Corporate Tax

The blueprint for corporate energy turns 50

Before he was a Supreme Court Justice, Lewis Powell was a lawyer in Richmond, Virginia who feared that “revolutionaries” would destroy capitalism. His 1971 memo recalls a time when Ralph Nader mindlessly terrified big business.

August 24, 2021

| 5:00 PM

This piece originally appeared in Backbencher, the Substack edited by Timothy Noah.

From Timothy Noah

Fifty years ago, trainee Supreme Court Justice Lewis Powell wrote a memo warning the US Chamber of Commerce that “the business and corporate system are in great trouble and the hour is too late.” Powell’s voice was not the only voice in the late 1960s and early 1970s urging big business to mobilize against the forces of taxation and regulation, and Mark Schmitt has convincingly argued (here and here) that the memo is central to this for the history of conservatism tends to be: exaggerated. (Among other things, Schmitt notes, Powell was a Conservative Democrat, not a Conservative of the Movement.) As for myself, in my story of the rise in income inequality after 1979, The Great Divergence, 2012, I suggested that the key figure driving the business lobby was in the In the 1970s and 1980s, it was not Powell but Bryce Harlow, a senior advisor to Presidents Dwight Eisenhower and Richard Nixon, who made himself dean of Washington business lobbyists. (Much of the following is from The Great Divergence.)

But the Powell memo, leaked to columnist Jack Anderson during Senate confirmation hearings three months after it was written, captures the panic in the business world in vivid detail at this point in history, and its golden anniversary is well worth it to be commemorated.

“No thoughtful person,” Powell wrote, “can doubt the American economic system is being attacked widely,” not only by “communists, new left and other revolutionaries,” but also by “perfectly respectable elements of society: from college campuses, the pulpit, the media, the intellectual and literary magazines, the arts and sciences, and politicians. “

Fifty years later you may be wondering: what was this man talking about? American business has flourished since the end of World War II. The 1973 Arab oil embargo, which started a chain of events that disrupted the US economy for a decade, was two years away. The pillars of the post-war industrial economy – General Motors, US Steel, General Electric, etc. – were still firmly in the saddle.

It is all true. But the business world was going through a difficult period. Corporate profits declined and capital formation was lower than in comparable industrial democracies. Inflation and unemployment were high. A week earlier, Nixon had taken the US off the gold standard, which created enormous uncertainty.

Harlow, Powell, and the Chamber tended to attribute most, if not all, of their problems to the post-1960 liberal rise. Congress tightened drug safety standards in response to Morton Mintz’s Washington Post exposé on the sedative thalidomide. Then, in response to Ralph Nader’s Unsafe at Any Speed, Congress began regulating car safety. Between 1966 and 1969, Congress passed laws regulating supermarket product labels, meat safety (previously only regulated when meat products crossed state lines), gas pipelines, the information banks made available to their customers, combustibles, and coal mines enhanced safety. The trend continued even after Nixon took office with the establishment of the Environmental Protection Agency in 1970 and the Occupational Safety and Health Administration in April 1971.

Powell’s memo – and, more importantly, Harlow’s evangelization in speeches across the country – helped make the business lobby, which was until then a rather disorganized interest group, a much more powerful force. By 1980 the chamber had tripled its budget. The National Federal of Independent Business grew from 300 members in 1970 to 600,000 in 1979. The American Food Manufacturers and the National Association of Manufacturers moved from New York City to Washington. The number of companies that had their own lobby shops in Washington, about a dozen when Harlow opened a lobbying office for Proctor & Gamble in 1961, grew to 100 in 1968 and 500 in 1978. and golf, “a longtime business lobbyist told Business Week 1979.” Now she’s organizing coalitions and keeping the flow of information going. “

If you look at the Powell memo today, you will be reminded of what a powerful character Ralph Nader was. “Perhaps the most effective adversary of the American economy,” Powell wrote, “is Ralph Nader, who – thanks largely to the media – became a legend and idol of millions of Americans in his day.” Powell then quoted a Fortune article Magazine, which stated that “the passion that reigns in” Nader “was aimed at completely smashing the target of his hatred, which is the power of corporations. He thinks and says bluntly that a great many CEOs should go to jail. ”(One change in American life since this sentence was announced is that this view of corporate misconduct is no longer particularly controversial.)

Bryce Harlow died in 1987. Louis Powell died in 1998. Nader is nowhere near as powerful as he was in 1971, and many of his budding Liberal allies have never forgiven him for spoiling the 2000 presidential election. But as I wrote in my recent New York Times review of Paul Sabin’s new book Public Citizens, Nader is still there, still trying to get the government to better control corporate power. This power is much greater today than it was 50 years ago, not least because Nader was so influential at the time that he triggered an enormous backlash from major corporations. But at least at 87, Nader has the satisfaction of knowing that he survived the enemies he made when he was at the height of his power. He’s a real American hero.

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