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Asheville Citizen-Times

Smaller federal government equals bigger corporate government

Chuck Kelly • February 11, 2010

In her Nashville speech to the Tea Party, Sarah Palin charged that the Obama administration will leave us “under the thumb of big government.”

Virginia Gov. Bob McDonnell, in his response to President Obama’s State of the Union message, also attacked big government, and concluded that more power should be placed with the states: “Today, the federal government is simply trying to do too much. …As our Founders clearly stated, and we Governors understand, government closest to the people governs best.”

These grains of truth have a serious downside. The more important truth is that, under an Obama administration, middle- and low-income workers will be less under the thumb of corporate America. History clearly demonstrates that a weak, uninvolved federal government abdicates control of our nation’s economy to its most powerful special interests. For the past three decades those interests have primarily been bankers, corporate America and their investors.

America’s workers became a vibrant middle-class, not only by providing society with necessary services, but also because the federal government protected their living standards against the power of financial interests to control the labor market.

For much of the past century our national political leaders passed laws that minimized the destructive competition that could occur between states as they lowered their labor standards in order to attract industry. They could go only so far in the race to the bottom when it came to hourly wages, safe working conditions, the 40-hour workweek, child labor, and so on. As a result, the U.S. — as a unified nation — developed the strongest and most vibrant middle class in history.

However, conservative politicians gradually reversed the process that made the U.S. the most powerful and economically successful country in the world. Instead of preventing destructive competition between states, they encouraged it. When the federal government allowed states to enact “right-to-work” laws, anti-union states attracted industry by offering corporations a relatively union-free environment, compared to states that still respected workers’ right to organize. Anti-labor states also increased their competitiveness by barely meeting federal standards for wages and working conditions, thus undercutting states that had higher than federal standards.

The trend continues today, as corporations pit states against each other in bidding for new industry. The state that can give a corporation the biggest tax breaks and can assure a union-free environment, the fewest worker protections, and the greatest government handouts (such as road and rail construction, free fire and police protections, lower utility costs)—is the state that gets to reduce its ruinous unemployment rate.

This same principle works on a global level, and is the reason globalization (trade based on corporations’ freedom to locate in those countries with the lowest wages and fewest worker protections) will be a disaster for our country if not reversed. There is no central world government to limit the extent to which desperate countries can compete for industry by offering the best tax breaks, free government services and a defenseless workforce.

Weakening the federal government and encouraging outsourcing to foreign countries are deliberate political strategies for ensuring a roaring U.S. stock market and rapid increases in investor wealth—and chronic, low-wage employment for everyone who actually has to work for a living.

To gain support for corporations’ power to pit states against each other, some politicians are trying to prove that a strong federal government is bad and should be emasculated. A way to do that is to make sure it can’t successfully address the growing problems everyone is complaining about: chronic unemployment, a broken healthcare system, declining infrastructure, and stagnant wages. And they’re succeeding simply by saying “no.”

Sure, a central government can be overreaching and can make terrible decisions, but the solution for a bad federal government isn’t less federal government, it’s good federal government.

Chuck Kelly is a retired management consultant living in Burnsville and is author of “The Destructive Achiever: Power and Ethics in the American Corporation” and “Farewell Fantasyland: Time for Political and Economic Reality.” He can be reached at

Chuck Kelly is a retired management consultant living in Burnsville and is author of “The Destructive Achiever: Power and Ethics in the American Corporation” and “Farewell Fantasyland: Time for Political and Economic Reality.” He can be reached at

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