Are we mad about crony capitalism?

“Crony capitalism is a description of capitalist society as being based on the close relationships between businessmen and the state. Instead of success being determined by a free market and the rule of law, the success of a business is dependent on the favoritism that is shown to it by the ruling government in the form of tax breaks, government grants and other incentives.”

Last week I contrasted private ownership (capitalism) with government-run society (socialism), showing why Marxism is a bankrupt philosophy and how socialism and fascism are all different forms of the same thing - statism. Another term, crony capitalism, also called corporate welfare, is being used these days. It describes how big businesses rig the governmental process so taxpayers' money is used to finance their businesses and grant political favoritism. Crony capitalism is not the same as fascism, which is the centralized coordination of private businesses in order for the government to pursue nationalistic and militaristic objectives. It is actually the opposite of fascism in many respects. Instead of government manipulating businesses, it is businesses manipulating government for favoritism and financial gain. Crony capitalism is not an economic system, rather it is the process of businesses gaming the system, be it free market capitalism, socialism, or fascism. Statism makes it possible for crony capitalists to exist. It is only possible when a government is set up as the central authority and citizen-voter participation is restricted. The Tea Party movement was begun out of opposition to crony capitalists. I use the "ist" ending because the term "crony capitalism" is actually a misnomer. The "ism" implies that it is a political-economic system rather than what it actually is, the abuse of the political-economic system by members of the system, namely capitalist individuals and businesses.

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While the welfare state's stated purpose is to help out needy people, albeit with debt financing, it opens the door for able-bodied people to steal taxpayer money for their self interest. In the same way, crony capitalists are business people who rely on the theft of taxpayer money and the buying of influence in government in order to keep their businesses competitive. The political philosophy of limited government, which is a fundamental part of conservatism, is anathema to the crony capitalists and is fiercely opposed by the statists. Both political parties in the United States are controlled by statists. Democrats are all statists, all Republicans are not. While having statist leadership, the base of the Republican Party is mostly composed of people with conservative and libertarian leanings, and they are opposed to statism. George W. Bush used the term compassionate conservatism, which tried to combine social conservatism with big-spending statism. Trump is nothing more than a liberal statist and is essentially the definition of a crony capitalist. The American Enterprise Institute gives us the following quote from economist Luigi Zingales:

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“As a businessman Mr. Trump has a longstanding habit of using his money and power aggressively to obtain special deals from the government. For example, his Grand Hyatt Hotel in Manhattan was built with the benefit of a decades-long tax abatement obtained through government connections. “In 1985, Mr. Trump circumvented New York State campaign-finance laws by making a $30,000 donation, through several Trump companies, to Andrew Stein, the Manhattan borough president who was running for president of the City Council. Mr. Stein was also a member of the New York City Board of Estimate, the body then responsible for land-use decisions in New York. “Finally, Mr. Trump has a long history of promoting eminent-domain abuses to expropriate private land he wanted. He is, in short, the essence of that commingling of big business and government that goes under the name of crony capitalism.”

Trump criticizes Ted Cruz for not getting along with his fellow Senators. But the main reason for that is Cruz took a stand against raising the debt ceiling and funding Obamacare while Sen. McConnell and Rep. Boehner were caving in to Obama and the crony capitalists whose subjects they are. While campaigning in Iowa, Ted Cruz took a stand against the ethanol mandate, something that benefits the crony capitalist. On January 31, 2016 he was interviewed by Chuck Todd on Meet the Press:

“The lobbyists very much want to keep Iowa focused on the ethanol mandate, because it keeps Iowa dependent on Washington. It means every year they have to go back to Washington and maintain the mandate, lobbyists get paid, politicians get paid. I'm going to eliminate all the subsidies. No subsidies for oil and gas, no subsidies for anybody. But the other piece that's very important and resonating is I’m going to also tear down the EPA's ethanol blend wall, which means make it legal to sell mid-level blends of ethanol. And that in turn can expand ethanol's share of the marketplace by 60%, but not based on mandates and subsidies -- based on the free market. That message is resonating.”

On October 15, 2015, Damon Root quoted Carly Fiorina speaking about Donald Trump and the issue of eminent domain: “ ‘I think Donald Trump, among others, has engaged in crony capitalism in its most raw and abusive form. When commercial interests get together with government to take away private property for their own commercial interests, that's a big problem. And I think I join so many conservatives in saying that eminent domain has been abused. And it has been abused by the collusion between governments eager for revenue and businesses eager for competitive advantage. So I find the Kelo case—if ever there was a case for judicial engagement instead of judicial restraint, it's this set of issues.’ “Fiorina is exactly right. In 1994 Trump got together with government officials in Atlantic City, New Jersey, in a shameful attempt to seize the home of an elderly widow in order make room for a limousine parking lot for the Trump Plaza hotel and casino. It was a textbook example of eminent domain abuse and ‘crony capitalism in its most raw and abusive form.’ ([url=http://reason.com/blog/2015/10/15/carly-fiorina-slams-donald-trump-for-cro]http://reason.com/blog/2015/10/15/carly-fiorina-slams-donald-trump-for-cro[/url]) The answer to the problem of crony capitalists is limited government - shrinking the size and scope of government and building citizen-voter participation in government. It involves a return to the 10th Amendment of the Constitution: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”