Dave Brunori at Forbes asks, “Where is the outrage?” regarding the Good Jobs First report that details the level of corporate welfare in the American economy. However, Mr. Brunori says it’s not the companies’ fault, they’re simply being rational:
I don’t blame the corporations. They act rationally. If someone gives you $1 billion, you take it. The blame lies with us.
In this article for The Blaze, Casey Givens makes the argument that, despite good intentions, a minimum wage hike will cost some employees their jobs. Conservatives, while critical of the size of the welfare state, should remain cautious about buying into the argument of low-wage jobs forcing people into welfare:
Rather than the Cold War conservatives that originated the phrase, the tale of the welfare queen is now being trumped by liberals to describe corporations like McDonald’s that pay minimum wage and rely on government aid like food stamps to pick up the tab for their employees’ remaining living expenses.
Mark Perry has a punchy photo on his blog contrasting the waiting lines that appear in different economic systems. It hits on at a reason that cronyism is harmful for society: free markets allocate food better than bureaucrats and politicians.
For instance, high-fructose corn syrup often replaces sugar in American foods because the government is prohibiting the importation of inexpensive foreign sugar by means of a tariff and quota system. What if the government put price controls on bread or imposed costly regulations on the farming of wheat? How well would American consumers fare?
Cronyism harms Americans by putting the whims of government officials above the needs of consumers.
In this 2008 Cato essay, Roderick T. Long discusses the difference between free-markets and corporatism. Many groups of people are to blame — libertarians, conservatives, businesses, and liberals are all culpable. Give your brain an early Valentine’s Day present and read this excellent essay:
No and yes. Emphatically no—because corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare. But also, in all too many cases, yes—because although liberty and plutocracy cannot coexist, simultaneous advocacy of both is all too possible.
Many observers have made the case that the Federal Reserve’s program known as “quantitative easing” is a giant corporate welfare scheme. In this McKinsey & Company report, they certainly make a convincing claim that there is a large distributional effect of money going from private citizens to the pockets of the world’s largest banks:
A new report from the McKinsey Global Institute examines the distributional effects of these ultra-low rates. It finds that there have been significant effects on different sectors in the economy in terms of income interest and expense.
George Mason University professor and Cafe Hayek blogger, Donald Boudreaux, isn’t a big fan of the latest Ex-Im Bank cronyism deal. They’ve recently agreed to loan nearly $700 million to an Australian company to help them purchase Caterpillar’s equipment. He elaborates:
Uncle Sam – that allegedly prudent, responsible, and science-driven protector of the well-being of ordinary Americans – has just decided to transfer more treasure to large corporations (namely, Caterpillar, GE, and Atlas Copco). The transfer comes in the form of a loan of $694.4 million from the U.S. Export-Import Bank to an Australian mining company that will use the loan proceeds to buy products from these American corporations. Despicable.
According to the Washington Examiner‘s Tim Carney, inequality is a big problem if it’s due to cronyism. While many studies contradict each other on inequality and its effects on an economy, there is no doubt in Carney’s mind that it is bad if it’s due to political connections:
The answer: “It depends.” It depends on how governments react to inequality, it depends on how developed the country is, it depends on whether it’s wealth inequality or income inequality.
In order to help you awake from you avian-induced holiday slumber, we thought we’d post the Townhall column on Thomas Sowell’s greatest quotes. There are timeless nuggets of wisdom throughout Professor Sowell’s many books, and some of the best are here:
Thomas Sowell is not only one of the finest columnists in the business, he’s a prolific author, a brilliant economist, and he has an incomparable knack for simplifying complex concepts that few other human beings can match. Enjoy the distilled wisdom!
While it’s not cronyism, we at Crony Chronicles thought this article by The Atlantic was very interesting and thought you might enjoy it, as well. It compares U.S. Metro Area economies to countries around the world, and the NYC, LA, and Chicago metro areas would all be among the top 25 economies in the world. It’s amazing what freedom, initiative, and innovation can do:
Why stop there? On the global map, Metro New York, Los Angeles, and Chicago would all be among the top 25 economies in the world (this exercise conveniently only compares U.S. cities to countries, not international cities). That’s better than Sweden, Norway, Poland, Belgium, and Argentina.
If you’re interested in the cronyism that occurs inside the beautiful Palmetto State, then we suggest checking out the South Carolina Policy Council’s economic research. Whether you’re interested in subsidies, economic development programs, or targeted tax breaks, SCPC has it all.