From George Mellaon at the WSJ, Rewriting the Economic Rules:

The point, for Mr. Reich, is a familiar one: We are ruled by big business. The granule of truth in that claim has sustained progressive politics for decades, harking back to the early 20th century, when muckraking journalists andTeddy Roosevelt were beating up on Standard Oil. It’s true that big corporations often seek government interventions that offer them protection from competitors. They don’t have armies of Washington lobbyists for nothing.

Mr. Reich himself is not above protectionism. He boasts that as labor secretary he opposed President Clinton’s Nafta free-trade agreement with Canada and Mexico. Protectionism is a seamy side of corporate—and unionist—behavior. But free-trade forces have more often won than lost. America’s and the world’s markets are still free enough to require businesses to compete vigorously for consumer favor. To that end, Google, Apple, Amazon, Toyota, Samsung et al. strive for productive and distributional efficiency.

The author doesn’t acknowledge this visible truth. Instead, he finds it insidious, for example, that farmers are snapping up Monsanto’s genetically modified seeds because the seeds’ resistance to pests and diseases increases crop yields. To his credit, he doesn’t take the food-faddist line that GMOs are unsafe (which they aren’t). His worry seems to be that Monsanto is making too much money. Attacking technological innovation is a strange way to go about saving capitalism.

Mr. Reich admires populist author Thomas Piketty, who proposes to save capitalism from itself by taxing capital out of existence, thereby creating a truly egalitarian society. He calls the Frenchman’s finding that capitalism steadily widens inequality a “powerful thesis,” although he nowhere contends with the many critiques of Mr. Piketty’s dodgy numbers supposedly backing his claim that the return on capital exceeds economic growth. Mr. Reich asserts that U.S. median family income has been stagnant for over a decade because of the decline in private-sector union membership, although he never contends with the effects of unions on job creation or mobility or on pro-growth economic dynamism.

HKO

As a form of saving capitalism, government control is like chemotherapy; valuable in small doses, deadly if over prescribed.

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