IN MEMORIAM
Down With Big Business
An editorial by Robert L. Bartley.
Monday, December 15, 2003 12:01 a.m. EST
(Editor's note: This editorial appeared in The Wall Street Journal, April 18, 1979. It was written by Robert L. Bartley, who died last week, and was among the works that won him the 1980 Pulitzer Prize for editorial writing.)
Our suspicion of big business has been soaring ever since the great catalytic converter debate, in which General Motors and Ed Muskie ganged up on Chrysler. Back in 1973, Chrysler was seeking a delay in auto emission standards to avert the catalyst. Its arguments had Senator Muskie backed into a corner, but GM had already bought its platinum and tooled up to sell catalysts. So GM came out for "clean air" and gave us the catalyst.
As a result: Consumers have had to shell out millions more for their autos, and the auto marketplace has become increasingly difficult. Cars now get rid of extra hydrocarbons by burning them in a catalyst, where the become waste heat. The development of auto engines has been diverted away from then-promising lines, such as the stratified-charge engine, which would have burned "excess" hydrocarbons in the cylinder, where they become energy. Cars now need unleaded gasoline, which takes more Arab crude to make, and which was hard to find last Sunday. The hydrocarbon emission standards have been met, but whether the air is cleaner depends on whether you like the sulphur mists catalysts produce.
GM prospers. Chrysler is on the ropes.
All this is brought to mind by General Motors' current corporate-citizenship campaign. GM is telling us how to lick inflation. "A voluntary program will work, if everyone volunteers," GM Chairman Thomas A. Murphy has written chief executives of the rest of the Fortune 500 to urge compliance with President Carter's wage-price guidelines. And GM has taken out newspaper ads to exhort the populace and brag about its own "commitment" to mother, flag and the Council on Wage and Price Stability.
Now, this may seem like a strange time to start campaigning for the wage-price control program. It's one thing to board the Titanic as it leaves port, but quite another to come on board when the water is coming over the gunwales. In its ads, GM was thoughtful enough to clear up this mystery quickly, etching in boldface the following words:
"We have written to our suppliers, informing them of GM's commitment and asking them all to make the same commitment."
So this time, GM and Jimmy Carter are ganging up on the XYZ Bumperlight Lens Co. Five years from now, with the help of Mr. Carter, Mr. Kahn and so on, XYZ Bumperlight Lens will be the XYZ plant of the lens section of the light division of the bumper arm of the manufacturing subsidiary of guess who?
These insights are gradually helping us to understand why the very biggest businesses are such unreliable allies in the fight to preserve a free enterprise economy. We're sure, of course, that Mr. Murphy thinks of himself as a capitalist, and can give as stirring an "economic education" speech as anyone around. We're sure that it has never even occurred to him that since GM has a bigger cushion than its suppliers, it can grind them down if the economy is locked up in price standards. We're sure that he and other GM officers have persuaded themselves that the government is waging fiscal and monetary restraint, and sincerely believe that wage-price voluntarism will help it work faster.
For all that, self-interest finds a way to get itself expressed, and the business giants have rather equivocal interests in free enterprise. They always have the option of doing everything left-handed and backwards if that's what the government wants; indeed, that kind of regulation gives them an advantage over less durable competitors. A lot of little guys can make nuisances of themselves if they start resigning from giant research, inventing things, and raising money to form their own companies that compete with the gidget section of the widget division. And GM and du Pont and Exxon and GE are so big even the government has to come to terms with them, or so at least they can believe. And what could be so bad about becoming a public utility and being allowed 8% or so on whatever you invest; it works for Ma Bell?
This is of course a caricature of big corporations, their executives and their motives. But it is a caricature drawn to highlight an impulse that we do think accounts for otherwise inexplicable parts of their attitudes toward free enterprise. Historically capitalist economies have prospered through competition, innovation and particularly a sensitive price mechanism transmitting unimaginably efficient signals for less production here and more investment there. If you freeze the system you will lose its thrust toward progress. But in many ways GM's life will be easier. So don't look to big business for unequivocal defenses of capitalism. We guess that's up to the folks at XYZ Bumperlight Lens.
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