Business Associations: Whom Do They Really Represent?

Two stories in the news, one local and one national, help us answer that question. First, a pair of stories from the New Hampshire Union-Leader:

Representatives of the state’s major hospitals fought a proposal that could pave the way for a for-profit cancer facility to come to the state at a hearing Tuesday that was notable for the absence of the company that was the impetus for the legislation: Cancer Treatment Centers of America (CTCA).

The bill, HB 1642, would create a special “destination cancer hospital” classification, which would be exempt from the state’s Certification of Need review process for new hospitals, as well as the Medicaid Enhancement Tax on the grounds that it wouldn’t accept Medicaid patients.

The New Hampshire Business and Industry Association’s stand on this pro-competitive, deregulatory bill? The rent-seeking position:

“We don’t think this is the right way for the state to promote economic development,” BIA Vice President David Juvet said. “We are very supportive of New Hampshire having a pro-business climate, and the Legislature has done a number of good things over the past year, but we would never support an effort to create what is an unfair business advantage.”

Next, a story from the Washington Examiner, on a new effort to repeal all energy subsidies:

Freshmen Rep. Mike Pompeo of Kansas has proposed the loftily titled “Energy Freedom and Economic Prosperity Act,” while the Senate’s Tea Party heroes, Jim DeMint (S.C.) and Mike Lee (Utah), have introduced the companion bill in the upper chamber.

The bill, which Pompeo hopes to insert into legislation extending the payroll-tax credit, would take a huge bite out of energy subsidies by eliminating tax credits for everything from solar panels and wind turbines to oil drilling and nuclear power generation. At the same time, the measure would cut tax rates.

The Chamber of Commerce on this pro-competitive, anti-corporate-welfare bill? The rent-seeking position:

But for some business lobbies, Pompeo’s bill is no good. “This bill is not fundamental tax reform,” Chamber of Commerce lobbyist Bruce Josten told me in an email, “as a result, is punitive to every kind of energy company out there.”

In other words, the chamber won’t go for tax-rate reductions and credit-elimination unless it covers all industries.

Whom do supposed general-interest business associations represent? Not, apparently, business interests in general, let alone the “free enterprise system.” Mancur Olson would have had an answer: the interests of the largest companies, who will be by far their biggest donors.

4 thoughts on “Business Associations: Whom Do They Really Represent?

  1. Professor Sorens,

    These are two nice object lessons in the concept of rent seeking. Now how would you fashion a libertarian-liberal coalition like the one that one airline deregulation in the 1970s to beat back the crony capitalists with their vast cash advantage and their vested interest- and specialized knowledge advantage?

    1. I wish I had a pat answer to that one! It is interesting that right now, it’s only the Tea Party guys who are pushing for ending all energy subsidies. Maybe they could bring some Dems & moderate GOPers on board if they abandoned the corporate income tax rate cuts. But then Grover Norquist would get mad.

  2. I’m not sure its as pro-competitive, anti-welfare as you make it out to be. The Chamber, which really represents medium and smaller businesses, oppposes it exactly because of what it leaves out: the domestic production tax credit among other things. Now I’m not one for leveling the playing field by giving out more subsidies to more industries, but to eliminate subsidies for one industry (alternative energy) while keeping subsidies for other industries (oil and coal) firmly in place is neither pro-competitive nor anti-corporate welfare. It’s anticompetitive and a simple redistribution of corporate welfare. This is exactly why our friends on the left see us as as pro-oil or pro-big business.

    1. Well, that’s a tax credit that applies to every industry that produces in the U.S.: oil, gas, alternative energy, food, autos, you name it. I can understand why a more narrowly crafted bill would focus on just the energy industry credits (the bill does repeal oil & gas industry credits).

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