By Matt Holdridge
From The Hill:
The nation’s biggest bank lobbying groups are calling on senators to support the Federal Reserve’s power to supervise small and large banks.
In a letter to Senate Banking Committee members, six large trade associations say the central bank’s power should not be limited only to overseeing monetary policy, as some critics of the Fed have suggested.
…”It would be a mistake to limit the Federal Reserve to supervision of only large, complex institutions headquartered in major financial centers,” the associations wrote. “The Federal Reserve needs a broader regulatory focus to ensure that for both its central bank and regulatory functions it has a clear view of banks of all sizes, from all regions, and from differing types of communities.”
When the big banks are comfortable with the Federal Reserves oversight of them, shouldn’t all of America worry about their cozy relationship?
We’ve seen this before. As Murray Rothbard explains in his work on the Progressive Movement,
It then became clear to these big-business interests that the only way to establish a cartelized economy, an economy that would ensure their continued economic dominance and high profits, would be to use the powers of government to establish and maintain cartels by coercion, in other words, to transform the economy from roughly laissez-faire to centralized, coordinated statism. But how could the American people, steeped in a long tradition of fierce opposition to government-imposed monopoly, go along with this program? How could the public’s consent to the New Order be engineered?
Fortunately for the cartelists, a solution to this vexing problem lay at hand. Monopoly could be put over in the name of opposition to monopoly! In that way, using the rhetoric beloved by Americans, the form of the political economy could be maintained, while the content could be totally reversed.
Monopoly had always been defined, in the popular parlance and among economists, as “grants of exclusive privilege” by the government. It was now simply redefined as “big business” or business competitive practices, such as price-cutting, so that regulatory commissions, from the Interstate Commerce Commission (ICC) to the Federal Trade Commission (FTC) to state insurance commissions, were lobbied for and staffed with big-business men from the regulated industry, all done in the name of curbing “big-business monopoly” on the free market.
In that way, the regulatory commissions could subsidize, restrict, and cartelize in the name of “opposing monopoly,” as well as promoting the general welfare and national security. Once again, it was railroad monopoly that paved the way.
Doesn’t the argument made by the bank interests sound a lot like Rothbard’s description of big business using the power of government regulatory bodies to protect their granted monopolies?
Rothbard’s observation also holds true not only for various banking interests and the Federal Reserve but for insurance giants and the looming national healthcare legislation.
As Anthony Gregory as recently pointed out,
…If universal health care ever comes to America, the corporations are likely to stay intact but will no longer have to satisfy customers, only the politicians.
Indeed, this has been Obama’s approach on health care: give the insurance industry a captive market of mandated consumers, get the drug companies in on the deal and otherwise expand the corporate state in the name of standing up to big business.
What to do about this situation and how do we explain the tight relationship between the state and big business interests to our neighbors?
Anthony goes on,
To convince the anti-corporate skeptic of the benefits of the free market, it is crucial to defend the legitimate systems of profit and private property, but it is also vitally important to make clear that America doesn’t have a free-market economy, and indeed many of the ills associated with free markets are actually the result of state capitalism — or socialist corporatism. That the expansion of government regulations, often done in the name of combating corporate excesses, is frequently supported most enthusiastically by corporate interests makes it all the easier to explain economic liberty to those who have become disenchanted with the current system and misattribute the problems to the free market.