Timothy P. Carney has recently written the following article at the Atlantic, pushing libertarians to stand up to the corporate welfare we see today. Carney makes a call to libertarians and conservatives alike to start stressing the issue of cronyism on the ground of “free-market corporate social responsibility.” This means business are responsible and ethical in the way they make profits. Companies that receive subsidies, bailouts or use legislation to impede competition are generating unethical profit, damaging society and the free-market.
[…] in the age of crony capitalism, libertarians must declare that some means of pursuing profit are immoral and call on executives to reject them. This would create a positive case for capitalism — arguing that the pursuit of profit, in the context of fair and open competition, helps the whole society. The new corporate social responsibility, redefined for libertarians, must stand athwart crony corporatism yelling “stop.”
George Will writes an opinion piece in the Washington Post about the fact that politicians are naturally self-interested, and to prevent reckless spending and cronyism he recommends “shackling the spenders” with a constitutional amendment:
The political class is incorrigible because it is composed of — let us say the worst — human beings. They respond to incentives of self-interest. Their acquisitiveness is not for money but for the currency of power, which they act to retain and enlarge. This class can be constrained, if at all, not by exhorting them to become disinterested but by binding them with a constitutional amendment.
Arthur Brooks, President of the American Enterprise Institute, writes a piece in the US News about unions, but also ties in the threat of cronyism:
But labor unions are far from the only threat to free markets and a competitive economy that state lawmakers should address. In the name of being “pro-business,” states hand out over $80 billion a year in business incentives, according to a recent analysis by the New York Times. The vast majority of these do little or nothing to promote economic growth; they are merely giveaways to the well-connected. This doesn’t begin to count nonfinancial regulatory preferences that benefit some firms over others, the abuse of eminent domain policies for private gain, or the almost $100 billion in federal business incentives.
This op-ed in the Washington Times discusses a case of cronyism at the local level, then goes on to explain how cronyism has harmed us nationally:
The D.C. Taxicab Commissioner declared Uber illegal earlier this year, even going so far as to set up a sting operation for one of the company’s drivers. Several months later, the D.C. City Council was set to vote on an amendment that would have officially legalized Uber — with a catch. It mandated the service charge passengers a minimum fare at least 5 times greater than that of a traditional taxi — effectively banning Uber drivers from competing with taxis.
Though public outcry prompted the council to withdraw its amendment, the Taxicab Commission has targeted Uber anew. It proposed a host of similarly nocuous regulations late last month. Given the commission’s track record, it’s hardly a surprise that they put the interests of the taxi industry ahead of those of the public.
D.C. lawmakers’ attempts to shield a particular interest group from competition exemplifies a broader trend in America — one that threatens to undermine the mutually beneficial relationship between businesses and the public at large.
L. Gordon Crovitz writes an opinion piece in the Wall Street Journal (subscription required) discussing a specific case of cronyism that underlines a recent trend in the tech world – using anti-trust laws and regulations to hurt competitors:
For the technology companies that are supposed to be the drivers of our economy, this kind of regulatory uncertainty is a growing burden. The response to innovation by one company should be more innovation by others, not competitors calling in lawyers and lobbyists.
John Cassar White writes a commentary in the Times of Malta about the problem of cronyism in several European countries:
A common argument in these analyses is that southern European states are plagued by endemic corruption nepotism, cronyism, favouritism and political patronage that sap the life out of their economies. Interestingly, a study published in the Social Behaviour and Personality Journal in 2008 claims that these negative traits are more prevalent in services industries in small countries “like Cyprus and Malta”. “Services provided in this labour-intensive environment are more open to corruption than those in larger organisations.”
Robert McClure, president of The James Madison Institute, writes an opinion piece in the TCPalm about the solution to cronyism:
No, the antidote to crony capitalism is free-market capitalism backed by a government that expects competitors to play by the same rules. Free-market capitalism rewards excellence. It fosters achievement and incredible breakthroughs. And it bestows honor upon those who succeed through hard work and ingenuity, the Olympic ideal, rather than by having political friends in high places.
Dr. Matt Ryan writes an opinion piece in the Washington Examiner about the “real scourge of our economy,” which is cronyism:
True capitalism gives individuals the opportunity to create wealth with minimal government interference. Today’s government, however, is anything but minimal.
Recent expansion of the public sector has been nothing short of staggering. In raw dollars, it is now twice the size it was when President Clinton told us “the era of big government is over.” This swelling bureaucracy acts as an insatiable middleman — constantly seizing capital from profitable endeavors and redistributing it to politically connected, less genuinely competitive firms.
Ken Connor at Townhall writes about corporate welfare in America and explains why he thinks it never gets cut:
Herein lies the problem: The average voter isn’t exercised about corporate welfare because thousands of subsidies are small enough to fly under the budgetary radar, so the voters don’t put enough pressure on their representatives to stop corporate welfare. Meanwhile, special interests—the benefactors of political incumbents—are constantly cajoling politicians for more money. The result? Spend, spend, spend! And pretty soon we have a $15 trillion dollar deficit.
Paul Larkin writes an opinion piece at the Daily Caller about the story of Gibson Guitars, which has been raided by the Department of Justice repeatedly because of supposed legal violations, and then the legislation introduced to stop this from happening again:
Last week the Justice Department cut a deal with the Nashville-based instrument maker, dropping charges that Gibson had imported wood products in violation of the Lacey Act — a federal law that makes it a U.S. crime to import flora in violation of any other nation’s law — though it looks like the Justice Department was motivated more by a desire to save the Lacey Act than it was by any concern for justice.
Some Congressmen introduced the RELIEF act to prevent this from happening again, but the article explains what happened next:
Yet shortly before recess, the House Republican leadership pulled the RELIEF Act from a floor vote. A Congressional Quarterly story reported that objections from 24 Virginia forest products companies prompted a Virginia representative to withdraw the bill. The Virginia companies objected to the RELIEF Act on the grounds that it would make it easier for companies to import wood…What the Virginia businesses did is a classic example of what economists call “rent-seeking”: namely, using governmental power to prevent competition.