Goldberg: Free the markets, Mr. Romney

In his Wisconsin victory speech last Tuesday, Mitt Romney said, “Washington has to become an ally of business, not the opposition of business.”

This to me is a more worrisome statement than his communications advisor’s gaffe about Etch-A-Sketches or Romney’s shout-out to NASCAR team owners.

Over the last few years, the country has been subjected to a tutorial about the role of government. Thanks to the efforts of the tea parties and, of course, the teaching by example of the Obama administration, a lot more Americans understand the problems with corporatism, crony capitalism and industrial policy.

COMMENTARY AND ANALYSIS: Presidential Election 2012

There are three potential problems with Romney’s formulation. The first is political. As Tim Carney of the Washington Examiner writes, Romney’s friend-of-business rhetoric fails “to tap into the broad perception in this country, from Left to Right, that the game is rigged in favor of the well-connected and the too-big-to-fail.”

Indeed, getting into a contest with President Obama over who is a better friend of business is not the winner some might think. Obama has given billions to big businesses, from Wall Street to Detroit. The stimulus was full of tax breaks and gimmicks aimed at business; he calls them special-interest loopholes when companies he doesn’t like get them.

I’m not saying Obama’s policies are valid or wise, but the water will get very muddy very quickly if Romney campaigns on who is business’ BFF, especially when you consider that one of the things Romney did at Bain Capital was take businesses apart.

And that was a good thing. Free markets depend on failure, or what Joseph Schumpeter called “creative destruction.” You can’t have light bulbs without destroying much of the candle-making business. At Bain, Romney was part of the process that fueled innovation. That’s nothing to be ashamed of.

Which brings us to the philosophical problem. Since the Progressive era, American liberals have been in favor of some variant of corporatism or industrial policy. The idea stretching from Teddy Roosevelt and Woodrow Wilson through FDR, JFK, Jimmy Carter and Bill Clinton to now is that the government is smart enough to pick winning industries and technologies. You know, like Solyndra.

There’s a huge difference between being pro-business and pro-free market. The government’s role in the free market is to keep it free and fair, not to play favorites.

When government takes it upon itself to be the ally of business, certain biases often take over. For instance, existing industries have a huge advantage over ones that haven’t been created yet. A more obvious bias is toward big companies over small ones. Big companies create constituencies and can afford lobbyists to make their case. Moreover, big business becomes a tempting vehicle for other policies like, say, providing healthcare. And why not: When government is scratching business’ back, why shouldn’t business return the favor?

There’s a reason the White House named Jeff Immelt, chief executive of GE, to head its jobs council. CEO’s of giant corporations are so much more pleasant to work with for government officials than all those small businesses with their bumpkin bosses, who just happen to create most of the new jobs.

Indeed, big corporations are enjoying record profits under Obama, but as Romney noted, “New business start-ups — and that’s normally where we get job growth after a recession — … are down to the lowest level in 30 years.” He needs to follow that train of thought.

In fairness to Romney, much of his rhetoric is very pro-free market and does draw a sharp contrast with Obama’s crony capitalism. But then he’ll hit one of those off-key notes and cause some to worry whether he’s just saying the other stuff because that’s what his advisors say he should say.

And that brings us to the third problem. What if Romney wins? A technocrat, he excels at accomplishing very specific tasks by getting deep into the numbers and listening to the best experts. That’s great when it comes to turning around the Olympics or a fast-food chain. But that’s also how he came up with “Romneycare.”

A Romney White House that starts out saying “How can we help business?” would end up in a bad place, and so would America.

jgoldberg@latimescolumnists.com