Category Archives: Blogs

Sen. Dianne Feinstein’s husband wins CA rail contract

Cronyism in California?

U.S. Sen. Diane Feinstein’s husband Richard Blum won the first-phase construction contract for California’s high-speed rail.

That’s from the California Political Review, and the rest can be found here.

Crony Capitalism Protects Wrongdoers, Harms Consumers, and Disrupts Markets

Kenn Connor writes about Tim Carney’s recent cronyism piece, noting that cronyism makes it harder to create products that consumers actually want.

Basically, the special interests invest in political campaigns as a cost of doing business, and they expect a handsome return on their investments. As Mr. Carney explains, that usually comes in the form of pet legislation, subsidies, tax breaks, limitations on liability, preferential treatment . . . the list goes on and on. Of course, politicians are only too happy to accommodate these special interests in exchange for political contributions that help cement and perpetuate their power. As a result, the free market is stymied; it can’t do what it’s designed by nature to do, which is to sift good companies from bad ones, reward efficiency and innovation, and empower consumers with authentic choice in the marketplace.

Crony capitalism, Dodd-Frank style

In a cronyism twist, new regulations from 2010′s Dodd-Frank legislation will set aside certain businesses for special government oversight because they are too big to fail. (The official term is Systemically Important Financial Institution). This arrangement may devolve into a special benefit for the designated businesses because it will tell the public that the corporation has the government’s backing. From the American Enterprise Institute blog:

Now think about that when you hear the great hew and cry of the folks who purport to be worried that the big banks are too-big-to-fail (TBTF). They denounce the funding advantages these banks get because of the markets’ belief that the government will not allow them to fail… Who could resist buying insurance from a firm the government will not allow to fail?

Pete Sepp: It’s Not Economic Development, It’s Corporate Welfare

In this excellent Heartland Institute podcast, National Taxpayers’ Union Vice President Pete Sepp discusses the problem of the corporate welfare wolf in the clothing of economic development. They discuss everything from real estate development to subsidizing sports stadiums:

Local officials in thousands of communities around the country love to do “economic development” that doles out tax breaks, taxpayer-backed loans and other “incentives” to attract specific businesses. Pete Sepp of the National Taxpayers Union says it’s really corporate welfare that sends the message..

NH: Shrinking government would shrink corporate welfare

Grant Bosse at the New Hampshire Watchdog writes about corporate welfare in his state:

When the New Hampshire Senate voted last week to tighten its control over the franchise agreements car makers sign with local car dealers, it also expanded the law to cover farm equipment dealers. The people who make farm equipment did the only logical thing they could in the face of growing government meddling in their business. They hired a lobbyist.

Can McDonald’s and Denny’s kill the ethanol mandate?

Timothy P. Carney at the Washington Examiner writes about the lobbying agenda of big chain restaurants, highlighting the fact that lobbying itself isn’t bad depending on the issue:

Most subsidies have concentrated benefits and diffuse costs. You and I each pay more for food, maybe for gas, thanks to the ethanol mandate. But saving the ethanol mandate is far more valuable to the ethanol lobby than killing it is to you and me.

But that’s where McDonald’s comes in. Mickey D’s pays tens of millions a year in higher food prices thanks to the ethanol mandate. Get all those chain restaurants together and they pay a ton every year — $3.2 billion, NCCF claims. Bam. You’ve got a concentrated loser of the mandate who can counterbalance the concentrated winner.

Reason: You Can’t Just Sell an Electric Car to Someone, This is America!

Ed Krayewski at Reason’s Hit & Run blog writes about a case of cronyism in the auto dealer industry:

Ever since Tesla announced its plans to sell cars directly, with factory-owned Tesla Stores and Tesla Galleries acting only as display showroms, car dealers and their associations have denounced the plan.

They’ve also sued Tesla for violating franchise laws in several states–Massachusetts, most notably–and gotten laws changed in others to make Tesla’s model flatly illegal…

At least 28 of Max Baucus’s former aides are now tax lobbyists

Ezra Klein at the Washington Post writes about the staffers of a prominent politician, and how his position of authority has lead to his staffers becoming lobbyists:

…the point of hiring Baucus’s former aides isn’t that they can seamlessly insert any language they want into the final legislation. It’s that they have a direct line to Baucus, and to the people around Baucus, and that gives them a huge advantage. The fact is that human beings are more likely to find arguments convincing when they’re coming from friends rather than strangers or enemies.

That’s the key to most of the lobbying in Washington. It’s not about leveraging bribes so much as it’s about leveraging relationships — and that makes it harder to stamp out.

Shrinking government would shrink corporate welfare

Grant Bosse, editor of the New Hampshire Watchdog, discusses the most effective way to end corporate welfare–shrink government. He correctly places the blame, not with the companies reacting to government-provided incentives, but with the invasive growth of big government largess: