Friday, November 9, 2007

Cronyism Trumps Capitalism

Writing in yesterday's Wall Street Journal, Jeffrey Ball reports,

Nearly a year ago, with his company reeling from rising energy prices, Dow Chemical Co. Chief Executive Andrew Liveris took a stand that turned heads in Washington. He called for tougher fuel-economy requirements for auto makers -- businesses that buy some $1.5 billion of goods from Dow each year.

The move was as rational as it was risky. Dow figured that limiting oil usage by cars would ease price pressure on fossil fuels, which Dow must buy in vast quantities to feed its factories. Dow also reasoned that if car makers were forced to improve mileage, they might buy more of various Dow products that can make vehicles go farther on a gallon of fuel.

In the global push to curb energy consumption, Mr. Liveris noted earlier this year, "someone wins, someone loses."

The designated loser, however, was livid. "I called my buddy at Dow and said, 'What the -- are you doing?'" recalls a Washington lobbyist for a major auto maker. Faced with the outcry from that industry, Dow backed down, and this summer withdrew its support for the controversial fuel-economy measure.

It's stories like this that make me feel like a cold-war Kremlinologist studying photos of the reviewing stand at the May Day Parade for clues.

Industry lobbying is not news, and industry lobbying for energy efficiency, though news, is long overdue. And, so what if it's Down Chemical versus Ford? The big players fight all the time; it's not personal it's business. Everybody knows that, right?

Except, apparently, not. An angry phone call from a golf buddy and the cold calculation of profit and loss be damned--Dow backs down.

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