As voters, pundits, and the political class debate who won the Republican presidential debate last night, there was one clear loser: crony capitalism.
Sen. Ted Cruz of Texas openly declared that he would not bail out the banks a la 2008. Dr. Ben Carson took that position as well, saying he had no interest in protecting bankers from their excessive risk-taking. Carly Fiorina spoke eloquently and at length about how Obamacare was a creature birthed by large corporations, including the pharmaceutical industry. She also noted that crony capitalism is one step away from socialism.
Jeb Bush explained that Dodd-Frank, the massive reform bill that weighs down financial institutions with massive regulations, is helping large banks gobble up smaller community banks that can’t afford to comply. Big banks love these regulations, said Jeb, because it allows them to squeeze smaller competitors out of the market. Ditto Senator Marco Rubio, who made the same point.
The only one who appeared out of step was John Kasich, who declared that bailing out the banks would be necessary to protect ordinary Americans from losing money they had deposited in banks. But Kasich is wrong: bailouts don’t protect the money of ordinary Americans held in savings or checking accounts. That’s the work of the Federal Deposit Insurance Corporation (FDIC) which make people whole if a bank fails.
Bailing out financial institutions, as occurred in 2008, is something totally different: injecting money or capital into a failing financial institution so as to protect bankers and financiers from excessively risky and overleveraged investments. Bailouts are about protecting big money financiers, not the bank deposits of ordinary Americans.
Apparently gone are the days when Republican candidates will openly call for subsidies for industry or mimic the position of the Chamber of Commerce. Good riddance.
What used to be called “pro-business” is now increasingly see as “crony capitalism” or welfare for the rich. Increasingly the GOP candidates are positioning themselves as being “pro-market” and not “pro-business.” And that is a good thing.