‘Crony capitalism’ is the real culprit
Published 7:44 pm Wednesday, March 11, 2015
If capitalism is under attack these days, it’s at least partly the fault of capitalists — at least, crony capitalists. Democrats and Republicans alike promote special protections and exemptions and even subsides for favored companies, while subverting the market forces that truly drive prices down and quality up.
“More than a few Republicans have railed against corporate welfare or crony capitalism, a message that resonates with an increasingly populist electorate,” notes Bloomberg View columnist Albert R. Hunt. “The test will be whether they can match the rhetoric with action.”
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These days, Washington is a target-rich environment for opponents of crony capitalism. Take a look at the U.S. Department of Agriculture, for example.
“The cost of the federal crop insurance program has soared over the last decade, mostly to the benefit of wealthy operations,” Hunt writes. “Several years ago, more than two dozen farms reportedly received more than $1 million in subsidies.”
There’s also a federal program, called the Market Access Program, that spends hundreds of millions of dollars each year helping profitable American businesses advertise their products overseas.
“MAP reaches virtually every corner of the globe, helping to build markets for a wide variety of U.S. farm and food products,” the USDA boasts. “(It) provides cost-share assistance to eligible U.S. organizations for activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research and technical assistance.”
We can talk about the sugar subsides and the ethanol mandates — they’re all examples of federal payoffs to big companies that don’t need them.
There’s also the Department of Energy, with its “sweetheart leasing deals on federal lands,” Hunt points out.
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“These should be appealing targets for a party that stresses fiscal frugality,” he says.
These aren’t just good ideas; they’re good politics. Writing in 2013 about how a revived Republican Party could come to the defense of the middle class, Commentary magazine’s Peter Wehner and Michael Gerson said, “Republicans could begin by becoming visible and persistent critics of corporate welfare: the vast network of subsidies and tax breaks extended by Democratic and Republican administrations alike to wealthy and well-connected corporations. Such benefits undermine free markets and undercut the public’s confidence in American capitalism. They also increase federal spending.”
And just last year, Utah’s Sen. Mike Lee, a rising conservative voice, made the same case.
“Cronyism simultaneously corrupts our economy and our government, turning both against the American people,” he said in 2014. “It forces American families who ‘work hard and play by the rules’ to prop up, bail out, and subsidize elite special interests that don’t. It therefore represents a uniquely malignant threat to American Exceptionalism.”
He clearly explains the difference between capitalism and crony capitalism.
“Thus free enterprise simultaneously yields economic growth and cultivates social solidarity,” he said. “The system is not perfect, but it is fair — because its power resides in the people. Cronyism turns all of this upside-down. It empowers and enriches the few by disenfranchising the many.”
There’s good advice here. The GOP can defend capitalism, while at the same time condemning and corralling cronyism.