The Big Ripoff: How Big Business and Big Government Steal Your Money with Timothy P. Carney.
Today's largest corporations have mastered the art of working with government officials at every level to stifle market competition. They reap billions through a complex web of higher taxes, stricter regulations, and shameless government handouts. The Big Ripoff pulls back the curtain to show who is strangling America's tradition of free enterprise and how and why they are doing it. Author Timothy Carney discusses how the incestuous relationship between big business and even bigger government works to the detriment of consumers, taxpayers, and entrepreneurs. Columnist and Fox News contributor Jim Pinkerton provides comments on the book- Cato Institute
Mr. Carney was a 2004-2005 Phillips Foundation Journalism fellow, and before that he was a political reporter for Bob Novak and Assistant Editor at Human Events. Tim is a columnist for America's Future Foundation's webzine Brainwash, and is a contributing editor to Human Events. He has been published in the Wall Street Journal, Washington Times, New York Sun, National Review Online, American Spectator, American Conservative, and other magazines, newspapers, and websites.
Timothy P. Carney
Tim Carney, CEI's Warren T. Brookes Journalism Fellow, is the author of The BIG Ripoff: How Big Business and Big Government Steal Your Money (Wiley, 2006).
He was a 2004-2005 Phillips Foundation Journalism fellow, and before that he was a political reporter for Bob Novak and Assistant Editor at Human Events. He is a columnist for America's Future Foundation's webzine Brainwash, and is a contributing editor to Human Events.
James P. Pinkerton
James P. Pinkerton has been a columnist for Newsday since 1993. Prior to that, he worked in the White House under presidents Ronald Reagan and George H. W. Bush, and also in the 1980, 1984, 1988, and 1992 Republican presidential campaigns.
Pinkerton is the author of What Comes Next: The End of Big Government--And the New Paradigm Ahead (Hyperion: 1995). He is also a contributor to the Fox News Channel and a Fellow at the New America Foundation in Washington DC. He is a graduate of Stanford University.
My name is Stephen Slivinski. I'm director of Budget Studies here at the CATOInstitute and today the book we're celebrating a release of is titled,"The Big Ripoff: How Big Business and Big Government Steal Your Money".Now there is a big myth in American politics today. It's the suppositionthat whenever business organizations and trade groups get involved inpolitics, they're doing it because they want to get the government off theirback. Well, that's only half true, they do sometimes want to getgovernment off their back, but instead of simply leaving it at that, theyalso lobby to place government on the backs of their businesscompetitors in the process. Short of that they at least want special handouts for themselves as a means of protection against the forces ofcompetition of the free market. Now, these sorts of handouts have beenbroadly grouped by observers, like myself, under the rubric of "corporatewelfare". These direct subsidies to businesses cause tax payers about 90billion dollars each year according to the latest estimate from the CATOInstitute. That only shows the edges of the phenomenon. That estimatedoes not include tax breaks, cartel protections, tax barriers and variousregulatory barriers to competition. These sorts of corporate welfare andequal countless billions more. And the cost of them are born byconsumers; a form of higher prices at the store, fewer choices in themarket place and higher barriers to entry for small businesses andentrepreneurs. In other words, The Big Ripoff. Tim Carney's book isa well written and much needed reputation of this big myth. The BigRipoff is also essential as a tool to understanding the lobbying scandalsthat have affected Washington D.C. lately as humorist PJ O'Rourke oncenoted, "when buying and selling are controlled by legislation, the firstthings to be bought and sold, are legislators." Fueled by Tim's hard hittinginvestigative reporting, which includes many stories that I as a policywho studied this issue for many years, didn't even knowmyself, The Big Ripoff is a book that really should be read by everyconcerned citizen and tax payer. At $24.95 cover price, the book itself is not arip-off. In fact, considering the information inside, it's really quite a bargain.Even more of a bargain for $14.00 here outside the lobby, I encourage you tobuy a copy for yourself or for a friend and Tim would be more than pleased tosign as many copies as he can upstairs in the lunch, immediately followingtoday's program. Also want to thank Mr. Jim Pinkerton of Newsday on FOX Newsfor being here today to provide us with his thoughts on the book. For those ofyou that don't know, Jim has worked at the White House under President RonaldReagan and George Bush leaving government in 1993, he's been a columnist forNewsday and a contributor to the FOX News channel on a regular, on itsshow. His writings have appeared in the New York Times, theWashington Post, Wall Street Journal, Foreign Affairs, New Republic, Slat e andthe others. He also stakes claim to be one of the tallest people in WashingtonD.C.. I also want to note, there is going to be a short question and answersession after Jim presents his remarks; He'll be commenting on the book afterTim speaks. And so with that, let me go ahead and introduce you to Mr. TimothyCarney. He's a freelance, investigative reporter and also the Warren BrooksJournalism Fellow at the Competitive Enterprise Institute. He's been published inthe Wall Street Journal, Washington Times, New York Sun, National Review on-line and the American Spectator. Also an associate editor at Human EventMagazine, a Philips Foundation fellow and he cut his teeth in the journalismworld working for (unidentified) Robert Novak. In fact, Robert Novak refers toTim in the introduction as possibly the best political reporter who has workedfor him in the past 25 years. In my opinion, this book is very strong proof of that.Please help me in welcoming Mr. Tim othy Carney.Thank you Steve, uh, thanks to the CATO Institute, thank you everybody who, uh,came through the heat to comer here today. The, last summer at this time, I wasworking on my book at six months before I had gone up to New York andinterviewed two business men, small business men, Bill Burdick and Bill Brody.One, Bill Brody, he lived in (unidentified) New York, a couple towns away frommy parents, he had a hardware store down in the Bronx and then a couple townsaway from that in Port Chester, New York, he had bought a couple run downbuildings on a dirty little water front there and renovated them. And they hadturned into a Laundromat, he bragged the best Laundromat in town, then itturned into a Hispanic foods store, a couple other small businesses there. Andhe was approached one day by a developer up in Port Ches who said. "wewould like to buy your land." But this was Bill Brody's retirement, this was hisuh, he got steady income from that. He was going to quit the hardware store ina few years and then just live off of that and then pass the buildings down to hischildren. So, Brody said, "we're not going to sell", and then the developer said,"well then, we are going to take them". And when Brody tried to complain to his,the local politicians in Port Chester, they said, "Oh, well here's the number youneed to call." It was the number of the developer.And sure enough, last summer at this time, the Kelo decision came down, Kelo-New London, and I reveled in reading liberal blogs for the next two days wherethese people just went ballistic about the fact that big business was going to betaking over the houses of these poor families there in Connecticut and myfavorite part was when they would acknowledge and say ,"what kills me themost, is that Antonin Scalia was right on this and Clarence Thomas was right onthis and the (unidentified) judges Ginsberg, etc., the good judges were wrongon this. What went wrong? How did they end up on the side of big business?Well, I don't think that Scalia or Stevens care very much what side business ison and in this crowd there are probably people that have their complaints aboutScalia from a liberal perspective, but at least relatively speaking, Scalia is goingto take the side of the smaller government and Stevens is going to take the sideof the bigger government in economic issues. And in this case, and a lot ofliberals saw this as an exception, in this case, big business actually profitedfrom bigger government and I liked it when I saw those lines out there, becauseI realize that the story I had to tell in this book hadn't been told enough and Ilove it when Al Gore recently said, "you know that you need global warmingrestrictions when even the head of Duke Energy is saying something has to bedone." And even the head of Duke Energy is calling for carbon dioxide tax.Really, even the head of a company that has monopolies on all their coal firepower plants, state controlle d monopoly, state controlled prices. He's callingfor a tax on the coal? That just means he raised his prices for consumers.It should, if you said, even the customers who know their rates are going to goup, want a tax on carbon, that would be even, but no, we get the, even the headof Wal-Mart has said that the minimum wage needs to be raised. Wal-Mart pays$10-$12 a, the lowest I've read is in the $8 range, per hour. The minimum wagehike they're talking about would go up to $7. So Wal-Mart CEO says well alright,our consumers can't afford enough at this point and they'll be able to affordmore when they get laid off. These guys understand economics at Wal-Mart.They understand economics almost better than anyone else and they understandthat mom and pop paying high school kid, hiring high school kids, are the oneswho are most likely to be paying minimum wage and that they'll be hurt, andthere is fewer competitors there if the minimum wage goes up and the idea iscompletely lost on the mainstream media for the most part.And so I tried to pepper the book with all sorts of these stories. The people hereat CATO are very good at explaining the basic economics and I mostly try andstay away from that and just tell the stories that get reported once in awhile asthe aberrations as in an interesting twists, Philip Morris wants more regulation oftobacco, even General Motors is calling for a stricter new rules on autoemissions, and there is no interesting twists when it happens again and again.And unfortunately, it's also not a new trend.I want to read here from the book here for a tiny bit from a part that mentions thebuilding we're standing in. This is in my chapter called the history of BigBusiness is the History of Big Government. "In northwest Washington D.C., on thesouth side of Massachusetts avenue, between 10th and 11th streets, stands aunique building defined by a large glass atrium inhabitants called the "WinterGarden". It's the headquarters of the libertarian CATO Institute. Across the streetssits a monument to American Confederation of Labor Founder, Samuel Gompers,once a marked citizen, today revered as the founder of the American Labormovement. Given the disparate political leanings, the contrast is amusing.The men who gathered at the Department of War, however, on December 6th,1916, struck a more startling contrast. Samuel Gompers in the flesh sat at thetable with President Woodrow Wilson, Secretary Newton Baker, Secretary of theNavy, the Agriculture Secretary, the Commerce Secretary and the Labor Secretary.Joining Gompers and these democratic politicians were Daniel Willard, thepresident of B&O Railroad, Howard Coffin, president of Hudson Motor Company,Wall Street financier Bernard Baruch, and a handful of other politicians,businessmen, a scientist and a doctor. This extraordinary gathering was the firstmeeting of the council of National Defense formed by Congress and PresidentWoodrow Wilson as a means for organizing 'the whole industrial mechanism inthe most effective way'. The Council of National Defense coordinated themanufacture of ammunition and other war necessities, but it did a lot more."The business men at this 1916 meeting had dreams for the CND that went farbeyond America's eminent involvement in the great war, both in breadth andduration. "It is our hope", said Howard Coffin, the head of the Hudson MotorCompany," it is our hope that we may lay the foundation for that closely knitstructure, industrial, civil and military, which every thinking American has cometo realize is vital to the future life of this country in peace and in commerce, noless in war." And I've got a, some other quotes in here from uh, some, onebusiness man who was there saying, "The war industry's board, successor to theCouncil of National Defense, the War Industry's Board extended its intent intothe inner most recesses of industry. Never was there such an approach toomniscience to the business affairs of a continent, the approach of omniscience."And this happened again in World War II, where business and government gettogether and they decide, business; nothing is more efficient and robust thanindustry. And in a lot of the minds of the elites who ran the businesses andcertainly in the minds of politicians, nothing is more altruistic and philanthropicand right minded, than the government. So why not having, have business do therowing and government do the steering and this is not an upsetting idea tobusiness at all. And I don't use the word in the book, because it makes peoplethink of Nazis and invading Poland, and all the other atrocities, but fascism isthe word that is used to describe this type of partnership between business and government.But when liberals or the mainstream media complain about conservativeinfluence in Washington and they don't mind throwing out the word fascism,RFK Jr. gave a whole spiel on that on the radio or in one of his articles recently.They call that fascism when say Bush doesn't raise the arsenic standards ondrinking water because somebody who would lose money from the drinkingwater standards going up, doesn't lose the money. Or a tax cut across the boardthat rich people get to save more money, there's no difference in some peoplesmind in less government helping, big business and more government helping big business.It's actually an interesting problem. I'm going to read you a quote from the bookin a second. But when I was meeting with independent book sellers, I was veryexcited about this and one book seller came up to me and said, "I heard aboutyour book and it's a great idea, and I'm going to stock it because this is exactlythe problem that I'm complaining about." And she was in Portland, Oregon or SanFrancisco or Greenwich Village, they were all from towns like that. And she said,"for example, Starbucks wants to start selling books." And I said, "Oh, wow,that's gotta be tough for you. You should definitely, uh, stock my book in yourbookstore." There is no distinction in some people's mind between that, but uh,is a big myth and I have a section on that. And there is adocumentary made, but it was also turned into a book and it was called theCorporation. And I start my book with, pointing out that 90% of Americans in arecent poll says big business has too much influence in Washington and thenasking well, what does it do when there is too much influence? And thedocumentary said, "most of the time when big business is lobbying inWashington, it is lobbying for less regulations and lower taxes." And there isnothing to back that up and obviously we do see them lobbying for lessregulations and lower taxes, but because journalists tend to be a little scared ofbusiness men, cause journalists are not business men and we don't wear as nicesuits as businessmen, we don't make as much money, we usually ride the metrowhile the businessmen drive in and park in their $10 a day garages. They are alittle bit scary to us and the free market is terrifying to the average reporter whoreally thinks free markets good, but too free, that's what caused the depressionand that's the extent of their economics even if they're covering economicissues in Capitol Hill. So both of those issue s fall into the scary category forreporter, the free market and businessmen and since they're both scary then theymust both go together. And that's what we're up against and it creates a realproblem. It creates a problem because it makes it so much easier for some oneto attack advocates of the free market, advocates of the regulation as beingcorporate shills. You don't have to make an argument if you can just say, well,you're opposing ethanol, because you're working for the oil industry or youropposing tax cuts because you're just doing to bidding of the big business andthe rich. And it frees them from making an argument for their big governmentpolicy. And so I don't well, I, when I was working for Bob Novack, I got acall from someone who had forward emails from Enron that the government hadtheir hands on and we helped get out that Enron had been lobbying the Bushadministration through Paul O'Neill to ratify the Kyoto global wa rming treaty,strict regulations on energy use and all this stuff. And so when Novak reportedthat and it showed up in the Washington Post and some other conservativeoutlets reported this, Timothy Noah in Slate said, well just because Enron stoodto profit from Kyoto and thus supported it, doesn't mean that Enron was bad.And all the sudden you're thinking, how come it does make it bad that Bush'ssupporters stand to profit from, when Bush wants to deregulate something? Andprobably in Bush's regulations, you will get the mainstream media, luckilylooking into who might benefit from the big government policies that he pushes.I do have a whole section on corporate welfare here that's heavily reliant onSteve's work and the CATO Institutes' work, but for me, that stuff is only, sort ofpart of the tip of the iceberg, as Steve said. It's the actual looking for stricterregulations. So the simple economic argument, the easiest one is, regulationadds to overhead and access to barrier to entry, keeping out possible newcompetitors and disproportionately affecting smaller businesses. And so withthat simple fact, it all the sudden becomes, and every radio host I talk to, once Isay that, they all assume I understand most of this, but some of them are a lotmore clever. Some of the regulations and the big government stuff they push for.I mentioned how you often hear, oh well, he's paid by the oil industry or this, Ihave a section of that on my chapter called, that last section of my book isprobably my favorite; it's called "Green is the Color of Money" and chapter ten iscalled "Environmentalism for Profit". And its sort of just a run through of variousdifferent schemes where big businesses are lobbying for environmental policy,getting good press off of it and then, on the other side, profiting off of it in away that they couldn't in a free market. And I quote Juliet Eilperin a writer for theWashington Post, who wrote in November, she wrote this article talking about allthese people that wanted stricter regulation of global warming laws and thenends it by saying uh, by quoting Roy Spencer. Now this was her way of gettingbalance. She quotes AP who wants stricter regulation, she wants Roy Spencerwho she calls a, someone who, "does not believe the climate will warm usrapidly as many computer models predict." He's a scientist, she describes himas, um, someone who "contributes to the free market on-line journal tech centralstation, which is in part funded by oil companies opposed to mandatory carbon limits.Now I've got nothing wrong with a reporter throwing that in. I think that's greatbecause everyone might have ulterior motives, so you quote them because theirargument might be good and then you mention their affiliation because their motives might not be good.But I went back through Juliet's article and I looked at what she didn't say.When she quoted Joe Bidden, she didn't say, Joe Bidden, whose primary sourceof funding is a DuPont Corporation who supports, a corporation that supportsgreenhouse gas laws, has invested more than anyone else in carbon dioxidecredits. No, she didn't say that. She, when she quoted the Natural ResourcesDefense Council, she did not say a group funded by banking corporation thatstands to profit from restrictions on greenhouse gas emissions, that is thebiggest banking corporation in the world that has invested more than anyoneelse in windmills and other alternative fuels, energy that lots of people argue isworthless, city group might think its worthless in itself, their funding NaturalResources Defense Council, but they know that with the right governmentpolicies, it can become worth something. When GE had its "ecomagination"launch, they didn't have organically grown wine a nd windmill generated horsd'oeuvres some how and they didn't hold their, they said well, this isn't justabout helping the planet, we want to help the planet, but we gotta help our shareholders to so we're gonna make money by doing good. And they held the eventon Pennsylvania Avenue, half way between the White House and the Capitol andthen Jeffery Immelt, the CEO, then went and met with, met with people in theWhite House and people in Congress, meaning they are going to make moneyby pushing the right regulations that's going to mandate their product. And uh,the chapter on ethanol here discusses it, the chapter on Enron in here discussesit and the Enron thing points to one more cost and one more reason I think itsimportant to write this book, the quotes that came out after Enron, this is acasualty of the free market, this is what happens when government doesn'tcontrol anybody, this is deregulation in California, I tear all of those down to tryto make the point, Enron would have been a small pipeline company, whosecollapse would have been unfortunate for Ken Lay and for a few thousandemployees, but wouldn't have been devastating in the way it was if thegovernment hadn't proped them up. The games they play in Californiawould not have been possible without regulations that Enron fought tooth andnail for, so I think its an important idea to get out there. The final reason itsimportant to get this stuff out there, about big business supporting biggovernment, is that too often, defenders of liberty, give a free pass to bigbusiness. Next time Altria comes calling on some group or some politician herein Washington whose a conservative free market, the Altria lobbyists willprobably get in the door, despite the fact that Philip Morris has been poundingaway for FDA regulation of tobacco for years, not to mention the mastersettlement agreement which is also covered in here.We assume that big business is on our side because we know that the left andmost of the media hate most big businesses and then we give them free passes.But we also don't reward them enough for being advocates of the free market. Imean Microsoft and Wal-Mart both are big companies that have tried to stick upfor the free market, gotten beaten up, not gotten much love, they've gotten lovefrom the consumers, but that starts to taper off with enough bad press, and thenthey come to Washington and they get pounded for not coming to Washingtonmore frequently. And so the left is good and government people are good atproviding incentives to come over to the big government side. And there is notenough incentives to come over to the free market side, because the benefits ofthe free market, we argue, are widely dispersed and the benefits of governmentcan be very narrowly concentrated, and they are not concentrated on mom andpop, they are concentrated on the people that have the best lobbyists, which isGE, General Motors, Enron, Boeing, all the companies that have long listings inmy index. So uh, later on I'll look forward to the questions and uh, look forwardto what Jim has to say and thank you again all for coming.