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Big Tech’s Flawed Defense

The libertarian claim that being 'private' should shield companies from government reform doesn't stand up to scrutiny

Google, Facebook, and Twitter aren’t private companies best left alone by governments. They aren’t even private companies if “private” is meant to distinguish corporate activities from governmental functions. The distinction between the public and private sectors has long been blurry at best where major corporations have been concerned, with each sector involved in the other’s business. Governments compete with the private sector in garbage collection, electric utilities, railroads, and banking, while the private sector competes with government in prisons, elementary schools, ports, and the military.

The fiction that a bright line separates major corporations from governments can also be seen in Nevada, which is proposing to not only contract out this or that government service but to spin off governments to private owners holus-bolus. Under draft legislation soon to work its way through the state legislature, high-tech corporations with more than $1 billion to invest would be free to build, own, and operate entire cities. Wielding the same authority as a county, the corporations will impose taxes, provide schools, operate courts, and provide police, fire, and other government services.

Cryptocurrency company Blockchains LLC’s 67,000-acre undeveloped land holding outside Reno is expected to become the first of these incorporated governments. But unlike other Nevada counties, its three-member board of supervisors won’t be elected by the voters; Blockchains will maintain control over its city by appointing two of the three. This Big Tech company will also be able to act as Big Brother by logging its future residents’ financial statements, medical records, consumer purchases, and other personal data.

Nevada’s plan to attract tech giants through its 21st-century version of the company town will find appeal because major companies have historically sought monopoly power, often achieving it through government favor. Before fascism became discredited due to its association with German Nazism, the fascist economic model—in which cartels would run the major industries while a free market would be permitted at the shopkeeper level—was championed by the pillars of industry.

The Swope Plan—General Electric President Gerard Swope’s 1931 blueprint for turning the United States into a fascist economy—won wide acclaim from the U.S. Chamber of Commerce, the National Association of Manufacturers, and the National Industrial Conference Board. Praised as “economic Mussolini,” it called for the compulsory cartelization of all major American corporations into federally controlled trade associations for each industry.

Collusion between big business and big government is the rule, not the exception. The warnings have been long in coming. President Herbert Hoover in his memoirs wrote a chapter condemning the Swope Plan titled “Fascism Comes to Business—with Dire Consequences.” President Dwight D. Eisenhower warned about the “military-industrial complex” in his 1961 farewell address, saying that the defense establishment’s “acquisition of unwarranted influence, whether sought or unsought, [could] endanger our liberties or democratic processes.” Countless warnings are likewise heard today over the unwarranted influence that Big Tech wields over our liberties and democratic processes.

The evidence is so ubiquitous that despite disagreement on what reforms are needed, most on both the left and the right now agree that Big Tech’s power can’t be allowed to continue unchecked. As the Federalist’s Nathanael Blake put it: “Big Tech is telling us what to see and what to say, how to run our businesses, what opinions to have, and how to vote. They are treating all of America like their company town.” Even some within Big Tech, such as Facebook’s Mark Zuckerberg, believe that reforms are needed to curb its government-like powers.

Not least, one of the greatest champions of free-market capitalism, the late Nobel laureate economist Milton Friedman, warned 50 years ago that leaders at major corporations were becoming surrogates for government. The business executive “becomes in effect a public employee, a civil servant, even though he remains in name an employee of a private enterprise,” Friedman wrote in The New York Times Magazine in 1970. “If they are to be civil servants, then they must be elected through a political process.”

Yet many libertarians and conservatives, despite acknowledging Big Tech’s unprecedented power to invade our privacy and control our lives, oppose reforms by standing on ceremony, claiming the high ground, and baldly asserting that Big Tech companies should be left alone because they’re private companies operating in the free market. Their ideology without evidence is unpersuasive.

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