Carl Horowitz

The federal takeover of General Motors and Chrysler has produced its share of collateral damage, but perhaps no group of persons has been left in the lurch more than the roughly 15,000 nonunion salaried retirees of auto parts manufacturer Delphi Corporation who are unlikely to receive their promised benefits. Their dilemma has much to do with Delphi having been until a decade ago a GM subsidiary. It also has plenty to do with how the Obama administration sees GM and companies like it.

To understand the predicament of these employees, it’s first necessary to digress briefly on the Obama economic worldview. In a word, that worldview is corporatism, or if one will, State-sponsored capitalism. Under corporatism, government provides central direction to capital and labor, but unlike socialism, it refrains from assuming direct control. What government does is forge partnerships with executives of powerful firms, coax them into working toward common goals, and provide them with funds, expertise and force of law. Corporations effectively become the for-profit arm of the executive branch of government. And because political connections take on special importance in this context, the possibilities for corruption vastly increase. Though corporatism for several decades has been more a phenomenon of Western Europe than of America, we seem bent on catching up in a hurry.

Politically Incorrect Guide to the Constitution

The corporatist spirit was in clear evidence during the last several months of the Bush administration, a period during which hundreds of billions of assets of the nation’s largest financial houses suddenly became worthless. Led by Treasury Secretary Henry Paulson, a frantic administration persuaded Congress to authorize $700 billion for a bailout known as Temporary Asset Relief Program (TARP). Then-Senator Barack Obama, sensing a teachable moment, sharply criticized President Bush’s “stubborn inflexibility” for not considering a diversion of TARP funds from rapacious banks and corporations to needy households. Populist rhetoric of this sort helped generate support from independent voters and win the election.

Carl Horowitz

Carl F. Horowitz is director of the Organized Labor Accountability Project of the National Legal and Policy Center, a Gold Partner organization dedicated to promoting ethics in American public life.
TOWNHALL DAILY: Be the first to read Carl Horowitz' column. Sign up today and receive daily lineup delivered each morning to your inbox.