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Guilt by corporate association

"By every measure, we are now primarily a streaming company that also offers DVD-by-mail,” said Netflix co-founder Reed Hastings. That's left the company with some new concerns. A DVD-by-mail business needs to worry about postage rates. An online-streaming business needs to worry about bandwidth. And so Netflix is now worried about bandwidth: As Cecilia Kang reports, it's entering the "net neutrality" fight, pitting itself against Internet service providers such as AT&T and Comcast. It's corporation v. corporation, as so often happens.

This has bearing on a certain type of guilt by corporate association argument that has long had purchase in certain sectors of the left and is gaining adherents on the right. The Washington Examiner's Tim Carney has been pushing this to conservatives, but since conservatives are often rich businessmen, it turns out he's also been pushing this to rich businessmen who gathered to figure out a strategy to help Republicans in the 2010 election. As Matt Yglesias suggested, those rich businessmen aren't helping Republicans because they think they'll be bad for profits.

Carney's response to this is unpersuasive: The first part is an irrelevant attack on the Center for American Progress, and then he says:

These businessmen, as far as I could tell, mostly owned their own businesses. Many of them had been shockingly successful. I’ve often said — and I said it at the dinner — that privately held businesses tend to favor free markets, even when they get big; while publicly held businesses (like those on the Fortune 500), tend to want bigger government as often or more often than they want free markets, depending on the industry and who’s in power.

It's hard to know what to make of this. There's exactly no evidence provided for the claim. It's not an accurate description of the event he attended, which included the VP of Bank of America (NYSE: BAC), the vice chairman of Cintas (NASDAQ: CTAS), the former chief executive of Dreyer's (a subsidiary of Nestle), the chief operating officer of the Chamber of Commerce (which loves itself some corporate welfare), the head of the Heritage Foundation (which files as a 501(c)(3) for tax benefits), the CEO of TCF Financial (NYSE: TCB), and so on.

Carney says he gave his standard talk on "the evils of corporate welfare and bailouts, and the destructive influence of the Big Business lobby in Washington," and I believe him: He should've just said that instead of trying to distract his readers with an attack on a shared enemy and then assuring them that he only talked to the good corporate titans -- the ones who agree with them, and fund their chosen political party.

But more broadly, this is why the guilt-by-corporate-association agenda doesn't end up working for political parties. There are businesses that disagree with you and you're happy to condemn and then, as Carney shows, there are those who agree with you and thus you find yourself treating them as allies. Sometimes those are the same businesses. There are public and private companies on all sides of major issues (Netflix and AT&T can both be found on the stock exchange), and companies with similar interests find themselves pulled in different directions by the ideologies of their founders and CEOs.

Trying to discredit people and issues because some member of big business or another is on their side is very effective -- it's why Carney reacted so defensively when it was done to him, and why he instantly turned to the same tactic against the Center for American Progress -- but at the end of the day, that's usually as far as it goes. People suddenly find the situation more complicated and full of exceptions when the corporate money is flowing in their direction. And that's usually why this type of analysis doesn't hold up for very long: There are so many corporations arguing for so many different things that, sooner or later, you're pretty much bound to find yourself on the same side -- and even working with -- a couple of them, and then it gets very hard to explain why you're not just like all those folks you've been criticizing.

By Ezra Klein  | October 21, 2010; 4:50 PM ET
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Next: What Massachusetts tells us about employers and health-care reform


For clarity, the "irrelevant attack on the Center for American Progress" appears to be truthful. Lobby firms such as Center for American Progress get big bucks for peddling certain policies.

The "irrelevant" statement about the flow of funds through Center for American Progress to its peer corporation, Center for American Progress Action Fund (which can then lawfully disburse the money, including foreign contributions, to recipients who cannot be directly funded by a "charity"), is as follows: "Wal-Mart — a donor of at least $500,000 and possibly as much as $999,999 to the Center for American Progress, which employs Yglesias and Fang — teamed up with CAP in 2009 to push for an employer mandate on health-care. This mandate threatens smaller retailers (and everyone is smaller than Wal-Mart), but Yglesias, celebrated it as 'an important sign of change in the air'."

Posted by: rmgregory | October 21, 2010 7:14 PM | Report abuse

Yes, sometimes 2 different Big companies may be on opposite sides of an issue, such as net neutrality. But for issues that truly count for the average American - like those Obama fought for: healthcare, financial regulation, the stimulus - the fight is between Big Business and the rest of us.

I want to emphasize that it is not between business and workers. The major fight is between Big Business and everyone else. And Big Business is winning by a landslide.

Posted by: paul89 | October 21, 2010 7:28 PM | Report abuse

Nice post.

Posted by: bestwebsitedesigner | October 22, 2010 6:27 AM | Report abuse

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