The Military Industrial Complexes of Our Time

At The Economist, Will Wilkinson responds to a recent essay Vanity Fair essay on inequality by economist Joe Stiglitz:

As Gabriel Sherman writes in a new New York Magazine article on Peter Orszag and the revolving door between Washington and Wall Street, "The close alliance among Wall Street and the economics departments of the major universities and the West Wing of the White House is the military-industrial complex of our time." Not to say that the military-industrial complex is not the military-industrial complex of our times, nor that the confluence of government and health care is not the military-industrial complex of our times. The problem is that we are multiplying military-industrial complexes. But this explosion in public-private "partnerships", and the inevitable political corruption and economic distortion they produce, is not at bottom due to a plot of the top 1%. It is due in no small part to the success of progressive ideologues like Mr Stiglitz in arguing for ever greater government control over everything.

A political system that enshrines governments' power to grant monopolies and other barriers to economic competition, whether they be direct subsidies to government's chosen champion firms, or less direct subsidies by way of taxes, tariffs, and regulations that disproportionately harm less-favoured firms, inevitably attracts money to politics. Under close inspection, the progressive master narrative is revealed as a tail-chasing, self-consuming progressive Ouroboros. It is an argument against money in politics that argues for precisely the sort of government power that draws money to politics. The progressive master narrative runs on the fuel of class interest, but it makes an arbitrary exception for members of the progressive technocratic elite.

This can't be said often enough. Involving politics in industry is a surefire way to involve money in politics. The more that government seeks to influence the economy, the more that individuals with means will seek to influence the government. This often leads progressives to push for better regulators on one hand and tighter controls on the other. Taxes become tools to alter behavior rather than raise operating revenue. Industries become regulated to the point that they are quasi-public utilities. Public-private partnerships pile up, as do their costs; just this morning, the Obama administration announced it would spend a billion dollars on partnerships designed to reduce medical errors. It's an endless feedback loop, in which progressive reformers are perpetually trying to fix the problems they helped create.

Wilkinson's whole essay, which is very much worth reading, is here. My take on Peter Orszag's move to Citibank here.