The 2012 Presidential race is on in the U.S., and Mitt Romney, the presumptive Republican nominee for President, has escalated his attacks on President Barack Obama, claiming that the President has undermined free enterprise and expanded the role of government in the life of every U.S. citizen over the last three and a half years. According to Romney, the U.S. economy needs a leader who will put in place policies that encourage free enterprise in order to grow faster and put people back to work. The problem with this is that Mitt Romney is misleading people into believing that he will support all free enterprises, while the reality is that, like his party, he will focus aggressively on supporting existing free enterprises that have gamed U.S. democracy and undermined free markets.
To understand why Mitt Romney’s message may sound good in theory, it’s important to understand the difference between the theoretical U.S. economic model and the economic model actually in place. While it’s largely assumed that capitalism, a model under which competition among private enterprises maximizes wealth creation, is in full practice in the U.S., it turns out that the reality is very different.
Under completely free markets, private enterprises compete to generate the best products and services at the lowest possible costs. Competition keeps private enterprises from controlling the market and therefore dictating prices. In theory, this actually does lead to greater economic benefits, and there are countries where, in practice, this actually takes place to a significant degree. In the U.S., the economic model in place is actually one where special interests have gamed politics to the point where government has been significantly influenced to protect specific corporate interests, ranging from food & drinks to minerals to energy to pharmaceuticals. This economic model based on corporate power, big corporate players work hand in hand with the government to prevent free enterprises from competing against them. This is why corporations like Exxon, which seems to earn record profits every single year, still receives government subsidies. It is also why other countries with less entrepreneurial and technological capacity are now beating the U.S. in clean energy as its government refuses to provide the same level of support it provides to fossil fuels.
Corporate power is dangerous not only because it discourages free enterprise, but because it undermines democracy by creating the illusion that government intervention in regulating any market is against free enterprise, even when it is to discourage oligopolies and to encourage entry to market by new enterprises. And this is exactly the illusion that Mitt Romney is betting on, telling U.S. voters that his policies will encourage free enterprises to create jobs and spur faster economic growth. In the coming months, Mitt Romney will raise hundreds of millions of dollars from special interests, including Super PACs supported by the likes of the Koch Brothers, to tell U.S. voters that he will be different from the incumbent because he will weed out government intervention in markets to allow free enterprises to thrive. It is misleading and wrong.
The reality is that in the last three and a half years, new enterprises have been getting a better shot at making it than in the eight years that came before the President was elected. The vast majority of jobs are being created in more competitive markets where enterprises don’t largely control the market they are in. What’s more, the President has prudently used government to do its rightful job, which is to intervene where free markets fail and where markets incur high social and environmental costs not reflected in market prices. The President has fought against insurers and pharmaceuticals to ensure prices don’t keep rampantly growing (which they shouldn’t in a truly free market), has worked hard to ensure that enterprises don’t create more problems than the benefits they provide, and has given tax incentives to small businesses that create the vast majority of jobs, not big enterprises that create relatively fewer jobs per unit of output.
Mitt Romney’s campaign will spend hundreds of millions of dollars claiming he’s for free enterprise, but if he’s elected, he will support the same kind of enterprises that will help him win the White House: those that have for many years undermined democracy by abusing corporate spending power to buy elected officials. If U.S. voters really want to encourage more free enterprise, they should know that the President has cut taxes for small businesses several times, reduced corporate abuses in the health and financial markets, helped bring back the Auto industry, and directed government agencies to implement a host of recommendations made by the business community to encourage free enterprise. It’s no coincidence that after the greatest recession since the Great Depression, the U.S. economy has come back largely because employers have added jobs even as the government is shedding them. Mitt Romney’s theory of helping some free enterprises wouldn’t have led to the kind of recovery the U.S. is experiencing. It would have led to the same hole we are just coming out of.
So, to answer the question, yes Mitt Romney could be a free enterprise president. But the free enterprises he would be supportive of already exist, and they’re huge, dangerous, and deceitful. We need a President who’s supportive of all enterprises, not just those who have bought Washington to keep control of the markets.