April 08, 2022
Megan McArdle had a bizarre column in the Washington Post telling readers “the left learns the limit of corporate power.” The gist of the piece is that Disney wasn’t able to use its power to block Florida Governor Ron DeSantis’ various efforts to beat up LGBTQ children, as well as public school teachers. McArdle interprets this failure as proof that corporations don’t have the power that many on the left attribute to them.
This is a bizarre conclusion based on the evidence here. While we don’t know what is in the heads of Disney executives, the company’s profits are not likely to be threatened in a major way by DeSantis’ election theatrics. This is not like Florida imposing a 5 percent corporate income tax.
It’s entirely possible that Disney’s executives really are offended by this attack on a segment of the population that experiences an enormous amount of discrimination, especially children who are struggling with their sexual identity. But they also were clearly responding to pressure from their workers and shareholders.
In any case, losing on this issue will likely not be a major blow to Disney’s profits. In fact, taking a stand that enjoys majority support across the country may actually be good for its finances, even if Disney proves unsuccessful in changing the law.
But few on the left held the naïve view McArdle is attributing to them. It was hardly plausible that even a very powerful corporation could, on its own, force an ambitious politician to give up a signature campaign issue for his re-election campaign, as well as a possible future run for president.
Over time, and with other corporations, along with a large grassroots efforts, DeSantis and other opportunistic Republicans may be forced to beat a retreat, as they did on civil rights many decades ago. But no one thought this was just a question of Disney saying that it didn’t like the bill.
The real story of corporations holding enormous political power is on the obscure issues, that almost no one follows, but nonetheless have an enormous impact on our economy. For example, the pharmaceutical industry has vigorously pushed for longer and stronger patent protection.
As a result, the amount we pay for prescription drugs has risen from 0.4 percent of GDP in 1980 to more than 2.2 percent of GDP at present. The difference comes to $400 billion a year or more than $3,000 a family. It’s unlikely that even 1.0 percent of the population is familiar with measures like the Bayh-Dole bill or the TRIPS provisions of the WTO, which meant a fortune for the drug industry. Needless to say, the pharmaceutical industry’s lobbyists were all over these and other measures which meant transferring tens of billions of dollars from the rest of us to the industry.
This is the typical story with a wide range of legislation. Many of the richest people in the country are able to benefit from the special tax treatment for “carried interest” which allows hedge fund and private equity partners to pay a tax rate of just 20 percent on their millions, tens of millions, or even hundreds of millions in earnings. Less than the marginal tax rate paid by many school teachers and firefighters.
Their lobbyists fight like crazy to preserve their special treatment. The general public is at best faintly aware of this handout to the country’s richest people.
There are endless other tales like this of lobbyists getting special interest legislation through for the financial industry, the oil industry, and every other major special interest group you might name. This is what the left is upset about in complaining about the excessive power of large corporations. They are not wrong.