The Corner

Reich Demands Punishment for ‘Disloyalty’

Robert Reich, whose surname so nicely fits the increasingly totalitarian mood of the Democratic party that a fiction author would be mocked for making it up, has some suggestions on the theme: “What To Do about Disloyal Corporations.” Focus in and hold on that word “disloyal” for a moment and consider its implications: What is expected of a business now is not that it should follow the law and conduct its affairs honorably, but that it should knuckle under to the demands of whatever faction happens to hold political power or be punished by the state for “disloyalty.”

At issue is the question of corporate inversion, which is a jargon-y way of describing the fact that when U.S. firms merge with firms headquartered in other countries, they sometimes locate the legal residence of the new merged enterprise in the country with friendlier corporate tax policies — and, given that the United States has the highest and most cumbrous corporate tax code in the developed world, that almost always means relocating abroad. We are not talking here about firms relocating to Caribbean tax havens or the like, but companies moving to Ireland, Canada, Switzerland, etc.

Reich refers to such firms as “deserters” — note the martial-law borrowing — and such relocations as “desertion,” which remains a capital offense under U.S. military law. Joseph Stalin infamously ordered that deserters be shot on sight and sent their families to prison camps; Reich wants them punished, too, by illegally stripping these firms of ordinary legal protections, for instance by revoking patents issued under American law.

The Democrats have been indulging in this sort of thing for a while now. (Since Woodrow Wilson, Jonah might argue.) Barack Obama natters on about “economic patriotism,” a particularly stinky formulation in that it conflates patriotism with the willingness to toe such policy lines as the president demands. This is classic strong-man thinking. President Obama for a minute there was playing around at trying to resurrect ancient nationalist thinking, giving a speech attempting to channel Theodore Roosevelt’s “new nationalism” at the Kansas site of his predecessor’s famous 1910 address. President Obama denounced George W. Bush’s economic policies as “unpatriotic.” Robert F. Kennedy Jr. argues that his political opponents are guilty of “treason,” and wants people to be jailed for holding unpopular political views. Democrats in 2012 denounced Mitt Romney as an “economic traitor,” which the Obama campaign amplified by declaring him “Not One of Us.” Senator Bernie Sanders routinely denounces his political targets as unpatriotic.

This is straight from the cartoon version of The Road to Serfdom. The government creates stupid economic incentives; private actors respond to those stupid incentives by making choices other than the ones their feckless rulers intended; the politicians declare this “unpatriotic,” and insist that their big ideas would work just fine if not for these scheming economic traitors and their connections to inscrutable foreigners; in the final act, state violence is directed against those who make economic choices other than the ones that politicians demand, either in the name of patriotism or in the name of national security.

There is one obvious alternative — stop creating boneheaded economic incentives through boneheaded economic policy — but that never seems to occur to anybody. Certainly not to Robert Reich, whose glee about the prospects of using the power of government to punish nonconformist businessmen is unseemly and illiberal.

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