Home / General / Why Corporations Love State-Level Regulation, Part the Millionth

Why Corporations Love State-Level Regulation, Part the Millionth



Corporations and their lackey politicians love state-level regulation. They usually frame this as hating federal regulation, but that’s not quite true. They do have federal regulation because the federal government is large enough to be relatively protected from corporate pressure, at least compared to the states. The effectiveness of agencies like OSHA and the EPA can be rolled back, but it is slow and entrenched cultures, professional expertise, and the sheer size of the government, makes the immediate gains demanded of corporations difficult to enact. But they also hate local government because the cities are small enough that while many may be happy to accede to right-wing agendas, progressive cities, who may well have minority-majority populations thanks to decades of white flight, they may well enact quite progressive policies. That’s why you have conservatives complain against federal regulation of wages while also acting to squash municipal minimum wages higher than the state or federal minimum wage, stating the state is the constitutional place for this sort of regulation. That’s not a state issue, but rather the place corporations have determined they can most influence legislation. This isn’t new either–the timber industry argued the same points in the 1930s against an increasingly proactive U.S. Forest Service in regulating forest policy (which did not last long and by the late 40s the USFS was back in the pockets of the timber industry and the desire for state-level regulation faded for awhile).

On the local level, this is why you’ve seen states like Oklahoma and Rhode Island act against municipal minimum wages. But it’s not on wages. Here’s an example of the Koch-owned Tennessee legislature acted against a public transportation system desired by the mayor of Nashville, a city with rapidly worsening traffic problems.

Indeed, Nashville had become a sort of ground zero for a series of local brawls infused by an “all politics is national” trend, as some have put it, inverting the mantra of former House speaker Thomas P. “Tip” O’Neill Jr.

A city ordinance designed to stop discrimination against gays and lesbians was undone by the state. An effort to ban guns in Nashville’s parks was overturned by the state. A plan by the Republican governor to expand Medicaid, providing health insurance for 179,000 Tennesseans, with Nashville the greatest beneficiary, was defeated because it was linked to “Obamacare.”

Then came the battle over the 7-mile high-speed bus line, lyrically dubbed the “Amp,” that was supposed bring together the disparate sides of Music City. Instead, it tore Nashville apart.

Zeroing in on this sort of local battle has become a key to success for groups such as Americans for Prosperity, the Koch-backed organization that counts its Tennessee chapter among its most effective.

The billionaire brothers Charles G. and David H. Koch have received enormous publicity for their announcement that they plan to spend $900 million to influence the 2016 elections. But with far less fanfare, they are having a clearer impact on local matters, right down to a fight over a bus line.

“The return on investment in time is much greater at the state than the federal level,” said Andrew Ogles, head of Tennessee’s Americans for Prosperity chapter, which played a key role in the fight against the Amp and Medicaid expansion. “If you have a rogue mayor or governor, our greatest influence is to talk to our state representative and senator. They are much more accessible to us than, say, a governor.”

In many ways, the effect of unregulated cash on the state level is even greater than on the federal because of the sheer and almost tyrannical power groups like Americans for Prosperity can hold over states like Tennessee. The legislators in that state are so in the Koch pockets that a mere phone call sets them in motion. When you can play on racial strife and fears of wealthy whites about having black people enter their neighborhoods, as was the case with this public transit project, it gets even easier.

But at the core, It’s never about local control or devolution or other conservative buzzwords. It’s about power and squashing anything that disagrees with the ideological orientation of the uber-wealthy. And in the New Gilded Age, that power is far easier for corporate titans to use than it was 50 years ago.

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  • Well, that was suitably depressing.

    • dp

      Loomis is great at explaining how things actually work; the depression part is an unfortunate side effect of reality.

      • hylen


  • tonycpsu

    Here’s another example, Erik, updating a piece you linked to a while back.

  • Joshua

    I poked around some pages about the AMP and it was as depressing as I thought it would be. A bunch of yokels complaining about how the government is stealing from them to build it (no mention of government subsidized highways), how the government wants to get rid of cars, how if they personally won’t use it it is a waste, and so forth. This is just completely mental stuff. I’m surprised I saw no Agenda 21 posts.

    I was in Austin last week and was genuinely surprised at how much space in the downtown was wasted on empty parking lots. I mean, in the middle of the day they were empty, at night they were empty, they were not used for anything productive. This is in the middle of an active and dynamic downtown of a booming city. It’s just silly. The funny thing is that Austin is ahead of other Sun Belt cities AND they have a major traffic problem. But we remain slaves to car culture.

  • steeleweed

    State-level pols are cheaper than national-level politicians and if they later go national, they already owe the lobbyists and have the connections.

    I remember Josephson (The Robber Barons) describing how ‘The Big Four’ ruled California post Gold Rush. One of them (I forget who was the bagman) was sent East with suitcases of cash to buy votes. IIRC, one Senator cost $50k – about $1.3 million today.

  • Yankee

    municipal minimum wages, also city public transport vs. state regulation. Federal regulation trumped by TPP dispute resolution. The bad thing is that the states are just the ham in the sandwich? Localism, or maybe federalism is goodness and the UN will get progressivism together? Truly I don’t understand where you want to go, here.

    • Murc

      I dare you to make less sense!

      • Yankee

        Probably I can manage that. Or, somebody could suggest what should be done with the social power currently invested in state governments. Send it up or down? Reform in place? What?

      • Rob in CT

        I think a lot of Americans’ frustration with government is due to the fact that we have at least 3 layers of it (municipal/state/federal or county/state/federal or sometimes more?).

        Therefore, dear Mr. President, we have too many layers of government these days. Please eliminate one. I am not a crackpot.

        • burritoboy

          At least 4 layers in all but a few places, and usually many more (sometimes many, many times more).

          Federal/state/county/municipal but also multiple commissions, commissioners, boards, and other entities running around on state, regional, county, and municipal levels.

  • Becker

    Someday, probably long after I’m dead, the Democratic Party will begin to take state legislative races seriously.

  • rm

    The language: “rogue” means unbought; “accessible” means bought.

    This a perfect example of postmodern conservatism. They fight the ideological battles on the level of language and epistemology. They get people to feel righteous about fighting for corruption.

  • grouchomarxist

    That’s my home town, alright. I grew up on the fringes of Belle Meade, so I know these people well. Too well. And none of this surprises me.

    Like a lot of cities in the late 18th/early 19th centuries, Nashville once had a fairly efficient mass transit system of electric trolleys and passenger rail. The automobile and post-WWII white flight did all that in; by the time I was a kid back in the 50s/60s, suburbanites primarily viewed the bus as a means to transport their domestic help — African-Americans of course, this being the South — from the inner city and East Nashville. Nobody actually rode the things. At least, no one in their circles.

    So you can imagine the deep racial/class stigma the Belle Meaders and their ilk still attach to riding the bus, even though the MTA has been making slow but steady improvements and nowadays attracts a much more diverse ridership.

    (The thing that has me banging my head against the wall when I read about people like the Belle Meade lady who objected to AMP because it would bring the “riff-raff” to her doorstep is that the bus already runs from her neighborhood to the places where “those” people reside. Making it slightly quicker and more convenient to ride the bus from one side of town to the other will unleash a horde of dark-skinned looters and rapists undesirables? WTF?)

    Another thing that’s worked against the bus line is that the city developed on a radial pattern instead of a grid, so often you have to ride a bus all the way into town and then transfer to an outbound, to go somewhere that’s actually on pretty much the same side of town. Up until the last couple of decades, it was far more convenient and less time-consuming to get around by car. Plus you didn’t have to stand out in the weather for long periods of time. (Why waste money on shelters, anyway, for the sort of losers who have to ride the bus?)

    Although Nashville hasn’t quite achieved Atlanta-level gridlock, the traffic at rush hour is horrendous and getting worse almost by the day. We are rapidly running out of band aids.

    So yeah, it’s just another reason to loathe the Kochs, and the goobers we elect to the state lege.

    • Nashville traffic is indeed pretty bad.

      One of our trips arrives there just in time to sit in rush hour traffic all the way from the airport to downtown. Painful when you’ve already been working all night.

    • greennotGreen

      I, too, live in Nashville which is a reasonably progressive place, but the state legislature is populated by buffoons. However, I don’t think AMP is a good project to measure progress/anti-progress. I think it was poorly conceived.

      Because the public transportation system in Nashville is so inadequate, most of the people who ride the bus are poor. Of the few times I’ve ridden the bus, there has usually been someone who seriously needed to work on personal hygiene. So starting the system in Belle Meade (median home value 4.1 times all of Metro Nashville) sets it up for failure. Plus, it involved reserving a lane in the middle of the road and building shelters in the middle of the road – very expensive. I would much rather have seen some cross-town buses. I recently retired, but when I was working I could drive to work in 20 minutes; it took 1 hour by bus!

  • Derelict

    Local control is a great mantra–one that I hear quite often from assorted right-leaning people. Typically it serves as a code for “no taxes!” but sometimes serves for other purposes such as “no regulations”, “let us teach Creationism” and “why can’t we redline?”

    Whenever I get the chance, I always ask local-control proponents the same question: Did you vote in your last school board election? It’s a very rare winger who does. Same thing for town government elections that are typically off-year events. So “local control” is really just a slogan for most of these useful idiots.

    • Rob in CT

      It’s a very rare person who does, period. The wingers are actually better at paying attention to little local votes, IMO.

  • Seems like what they love isn’t so much state-level regulation but state-level veto points. They’re happy to shoot down state regulations by arguing the federal government is the place for it, when that’s where their lobbyists happen to already be.

  • DrDick

    This is also why conservatives put so much time, effort, and money into local and state races. This is where most of the actual legislating goes on and they can still generally get their way if they win at this level and lose nationally.

  • efc

    I think you give the corps too much credit for consistency. Corporations love regulations at the federal level when they provide better protections for their bad practices.

    Corporations constantly attack state laws via the preemption doctrine. One of my (barf) “favorite” examples is the Federal Arbitration Act (FAA). Corporations love it because they can prevent individuals from combining many small claims in to a larger class allowing the corporations to steal tiny amounts from millions of people because who is going to engage in legal action of any sort over, say, $10?

    The FAA has been used in cases like concepcion to preempt and invalidate state level laws regarding when a contract term is unconscionable.

    • Just_Dropping_By

      Yes, this is one of my pet peeves with “anti-state” posts at LGM — you can easily find dozens of examples of industries or corporate interest groups pushing for federal regulation in place of state-by-state regulation.

  • Manny Kant

    Hmm…most of the Nashville examples don’t seem to me to really have much to do with the uber-wealthy or corporations getting what they want. Pretty much every publicly owned corporation (and I’d imagine most of the big private ones as well, although I’m less sure of that) already has its own anti-discrimination protections for gays and lesbians. Certainly the uber-rich don’t really care very strongly about their “right” to discriminate against gay people.

    The gun stuff is obviously cared about by the gun industry itself, but mostly it’s gun rights wackos themselves who prevent even the most minimal gun regulations. I can’t imagine the vast majority of corporations particularly care.

    The Medicaid expansion is strongly supported by the hospital lobby, which is why a Republican governor might be interested in it in the first place. It’s opposed by ideological crazies, not big business.

    The high speed bus thing, I suppose maybe, but opposition to small municipal public transit projects surely isn’t a particularly big priority for car and oil companies.

    It seems like here we’ve got a series of policies that are mostly opposed by right wing lunatics, and don’t have much to do with the Chamber of Commerce agenda.

  • Johnnie

    Frac sand mining has been pretty contentious in Wisconsin recently as the western part of the state where all of the mining occurs is relatively liberal for a rural area. There are pretty obvious concerns regarding run-off, particulate pollution, noise and increased large vehicle traffic on the local roads out there and so villages and townships have made efforts to limit the mining. Of course that means the Republican legislature is more than happy to demand state-wide uniformity on regulating the mines. Same goes for minimum wage increases which were preemptively made illegal for municipalities out of fear that Milwaukee or Madison might do the humane thing and raise them slightly. It’s a great time to be a Wisconsinite (if you happen to operate a resource extraction business or a low wage fast food restaurant).

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