The Kojo Nnamdi radio show had an interesting segment recently about state and local attempts to subsidize businesses, and the guests of the program (including economist Matt Mitchell) discuss the costs and benefits.
Cronyism takes many forms, and it is not a new problem. Historically, one of the ways cronyism was prevelant was the idea of protectionism, meaning the government would institute tariffs or other barriers to prevent foreign goods from coming into the country. In 1845, the French economist Frederic Bastiat wrote a satirical petition pretending to be from the makers of candles asking French lawmakers to “shut off as much as possible all access to natural light, and thereby create a need for artificial light”. The petition is reproduced below:
A PETITION From the Manufacturers of Candles, Tapers, Lanterns, sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting.
To the Honourable Members of the Chamber of Deputies.
You are on the right track. You reject abstract theories and have little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry. Continue reading
Here’s a poem about cronyism, based on “The Raven”. Pdf version here.
By Oliver Sherouse
Creatively Subsidized by Edgar Allen Poe
Once upon an evening dreary when I pondered, weak and weary
over many a disappointing chart of sales from quarter IV,
while I watched our profits sapping, suddenly there came a tapping
as of someone gently rapping, rapping at my office door. Continue reading