MIXED ECONOMY 101

The NY Times tells us that James Baker's call to service in Iraq is all well and good, but that he"is far too tangled in a matrix of lucrative private business relationships that leave him looking like a potentially interested party in any debt-restructuring formula. The obvious solution is for him to sever his ties to all firms doing work directly or indirectly related to Iraq." The editorial continues:

Mr. Baker is senior counselor to the Carlyle Group, a global investment company that has done business with the Saudi royal family. He is also a partner in Baker Botts, a Houston law firm whose client list includes Halliburton. Baker Botts has an office in Riyadh and a strategic alliance with another firm in the United Arab Emirates, and it deploys Mr. Baker's name and past government service on its Web site to solicit Middle East business. It is inappropriate for Mr. Baker to remain attached to these businesses, whose clients and potential future clients could be affected by the decisions made about Iraq's official debt.

Duh. The"iron triangle" has been a perennial staple of the"mixed economy," a central characteristic of what Rand called the"new fascism." It involves a reciprocally reinforcing relationship between interest groups, bureaucrats, and politicians, wherein the personnel are very often the same: former interest group members become the bureaucrats who administer the political relationships that impinge upon the very interest groups being regulated. The alphabet soup of regulatory agencies functions by virtue of this iron triangle, blurring the line between the regulators and the regulated.

If the NY Times would like James Baker to sever his economic ties for the purposes of being a more objective participant in this folly, then it should be advocating the end of the system that makes the James Bakers possible, a system that institutionalizes such ties. But then Halliburton, Bechtel, and the rest of crony capitalism would have to give way to a free market. We can't have that, now, can we?