How big government influences big business

Radley Balko shows why telephone companies doing the federal government's bidding isn't necessarily the fault of big business:

You can inveigh all you like against corporate power. But corporations by themselves can't force us to do anything we don't want to do. Only the government has the power to do that — or corporations with power on loan from the government.

The federal government is enormous. It has a massive and growing influence over what happens in the private sector. Witness (as I've pointed out many times before) the fact that the richest counties in America today aren't near the country's entrepreneurial epicenters, but in the D.C. suburbs, home to most of the country's federal employees and government contractors. Now as lefties, you may find all of this to be sweet potato pie. But know that a federal government of today's size and scope also gives whoever is controlling it enormous leverage to bend the private sector to his liking. That's great when your party is holding the reins. Not so good when it isn't.

Sure, in an ideal world, all the telecos would've consulted their lawyers, realized that what the Bush administration was asking was illegal, and boldly told the White House where to stick its nosy information requests. But come on. Incentives matter. Such a move may have been principled, but it would have been foolish. Corporations are obligated to their shareholders to protect their bottom lines. Pissing off the people in power who with a swipe of the pen can swing hundreds of millions of dollars, either to you or to your competitor — well, that's just not good for the bottom line.

In a truly free economy, this obligation to shareholders is a good thing. Because in a free market, shareholder interests are generally in line with customers' interests. Piss off your customers, they take their business elsewhere, and you're shareholders are angry.

Unfortunately, in a market where the government is likely to be one of a particular industy's biggest customers, shareholder and (non-government) customer interests start to clash. You see, the telecos made a calculated decision. Billions of dollars in federal contracts over the long-term, combined with the other value they saw in in winning favor with the Bush administration and the Republicans in Congress (a favorable turn of phrase in the Federal Register, for example, can mean millions) was in their estimation more lucrative than protecting the privacy of their non-government customers in the short-term.

Shouldn't that tell you something about just how frighteningly large and influential the federal government has become? The telecos concluded it's better for their collective bottom lines to risk pissing off all of their other customers than to risk pissing off this one.