. Roosevelt made the decision to shift from a competitive, market-driven economy toward a corporatist one that accepts, indeed embraces, concentrations of power. As with other manifestations of government-business collusion in this country, the approach grew out of the best of intentions—namely FDR’s heroic efforts to fight the Great Depression. It is ironic to think of FDR colluding with big business. His rhetoric was, if anything, openly hostile to business. In one of his famous fireside chats he expressed satisfaction with how much business leaders hated him. But for all his talk, Roosevelt nonetheless strove to co-opt corporate power. Nor did he make a secret of his model. Early on, FDR’s administration made clear its admiration for Mussolini’s Italian state. One of Roosevelt’s original “brain trust” of advisors, a Columbia University economist, Rexford Tugwell, openly spoke of his enthusiasm for the fascist leader, as did the man Roosevelt picked to head the National Recovery Administration, General Hugh Johnson, who several times referred to the “shining name” of Benito Mussolini. Roosevelt himself expressed interest in “bringing to America” the programs of “that admirable Italian gentleman.”

Such public talk ceased abruptly when Italy invaded Ethiopia in 1935 and Mussolini lost sympathy among the American public. Even Cole Porter dropped from his popular hit the lyric, “You’re the top. You’re Mussolini.” The Roosevelt administration was also sobered by the Supreme Court’s decision to strike down as unconstitutional the National Recovery Act. But then World War II, and afterwards the Cold War, furthered the journey toward government-business collusion. The war effort in the 1940s demanded a close working relationship between business, finance, and Washington. The administration and the War Department set the agenda, and those who supported it enjoyed the contracts and useful exemptions from certain regulations. After the Second World War ended, the long Cold War that followed institutionalized and deepened this collusive approach.

Especially conducive to these developments was America’s confrontation with communist ideology. At one and the same time its anti-communist stand made Washington reluctant to command business openly, as it had during the war, but also not wanting to seem anti-business, by, say, aggressively pursuing anti-trust actions. Since the nation’s ongoing war footing gave Washington so much power and money, it had little trouble enticing the cooperation of business simply by threatening to exclude uncooperative firms from what became a torrent of money. When people reflect on President Eisenhower’s concerns about this developing pattern, they mostly associate it with defense contracting. But even as Eisenhower introduced the phrase “military-industrial complex” into the national lexicon, he likely saw the broader picture of government-business collusion run comfortably by a corporate-government elite.

The auto industry is a case in point. Washington had long protected it—no doubt a legacy of the auto companies’ enormous cooperation during World War II, and later as part of the Cold War effort. In an earlier time, the government might have used anti-trust legislation to break them up, especially the behemoth General Motors. Indeed, for years there were calls to do just that. As it was, Washington allowed the industry to become what economists call an oligopoly, and what the public then referred to as the “Big Three”: General Motors, Ford, and Chrysler. Giving voice to these arrangements, General Motors president Charles Wilson, at the peak of General Motors’s dominance, declared before Congress in 1953 that what was good for the country was good for General Motors and vice versa.

These firms hardly competed with each other. They drove out any potential competition, including Packard, Studebaker, American Motors, and even the Checker cab––that square and roomy conveyance beloved of taxi passengers. Washington throughout turned a blind eye, even as the lack of competition allowed the Big Three to build ever-shoddier vehicles, preferring tailfins to engineering innovations and guaranteeing themselves future sales by producing vehicles whose obsolescence was built in. Because this structure generated huge cash flows, which managers wanted to keep uninterrupted, the Big Three eagerly bought peace with the United Auto Workers (uaw) union by sharing the monies taken from hapless consumers. Thus the uaw, along with government and the Big Three, became the fifth party to this collusion. The comfort and protection afforded by these arrangements leaves little wonder why this crowd had so much trouble coping when real automotive competition docked from Japan in the late 1970s and 1980s.

Rather than adjust to the market realities of Japanese competition, the collusive parties used Japan as a substitute for the Cold War to justify corporatist, fascist-like economics and secure the position of the corporate-government elite. A perfect example emerges from President George H.W. Bush’s late 1980s visit to Japan. In asking for concessions for U.S. auto manufacturers, his rhetoric focused on jobs for Americans. But that was a veil: by then, Toyota, Nissan, and Honda had already moved production facilities to the United States and were employing about as many people as General Motors, Chrysler, and Ford. Instead of protecting jobs, Washington was serving its well-established partners: American corporations, as well as the United Auto Workers, which had power in Detroit but not in the Japanese factories. Shortly after, a new president, Bill Clinton, found another way to use Japan to bolster government-business collusion: he announced that this cooperative model had produced Japan’s economic success, and that America needed to imitate it. What he did not say was that his way forward offered Americans nothing new. Nor did he point out, even as he plugged the cooperative approach, that Japanese commentators were complaining that their country’s ongoing government-business collusion was a continuation of its prewar and wartime militarist, fascist structure.

By the time Japan’s economy unraveled later in the 1990s, China’s economic power had grown sufficiently to take Japan’s place as a justification for America’s continuing corporatist arrangements. Washington may have appeared to become harder on business as its regulatory agencies grew, but behind the seemingly harsh rhetoric the explosion of rules—especially from Democratic administrations—served only to bind established and favored firms closer to Washington. Think of it this way: the more pervasive the regulation, the more value to business of any government-issued breaks, and so the more motivated managements become to secure these breaks by cooperating. Additional government licensing and regulatory hurdles also benefit established cooperators because those rules make it more difficult for new firms—potential competitors—to enter existing industries. By both pushing the government’s agenda and effectively protecting cooperative firms, what is sometimes called “the administrative state” has become a key to securing this centralized, collusive organization—an approach that is antithetical to Madison’s plea for countervailing interests.

Technology firms, often viewed as symbols of independent entrepreneurial effort, nonetheless also exemplify the workings of this fascist-like economic system. The Obama administration certainly offered favored firms protection and even lavished subsidies on them when they did what the government wanted; energy alternatives and electric cars stand out as examples. Even such firms as Facebook and Google, which reached near-monopoly status without government assistance, have embraced the cooperative approach. A stark example is Mark Zuckerberg’s recent plea for government regulation of his company. No doubt he would prefer to continue abusing his customers as in the past, but because public outcries have moved Washington to question Facebook’s practices, he has had to make a difficult choice. Fearing the competition that anti-trust action would bring, he has opted for greater regulation with new rules that he no doubt would have a hand in writing. Embracing regulation would also allow him to head off any possibility that Washington might thwart ongoing efforts by Facebook—presently valued at over $500 billion—to stifle competition. He would have no need to do it for himself, because the regulations laid down by Washington, by making entry into the industry more difficult and expensive, would do it for him.

PROBABLY THE clearest illustration of government-business collusion can be found in the 2008–09 financial crisis. In the long run-up to that disaster, Washington had enlisted the cooperation of the banking industry to promote a political interest—widespread homeownership among less affluent Americans. Washington pressured banks to lend mortgage money to those with sub-par credit ratings, and thus a questionable ability to repay the loan—the so-called sub-prime borrowers. Under the 1992 Housing Community Development Act, the two federal agencies designated to support private mortgage lending, the Federal National Mortgage Association and the Federal Home Loan Mortgage Cooperation, announced they would extend such support only to lenders who made many subprime loans. By the aughts, those two agencies limited that support to banks that reserved fully half their mortgage lending to subprime borrowers.

Because these demands put the banks in an unusually risky situation, government regulators stepped in to help their cooperative colleagues. They allowed banks to shed the risk through questionable financial devices. One, “credit default swaps,” allowed insurers to sell indemnification insurance to lenders against the risk that a borrower would default. The authorities also allowed these arrangements to stand outside normal insurance regulations and, consequently, also outside the usual security protocols. To further spread the risk of these sub-prime loans, Washington also encouraged “securitization,” by which banks created a bond backed by a bundle of individual mortgages. The banks could then rid themselves of the sub-par risks by selling those bonds on the open market to individuals, foundations, pension funds, and even foreign governments. Washington promoted this effort by also willfully ignoring the credit rating agencies that were giving undeservedly high safety ratings to these bonds, even though they included a large proportion of risky sub-prime debt.

Despite all this maneuvering, by 2007, this house of cards began to collapse. The always-risky sub-prime borrowers began to fail on their mortgage obligations. In the face of such widespread default, the firms that had so actively cooperated with Washington’s guidance faced insolvency, as did those who bought that questionable debt. Washington’s response? It sprang into action, to save, it claimed, the financial system. But, as it turned out, Washington did so also to protect its corporate partners.

The fate of Bear Stearns is instructive. When, in 2008, this New York-based global investment bank first showed signs of having trouble, it was in complete compliance with all federal and international regulations. It was solvent. What it did face was a temporary shortage of liquidity. It was well within Washington’s power and experience to simply advance an emergency loan to protect the firm and those parts of the financial system that depended on Bear’s ability to meet its obligations. That is what Washington did later for several firms, using the more than $430 billion of tax money it put at risk through the Troubled Asset Relief Program (TARP). But Bear Stearns it treated differently. It surely was no coincidence that this broker-dealer had always been a disruptive and uncooperative agent in financial markets. Perhaps because the people who ran Bear had less social pedigree than those who ran Goldman Sachs and the other established financial firms, the company never had much inclination to cooperate with Washington or other companies. It is notable how Bear Stearns some years earlier had refused to join a Federal Reserve effort to arrange loans for the failing Long-Term Capital Management, whose top executives, not coincidentally, had exceptionally good Wall Street, Washington, and academic connections. So instead of smoothing over Bear Stearns’ troubled moment, Washington forced the company to sell itself at a bargain price to J.P. Morgan, a firm notably cooperative with Washington.

It was only after the forced sale of Bear Stearns that Washington passed the TARP legislation and the consequent huge flow of money that assisted Citibank, Chase, and other banks with less obstreperous reputations than Bear Stearns, and who could boast of their cooperation with Washington’s subprime push. TARP also assisted Goldman Sachs—so renowned for its links to Washington that one standing Wall Street joke holds that Goldman’s url has a “.gov suffix,” while another joke, playing on the firm’s name, refers to it as “Government Sachs.” Because TARP funds could only go to banks, and because Goldman at the time lacked a commercial banking license, the authorities rushed a license through for it. But they made no such effort for Lehman Brothers, a firm that, despite its long pedigree, was well outside the collusive establishment. Washington simply let it go bankrupt. Then the government, in a remarkably novel move, effectively nationalized the insurer AIG. This firm, too, had a less-than-cooperative reputation. It was also disputing the value of credit default swaps it had sold to Goldman Sachs. Goldman insisted that the loans in question had become riskier and demanded that AIG put up more assets to ensure that it could pay should the loans fail. AIG resisted. Once the federal government took over, it forced AIG to pay the full amount Goldman had demanded—in excess of $4 billion. These particular default swaps were one of the few assets that paid in full during the crisis of 2008–09.

This elaborate cherry-picking of winners and losers is all the more revealing, because Washington all along had at its disposal a more egalitarian and coherent approach. In the early 1990s, when a similar crisis developed among savings and loan associations (s&ls), the government had a very different plan. Because most of these institutions were too small to “qualify” for government-business collusion, the authorities had little need to protect some and not others. Unlike in 2008–09, Washington treated all the s&ls equally. To oversee the orderly bankruptcy of many of them, it established and funded the so-called Resolution Trust Cooperation (RTC), which sold off their good assets to meet their obligations to creditors and which, for the sake of financial stability, took their questionable assets onto its own books for resolution over time. Over the long-term, the government actually made a profit on the taxpayers’ monies involved. That a solution like the RTC was never considered in 2008–09 suggests that either everyone in Washington had suffered memory loss or that their desire to pick winners and losers impelled them to a less consistent approach than would have been possible with a revival of the RTC.

EARLIER EVIDENCE of collusive behavior appeared in the 1990 destruction of Drexel Burnham. Washington worked hard to put down this aggressive investment bank, not so much because it was resisting the government’s agenda but because it was attacking established firms that were cooperating with Washington. Drexel Burnham’s “sin” was its invention of what became known as the “leveraged buyout,” which enabled relatively small players to take over large, established firms. A group of investors would identify a company with an ineffective management and attempt to take over the firm by buying out its shareholders. To pay for these purchases, the takeover group would issue bonds through Drexel Burnham, which would promote these bonds by offering the assets of the targeted company as a form of repayment guarantee. If the targeted firm had a good competitive position in its market but was saddled with an inefficient management (as is usually the case with monopolies or companies otherwise protected by government), Drexel Burnham’s promise was compelling.

Such “hostile takeovers” were long considered taboo among established firms because they disrupted the accepted business practices and ordered hierarchies with which managements were comfortable and on which Washington depended for cooperation. Mutually agreed-upon mergers were fine (especially those blessed by Washington), but usurpations such as those orchestrated by Drexel Burnham were deemed simply too disruptive. Drexel, for instance, backed T. Boone Pickens’ attempt to take over Gulf Oil in 1983 and Unocal in 1985, as well as Carl Icahn’s 1985 bid for Phillips 66. These efforts failed, but came close enough to succeeding to unsettle managers, as did Ted Turner’s success in 1985 using Drexel’s leveraged buyout techniques to take over MGM/UA and Kohlberg Kravis Robert’s famously successful 1988 takeover of RJR Nabisco.

The consequent widespread disruption attracted Washington’s attention. Its partners in economic management were suffering. Before the authorities made any accusation of wrongdoing, the Securities Exchange Commission investigated Drexel intensively. Eventually, it uncovered illegalities on the part of one Drexel Burnham employee. Instead of an individual prosecution, the discovery generated a deeper examination of Drexel. Such investigations were common enough—one illegality often leads to another. What was unusual is that the U.S. Attorney used the RICO (Racketeer Influenced and Corrupt Organization) statute to freeze Drexel’s assets during the investigation, even before uncovering any major wrongdoing. The asset freeze effectively made it impossible for Drexel Burnham to meet its obligations. It was a death sentence for the firm, as it would have been for any financial institution, and Drexel closed its doors in early 1990. The firm never admitted to guilt but it did accept the judgment of the authorities. It had little choice. Only later did it emerge that Drexel Burnham had indeed broken laws, also common enough because the rules are so extensive that few firms can remain entirely compliant all the time. Something other than common compliance failures, however, must explain the zeal with which the authorities attacked Drexel, even before they discovered any wrongdoing. It had less to do with law than with stopping Drexel’s disruption of the cooperative-collusive system.

Imagine the action in Silicon Valley today had Washington not crushed Drexel Burnham, and with it, its practices. Tesla, for instance, has management difficulties, enjoys a leading competitive position, has missed several self-imposed production deadlines, and what is most important, enjoys considerable public subsidy. If leveraged buyouts were still the order of the day, Tesla would present a ripe takeover target for an aggressive outside management. Apple, Microsoft, Google, and other technology giants have enormous—and enormously attractive—pools of cash on their balance sheets. These liquid assets earn little and support no project to improve their companies’ technologies or expand their businesses. Were a takeover as feasible as it was in the past, a management team would view these hoards of cash as an easy way to promise repayment to bond buyers in a leveraged buyout. But having crushed Drexel Burnham, Washington has warned off any such behavior, and in doing so has assured Tesla, Apple, Google, and others that no such threat exists, that they face neither competition nor pressure to use these idle funds—to further research, for example, or to increase employment. Washington has these and other cooperative, comfortable managements under its protective wing. Nor do recent privacy hearings alter this protective posture. Regulation could serve these firms as the earlier description made clear it could serve Facebook.

IN PART, Donald Trump’s election may well express public revulsion at this corporatist system. People may not know the intricacies of the system or its ugly origins, but they feel and voice disgust with the “rigged system,” complaining how the elite—those with influence within government, business, and finance—work together for themselves and their political agenda and not for the public weal. When people say these things, they are describing the fallout of the collusive system, even though the public hardly uses that terminology, much less the words corporatist or fascist. The leftward lurch of the Democratic Party no doubt has similar roots. Here, too, left-leaning supporters view any moderation that would support existing practice as hateful and unfair because it would continue to provide benefits to those who least need them, and at the expense of the working and middle classes. Both those trends, Trumpian rule on one side and the leftward shift on the other, offer reason for optimism—not because they offer solutions but because they reflect a reaction that might actually begin to unwind this country’s long-entrenched, fundamentally abusive economic system.

If the United States were to conduct such an unwinding, the place to start would be the regulatory system. Allowing regulatory exemptions for cooperation with Washington is a fundamental way agencies direct business toward the government’s agenda and frequently away from the market’s expression of the public’s wants and needs. If Congress, or an executive order from the White House, forbade such practices and insisted that the government set the rules and then stick to them in all cases, this primary lever of the country’s corporatist economic system would fail. Trump has moved marginally in this direction by dispensing with some regulations. By limiting the regulatory burdens placed on business, he has—no doubt inadvertently—reduced the value of the government-issued exemptions used to exact corporate cooperation. But because much regulation is also essential to protect the public welfare, Trump’s approach can only go so far. Ending this abusive system is less a matter of limiting the scope of regulations than stopping the discretion the administrative state has in applying them. For similar reasons, our country needs clear and consistent criteria, not bureaucratic discretion, in regulatory matters generally and especially in directing anti-trust measures.

Though such avenues of relief are clear enough, the prospect of meaningful progress remains remote. Powerful interests that are not subject to the ballot box have deep stakes in maintaining the existing arrangements. For industry and finance, the monopoly-like privileges offered by the long-established approach are simply too tempting. Indeed, one could argue that corporations have operated under this system for so long that they have lost the institutional ability to respond to anything other than government signals, and certainly not to those of the market. As for the government, those in power in the bureaucracy as well as those in elective office will want to maintain their ability to direct the still powerful American economy.

Trump, for all that he is a reflection of public discontent, shows only slight inclination to root out this corporatist, fascist-like system at the base of the “swamp” that he once promised to “drain.” He apparently does not even grasp the most fundamental conditions that underlie the discontent that helped bring him to office (talented as he is at playing to his “base”). Most of his behavior seems to indicate that he wants less to rid the country of the collusive system’s basic character than simply to redirect it toward a different agenda with different favorites. The tariff break offered to Apple might count in this regard, or the efforts to bend environmental regulations to enable more oil drilling on public lands.

The same can be said of Trump’s efforts to restructure the country’s trade deals—to make, in his words, a “better deal.” It has become increasingly evident that NAFTA, the Trans-Pacific Partnership, and other treaties benefited the established collusion between government, industry, and finance, and did so to the detriment of others who have operated outside the country’s cooperative-collusive system. As for Trump’s tariffs, whatever else he intends them to accomplish, they only bring different elements of the economy into the collusive system while excluding others. His volatile mix of rhetoric and behavior creates confusion about where the administration is going and makes it unclear whether it knows—at least when it comes to economics—with what and with whom it is dealing. It certainly provides little hope of remedying the present problems of America’s economics.

Nor would a rise to power by the Democratic Party’s left help in this matter, even though it, too, reflects an intense public discontent with present economic arrangements. Specifics, of course, depend on which candidate is speaking and to which audience, but the general theme is to replace fascist-style direction with something more socialist, in which the government would control industry and finance directly rather than through collusive deals. Admittedly, this approach has one appeal in that it presumably would withdraw the unfair privileges and protection long secured by some businesses. But if the history of socialism is any guide, the businesspeople and industrialists thrown out would be replaced by a different favored group chosen to direct the economy’s effort and the government’s agenda. A government-affiliated elite would continue, no doubt little changed, indeed maybe even including the same individuals.

Because there is little hope of a remedy from either the right or the left, it seems likely that the battle between a dissatisfied public and a collusive elite will continue. Future years may witness ebb and flow in the intensity of feeling against the fascist economy, but unless the public gives up its objections and accepts this abuse, the hostile politics of today will surely continue. The collusive elite will mount a formidable defense. After all, it controls the levers of power. It also has proved itself adept at finding allies on the left when the challenge from the right gains ground and allies on the right should the challenge from the left appear threatening. The elite has used Trump’s vulgarity and the unsavory attitudes among some of his followers to distract from the basic motivation of this opposition and to enlist allies on the left who otherwise would happily see this elite put out of power. Should the left gain power, the elite would no doubt do something similar to gain allies on the right who otherwise would happily see it out of power.

As for those who despair of seeing politics of good feeling anytime soon, there is compensation in an ongoing dispute. Turmoil should be preferable to supine acquiescence.

Milton Ezrati is a contributing editor at The National Interest, an affiliate of the Center for the Study of Human Capital at the University at Buffalo (SUNY), and chief economist for Vested, the New York based communications firm. His latest book is Thirty Tomorrows: The Next Three Decades of Globalization, Demographics, and How We Will Live.

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