One regularly reads or hears condemnations of the power of business corporations in the modern world. So let’s think about the nature of power.
Witness Warren Buffett. Buffett is currently the sixth richest man in the world and head of the powerhouse Berkshire Hathaway corporation. I’m not a fan of his political or economic views, but an anecdote about his power in 2008, when he was the third richest man, is instructive.
Buffett was asked by Wendy Edelberg to come to Washington to share his thoughts on a variety of financial matters. Buffett twice declined the invitation. Edelberg decided she would not take No for answer, and Buffett was subpoenaed.
Who was Wendy Edelberg? She was Executive Director of the Financial Crisis Inquiry Commission, a government body charged with investigating the 2008 financial crisis. As a government official in that position, she had the power to send a message to Buffett that begins with the words “YOU ARE HEREBY COMMANDED to appear and give testimony.” And if Buffett did not, the police would soon appear at his door.
Suppose the “invitation” had gone the other way: Imagine that Warren Buffett had asked Wendy Edelberg to come to Omaha to share her views about stuff. Suppose Edelberg had replied that she was too busy or otherwise did not want to. What could Buffett have done about that? Absolutely nothing. Buffett, despite his great wealth, has no power to compel anyone to do anything.
But a mid-level government bureaucrat could force the world’s third richest man to come to her.
Edelberg’s and the FCIC’s lawyer wrote to Buffett: “We would prefer not to use compulsory process to secure your cooperation.” Not surprisingly, they were able to overcome their reluctance.
So for those who mutter darkly about the power of corporations: please keep in mind where the coercive power really lies.
Economic power is a genuine power, but its power is limited by the voluntary choices of the parties involved in the transaction. I could offer you a million dollars to shave your eyebrows and declare your love for Immanuel Kant on YouTube. You could accept or not.
Political power is different. It is the power to compel others, and it does not require the consent of all of the parties.
Of course it’s a common phenomenon in mixed economies for some wealthy individuals or corporations to use their economic power to influence the political process, and sometimes that is a bad thing. But even here remember what makes that possible: either corrupt politicians who accept bribes or politicians, corrupt or mistaken, who politicize the economy in the first place.
We need to move in the direction of separating politics and economics, for exactly the same reasons we separated politics and religion.
Great post. Not only is WB compelled to appear in Washington, I’m sure he’s not compensated for his time nor reimbursed for his expenses. No eminent domain for a day. No need to figure out what the market value of one day of the third richest man in the world.
I suppose he could “go Galt” by appearing and not saying anything important – a mind on strike. But for Buffet, celebrity will win out over indignation at political bullying run amok. What an obscene abuse of power to put into motion a process that will result in the confiscation of Warren Buffet’s freedom if he doesn’t appear in Washington to chat with the people’s elected representatives and their agents.
If Ms. Edelberg really thinks that Warren Buffet’s testimony will make any difference to the outcome of her report, then it’s unlikely that she’s qualified for the job. I’m sure there are qualified people like Peter Schiff, Thomas DiLorenzo, or Thomas Woods that would be happy to voluntarily provide their opinions and explain the causes of the financial crisis.
But I doubt they want to hear from people who understand history and economics and that the recent financial crisis had everything to do with government manipulation of market forces and threats to banks to lend money to people with no ability to repay.
I’m sure that actually having WB show up on Wednesday after being subpeonaed will be the greatest day yet of Ms. Edelberg’s life. And I’m sure WB will enjoy signing a copy of his book for her. I hope that, since he’s there, he is able to explain the root causes of the financial crisis and not just rant against the complicity of Wall Street banks.
Crisis is opportunity for the Marxist/Fascists running our government. I am not surprised that the bulk of stoogified (publicly-educated) America is oblivious to the glaring guilt of the Feds in our economic situation.
The BP oil spill reveals the magical thinking that rules this country. The Marxist media pushes the agenda of the Marxist government, and they get by with that because Americans have been trained to be Marxist/postmodernists in government schools. People expect government to work miracles. Sadly, many of our countrymen yearn for a totalitarian solution to all of their problems, as did many stupid Russians, Chinese, and Germans in the 20th century. Why? Because they’ve learned nothing but to think like Sophists and will not be bothered to educate themselves.
The good news is that some of us are waking up to what has been going on, and I am prepared to stand my ground against tyranny to the bitter end, if that is what it comes to. I hope that we can turn things around peacefully through honest education and discourse. That is what I intend to work for.
Apparently this woman has her PhD in economics from the University of Chicago. Seems she went right into “government” after she got out.
http://www.federalreserve.gov/research/staff/edelbergwendym.htm
Bringing in the people who do understand would mean exposing the role of the Federal Reserve in this mess. We have to realize these people are not going to voluntarily give up their coercive power. They just won’t do it.
Now that of course assumes that these individuals recognize what they’ve done. They may not, and in fact the idea of a having a free market (esp w/r/t currency) may be completely foreign to them.
Getting WB to show up is not going to solve anything unless you expose the real reason he should be subpoenaed. The real reason is that he is a staunch advocate of globalism (financial and social) and supports the eugenic practices used in third world countries to attack poor populations.
The housing crisis is his little contribution to hamstring the middle class. This brings his ideology of collapsing economies to further his power grabs close to home and it is time we woke up to this. Too many people blur the line between capitalism and corporatism. Corporatism is the philosophy that should be under fire. WB is corporatism through and through.
It is corporatism that allowed the Federal Reserve to take hold of our economy and run amok. It is corporatism that brought all the collapsed bubbles in the 21st century to fruition. Once government is portrayed as infallible, and they sponsor government protection of big business, then the little guy pays the price. Wall Street has killed Main Street.