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By Ivan Eland
December 8, 2011
Many people confuse a “pro-market” orientation with a “pro-business” one. Recent events abroad highlight the stark difference between the two outlooks. Business interests lobbying the U.S. government are sometimes valuable to society and other times harmful.
For example, after the 9/11 attacks, opposition to the USA PATRIOT Act—a draconian attack on American civil liberties through increased government surveillance and commandeering of private information—hasn’t gotten much traction. The intense fear generated by those attacks allowed the act to be railroaded through Congress, with many members not even reading it before passage, and has since stymied attempts to repeal it or significantly lessen its ill effects. Now the American high-tech cloud-computing industry may help break this logjam. Cloud computing allows users to efficiently place their data in the hands of an off-site company for storage and electronic retrieval. American cloud-computing companies, such as Microsoft and Google, are facing overseas competition that is warning that using such companies would give the U.S. government access to users’ data through the PATRIOT Act.
Interestingly, U.S. government and cloud-computing industry spokespersons only half deny these accusations. For example, Politico.com quotes Philip Verveer, the U.S. coordinator for International Communications and Information Policy at the State Department, as saying, “We think, to some extent [emphasis added], it’s taking advantage of a misperception, and we’d like to clear up that misperception.” Similarly, Phil Bond, a tech lobbyist noted, “There is no shortage of people who misapprehend the law. If some of these misperceptions harden or real problems [emphasis added] [are] not addressed, it will cause companies and governments to hesitate in doing business with U.S. cloud companies.” This lobbyist’s statement illustrates that U.S. cloud companies have to walk a fine line by talking about “misperceptions” to avoid driving away foreign business and angering the U.S. government, yet they acknowledge that they’d like to solve problems caused by the act by changing at least some aspects of it. Thus, American high-tech business could very well become a potent force in attenuating some of the PATRIOT Act’s most infamous provisions and freeing up the market for real and robust global competition in cloud computing.
On the other hand, business pressure on government can merely result in corporate welfare. Nervous American financial institutions with substantial European exposure, angered at Germany’s heretofore justifiable reluctance to pay for bailing out irresponsible southern European countries, lobbied the U.S. government to do something about the eurozone financial crisis. Always willing to worry more about other countries’ problems than they do themselves, the government of the American superpower eagerly took up the chance to once again meddle in Europe’s affairs. To prevent Europe’s banks from dumping dollar-denominated assets and bonds, the Federal Reserve offered to swap dollars for euros with the European Central Bank (ECB) at subsidized interest rates, thus making it easier for European banks to obtain cheap dollars. But the very American financial institutions that lobbied for the U.S. government to provide dollars to Europeans were the same ones that had cut off such financing to European banks because those banks owned too many risky European government bonds. Of course, the ECB was perfectly capable of enacting the equally stupid policy of buying bonds from profligate countries and printing money. The ECB didn’t need American help in refusing to hold countries accountable for their fiscal irresponsibility.
In addition, the eurozone’s plan for such countries includes expanding the euro bailout fund, including an infusion of cash from the International Monetary Fund. The United States is a major pillar of that institution, and U.S. taxpayers will again be asked to pay some of Europe’s bills. Couldn’t the Europeans be satisfied that America paid greatly into post-World War II European reconstruction and is still subsidizing European security 20 years after the Cold War ended?
Even if the Europeans were satisfied, the U.S. government would probably still have a pro-business policy of helping its financial institutions with European exposure. Thus, pro-market lobbying to change PATRIOT Act intrusions and regulations is beneficial to society, but pro-business lobbying for corporate welfare is not.