John Gapper has a very good column in the Financial Times today. He issues a timely warning that governments are on the prowl, looking for any company that might give it an excuse to rip its wealth from its investors’ hands:
Willie Sutton, the robber, sagely observed that he raided banks because that was where the money was, and US politicians know this lesson well. The voters do not have a lot since they are recovering from a loss of paper wealth in the housing bust and governments around the world (as well as US states) face yawning budget deficits.
Who does have cash? Large, dividend-paying corporations such as BP. They include energy producers and utilities; consumer goods brands; food, drink and drugs companies – all of the mature businesses that cluster in indexes such as the FTSE 100 and the Standard and Poor’s 500.
Other companies may look at all this and believe that they and their investors are liability-free because they have not spilled oil in the gulf, sold cigarettes, made cars that do not brake or constructed synthetic collateralised debt obligations.
That would be a mistake. Many of S&P’s dividend aristocrats rely on the goodwill of consumers and politicians to keep accumulating cash for payouts. The mood following the bail-out of Wall Street is now so hostile to corporations, and public budgets so strained, that any slip would make them vulnerable.
Is there any hope for corporations? Well, possibly. There are signs that the general public is beginning to realize who the real robber barons are. If something like
this can appear in the New York Times, there is hope:
What this means for Mr. Obama is that an anxious populace is now less likely to see his clash with BP as an instance of government’s standing up to a venal corporation, but rather as an instance of both sprawling institutions having once again failed to protect them. In a poll conducted last month by the nonpartisan Pew Research Center, 63 percent of respondents rated BP’s handling of the oil leak as fair or poor. But the government fared only modestly better, with 54 percent giving it the same dismal marks.
In other words, voters perceive both business and government as part of an interdependent system, and it is hard for them to separate out the culpability of either. Mr. Obama acknowledged as much in his speech Tuesday, when he asserted — in his lone criticism of government’s role in the crisis — that the bureau in charge of monitoring the oil companies had effectively been colluding with them instead.
All of which leaves the old kind of anticorporate populism — “the people versus the powerful,” as Al Gore put it — a beat behind the times, sort of like “flower power” or the Laffer Curve [up to a point, Lord Copper - ed.]. Mr. Obama and his party are probably right to presume that voters don’t trust BP or any of the powerful companies the president has taken to castigating on a regular basis. The problem is that they don’t trust Washington to stand up for them, either.
And with even liberal anger against the President growing, perhaps the analogy at the end of
this Daily Show segment is worth considering further. The orcs who are despoiling the free enterprise system draw power from the One Ring, the might concentrated in Washington DC and which corrupts even the most noble souls (to be charitable to the President). In order to stop the orcs, we shouldn’t just change the Ringbearer(s) every few years, we need to destroy the Ring itself.
The FDA is getting into the business of mixing drinks. Employing a dangerously questionable array of regulatory powers, the agency is trying to determine if the the combination of caffeine and alcohol is a tempting and harmful brew for underage drinkers. Rather than do any investigative work of their own, they are giving producers of these drinks 30 days to prove that the alcoholic energy drinks are safe.
What makes them think these drinks are not safe? As difficult as this is to believe, some consumers have reported that the drinks apparently encourage “risky behavior.” Shocker.
The FDA contends that the real purpose of their investigation is to make sure the beverage companies are not pandering these products toward underage adolescents because the cans look very much like non-alcoholic energy drinks that are marketed toward youths. This video details the dangers of low prices and appealing packaging. Careful corporations, you might just improve your sales!
Stories like this highlight the utter worthlessness of the FDA. It isn’t that consumers are complaining that the drinks are bad, that the beverage companies are making false claims, or that they have broken any laws or violated anyone’s rights. Simply put, some people have it in their heads that these drinks have effects they don’t like and they are appealing to government to stop others from voluntarily consuming these products, the effects of which they seem enjoy.
Regardless of marketing, it’s illegal to sell alcohol to minors. So, if it is the case that youths are purchasing these alcoholic energy drinks, is it the beverage companies fault and responsibility? Or should the appropriate enforcement agency i.e. the police, investigate potential violations of the law?
Further to Cord’s post below, a real liberal, not a statist claiming to be one, would be familiar with John Stuart Mill’s argument that minorities need small government to protect them from the “tyranny of the majority“:
The “people” who exercise the power, are not always the same people with those over whom it is exercised, and the “self-government” spoken of, is not the government of each by himself, but of each by all the rest. The will of the people, moreover, practically means, the will of the most numerous or the most active part of the people; the majority, or those who succeed in making themselves accepted as the majority; the people, consequently, may desire to oppress a part of their number; and precautions are as much needed against this, as against any other abuse of power. The limitation, therefore, of the power of government over individuals, loses none of its importance when the holders of power are regularly accountable to the community, that is, to the strongest party therein. This view of things, recommending itself equally to the intelligence of thinkers and to the inclination of those important classes in European society to whose real or supposed interests democracy is adverse, has had no difficulty in establishing itself; and in political speculations “the tyranny of the majority” is now generally included among the evils against which society requires to be on its guard.
Mill goes on to warn that limits on government are not enough, for the tyranny of the majority can also operate through convention – and this is what distinguishes the liberal Mill from the conservative. However, in a world where the liberal victory over convention is well-nigh complete, it is the limitation of the power of government over individuals that is more important. That is where liberalism has failed, because people who presumptuously call themselves liberals have been seduced by the power of the state and seek to use it to impose their own view of the world on everyone. The fatal conceit that Hayek, another great liberal who despised the idea that he might be thought of as conservative, warned against as leading down the road to serfdom has so completely infected modern liberalism that it has become the establishment that Mill warned against (perhaps Nobel laureates form the new aristocracy of this establishment).
It is perhaps a jape by history that conservatives have become the prime guardians of real liberty, but once liberty becomes a tradition, conservatives are bound to uphold it. Mill would recognize this, and approve heartily. If he does not know this, Krugman is not only no liberal, but he is no intellectual either.
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