Big business vs. free enterprise

Ezra Klein tells about young conservative think-tanker Derek Khanna, who wrote at his bosses’ behest a paper criticizing the heavy-handed use of copyright law to inhibit competition.  Conservatives praised the paper, but then pushback from corporate funders caused the think tank to pull the paper and fire its author.

Khanna had unwittingly stumbled into a deep fissure in today’s Republican Party. The party sees itself as the champion of private enterprise. But which private enterprises? The ones that exist today? Or the ones that might exist tomorrow?

There’s a difference between being the party of free markets and the party of existing businesses. Excessively tough copyright law is good for big businesses with large legal departments but bad for new businesses that can’t afford a lawyer. And while Khanna, like many young conservative thinkers, believes in free markets, the Republican Party is heavily funded by big businesses.

To see how this play outs, consider the debate taking place in conservative circles over financial regulation. A growing cadre of thinkers are coming to the conclusion that the big banks have become a kind of oligopoly protected by the inescapable taxpayer subsidy for financial institutions that are too big to fail. The pro-market solution to this, some Republicans argue, is to get rid of too-big-to-fail banks altogether — that’s the only way to foster a competitive market.

“Capping bank size, limiting bank activities, higher equity capital requirements,” writes Jim Pethokoukis at the conservative American Enterprise Institute, “all tools in the toolbox for eliminating the crony capitalist subsidy of the US financial system by government.” This thinking is leading to some unexpected alliances. Sen. David Vitter (R-La.), a hard-core conservative, is co-sponsoring legislation with Sen. Sherrod Brown (D-Ohio), a leading liberal, that would break up the big banks.

But the rebellion hasn’t spread far, and it probably can’t spread very far. As Ramesh Ponnuru, an influential conservative writer, told Politico, “if [breaking up the banks] even got to the stage where politicians were talking about it, then there would be a discussion of, ‘Well, how are we ever going to fund our campaigns?’”

via Derek Khanna wants you to be able to unlock your cellphone.

Is this another fissure between establishment conservatives and the new breed of conservatives, as evident in the controversy over Rand Paul’s filibuster over the drones?