Will the Real Crony Capitalist Please Stand Up?

Sarah Palin weighed in with a very important point in the policy debate about the role of government. Her Saturday speech, among other things, took a swipe at the country’s dilemma of booming crony capitalism:



[T]he permanent political class …[use] taxpayer dollars… to bail out their friends on Wall Street and their corporate cronies, and to reward campaign contributors, and to buy votes via earmarks. There is so much waste. And there is a name for this: It’s called corporate crony capitalism. This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk. No, this is the capitalism of connections and government bailouts and handouts, of waste and influence peddling and corporate welfare. This is the crony capitalism that destroyed Europe’s economies. It’s the collusion of big government and big business and big finance to the detriment of all the rest – to the little guys.

Amen. Immediately, the media and other Democrats, as well as some Republicans, pointed out that this label sticks to Texas Governor Rick Perry just as it does to President Obama and that, assuming Perry is the Republican nominee, it will have limited resonance in the 2012 debate.

There is an element of truth to this, though that seems to be as much an effort to dodge discussion (or Obama’s record) as it is to accurately represent matters.

First, about the phrase, ‘crony capitalism.’ After addressing it recently on television someone emailed me and asked if I would please deploy the term ‘cronyism’ since, after all, this is just corrupt abuse of taxpayer money and not at all capitalism. I get that. But you ride the waves that come in, and rhetorically, this practice is “crony capitalism” and will remain so barring a full airing of the practice’s true extent and insidiousness.

That Perry, like it seems most politicians, has some things to answer for on this front seems hardly enough to neuter Obama’s awful exposure to the charge (see, e.g., his many waivers from ObamaCare going 50% to union members who only represent about 7% of the workforce, as well as “Obama’s Enron“, the $535 million green jobs boondoggle Solyndra).

It is axiomatic that crony capitalism and similar corruption is rampant, in many forms, among businesses that would not exist but-for largesse transferred to them, by politicians, from taxpayers. Such industries, and the practice of propping them up in the name of one or another fads or theories, invite this.

The increasingly popular “green jobs” schemes — the White House claims more than $80 billion of the $800-plus billion ‘stimulus’ went to these, whatever their definition encompasses — are therefore rife with moral hazard. After all, they exist for reasons other than their economic s or their merit; their pitch is “unless you give me this preference, mandate or bag of money why, I’ll disappear”.

As George Will writes, Governor Perry’s “Texas Emerging Technology Fund is, essentially, a government-financed venture capital operation to nurture infant tech industries and to lure some to the state.” Sigh.

But let us recognize that, with unhappy exceptions, Perry’s approach has been more one of poaching businesses than propping up pipe dreams while purely by coincidence rewarding interest groups whose support you need. That is, Perry’s practice was more — if not entirely — a variant of Keynesianism cum opportunism than actual crony capitalism. Call it entrepreneurial interventionism. Not my cup of tea, but also not the economic cancer that is Obamanomics.

Consider how politicians increasingly use taxpayer dollars to lure, say, an existing football franchise to the town for the economic activity it would generate. To my thinking, if a franchise made economic sense it would come, without taxing the taxpayer to bring that about. But city leaders build stadiums to poach an existing business in a successful field and talk about the jobs they created.

Now on to Obama. Instead of building a stadium to relocate a team, Obama’s approach, as best embodied by his “green jobs stimulus” — or “targeted infrastructure investments in clean energy” as the new euphemism has it — is more like city leaders deciding that while fans would probably go to football games and sustain a new industry in town, well, football’s too violent. What sporting citizens really ought to want is a Women’s Professional Jai Alai franchise, which some of the city council’s financial backers heard from their European friends is the wave of the future.

An even more accurate analogy to the bizarre philosophy propping up “new technologies” like wind- and solar-powered electricity — both commercialized in the 1890s — would be professional Jai Alai for near-sighted arthritic ladies of a certain age. But, the point shines through regardless.

So yes, Rick Perry has used taxpayer dollars in ways I disapprove of. Maybe more than I know. I sadly expect he would do it again on some level in Washington, given that’s what politicians do when given access to power and trillions of dollars. As P.J. O’Rourke once wrote, it’s like giving whiskey and car keys to teenage boys. It is a principal reason why I cannot get excited about politicians. And I will continue to work against this.

But, for Obama supporters in the media and elsewhere to utter a word about this — seeking to protect their guy — is breathtaking. Are they unaware of what is going on, claiming equivalence with the near-systemic corruption we see with Obama’s union sops and “green jobs” scams?

Maybe Rick Perry isn’t the one to raise this. Someone had better. It will bankrupt us. Sarah Palin can do us all a world of good by forcing an open debate.

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