Lessons from 19th Century Cronyism

Politicians often support “industrial policy,” which means they get to grant special favors to well-connected companies or industries. But as explained by Professor Burton Folsom, this approach didn’t work very will in the 1800s. It’s not surprising, of course, that politicians like having the power to grant favors. It makes them feel important. But such […]

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Industrial Policy Is a Recipe for Cronyism and Stagnation

Ronald Reagan must be turning over in his grave. A Republican president is pushing protectionist policies that hurt American consumes and taxpayers. A Republican president and Congress are spending like drunken sailors (apologies to drunken sailors). Now some Republican politicians are promoting a version of central planning called “industrial policy.” This newfound flirtation with industrial […]

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Green New Deal: Cronyism on Steroids

From a macroeconomic perspective, President Obama’s so-called stimulus was a flop. The federal government borrowed and redistributed almost $1 trillion, yet the economy stagnated. From a microeconomic perspective, the faux stimulus may have been an even bigger failure. One of the worst features was the laughable and scandal-ridden green energy program, which featured corrupt boondoggles […]

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The Continuing Battle against Cronyism at the Export-Import Bank

One of the worst examples of Washington cronyism is the Export-Import Bank, which has provided subsidies for big companies that sell to foreign buyers. Corrupt firms such as Boeing and General Electric argue that they need help from the Ex-Im Bank in order make those sales. Is that true? Interestingly, we had a real-world test […]

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The Hidden Tax of Cronyism

I don’t like it when poor people receive handouts from government, though not because I think they’re being grifters. I mostly view them as victims who are vulnerable to getting trapped in the quicksand of government dependency. The people I despise are the rich people who manipulate the levers of power to get undeserved goodies. […]

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Modern-Day Protectionism Enables Cronyism and Corruption

During America’s early history, trade taxes were the major source of government revenue, but they were “revenue tariffs” rather than “protectionist tariffs.” Lawmakers didn’t necessarily want to block imports. This was before America was plagued by an income tax and some source of revenue was needed to finance the government. And since the central government […]

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Elizabeth Warren Wants to Make Cronyism Great Again

Donald Trump wants to make protectionism great again. Bernie Sanders wants to make socialism great again. And if we continue with sarcastic headlines, Elizabeth Warren wants to make cronyism great again. She has a plan, which she explained in a column for the Wall Street Journal and also in this press release on her Senate […]

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Thanks to the EBRD, American Taxpayers Are Subsidizing Cronyism in Eastern Europe

Because of their aggressive support for bigger government, my least-favorite international bureaucracies are the International Monetary Fund and the Organization for Economic Cooperation and Development. But I’m increasingly displeased by the European Bank for Reconstruction and Development, which is another international bureaucracy (like the OECD and IMF) that is backed by American taxpayers. And what […]

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I’m Happy when Amazon and other Big Companies Prosper – Assuming Profits Are from Capitalism rather than Cronyism

I explained back in 2013 that there is a big difference between being pro-market and being pro-business. Pro-market is a belief in genuine free enterprise, which means companies succeed of fail solely on the basis of whether they produce goods and services that consumers like. Pro-business, by contrast, is a concept that opens the door […]

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Reducing Solyndra-Style Green Cronyism Is another Reason to Be Excited about Tax Reform

I have a fantasy of junking the entire corrupt tax system and adopting a simple and fair flat tax. I have an even bigger fantasy of shrinking the size and scope of the federal government to what America’s Founders intended, in which case Washington wouldn’t need any broad-based tax. But in the real world, where […]

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To Fight Cronyism, Let’s Have Separation of Business and State

In my 30-plus years in Washington, I’ve lived through some very bad pieces of legislation. George H.W. Bush’s betrayal of his “read my lips” promise with the 1990s tax increase. Bill Clinton’s 1993 tax hike, which OMB admitted 18 months later was a failure. All sorts of bad policies under George W. Bush, starting with […]

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Occupational Licensing, Government Thuggery, and Greed-Fueled Cronyism

What word best describes the actions of government? Would it be greed? How about thuggery? Or cronyism? Writing for Reason, Eric Boehm has a story showing that “all of the above” may be the right answer. At first it seems like a story about government greed. When Mats Järlström’s wife got snagged by one of […]

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Cronyism, Corruption, and the Obama White House

One of the points I repeatedly make is that big government breeds corruption for the simple reason that politicians have more power to reward friends and punish enemies. It’s especially nauseating when big companies learn that they can get in bed with big government in order to obtain unearned wealth with bailouts, subsidies, protectionism, and […]

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Government, Cronyism, and the Gambling Industry

I have a very consistent view of victimless crimes. I don’t approve of drugs and I’ve never used drugs, but I think the social harm of prohibition is greater than the social harm of legalization. I don’t particularly like alcohol and I am almost a teetotaler, but I’m glad there’s now a consensus that the […]

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Tesla, SpaceX, SolarCity, and the Cancer of Cronyism (Plus some Post-Election Humor)

It’s easy to define and/or understand most statist policies. We know that a tax increase is when politicians take (or, given the Laffer Curve, try to take) more of your money based on your decisions to work, save, shop, or invest. We know that protectionism is when politicians use taxes and other policies to restrict […]

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José Manuel Barroso, the European Commission, Goldman Sachs, Corruption, and Cronyism

Why did a for-profit college pay former President Bill Clinton the staggering sum of $16.5 million to serve as an “honorary chancellor for Laureate International Universities”? Was it because he had some special insight or expertise on how to improve education? Why did Goldman Sachs pay former Secretary of State Hillary Clinton hundreds of thousands […]

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A Very Depressing Chart on Creeping Cronyism in the American Economy

Last year, I shared the most depressing PowerPoint slide in Danish history. Back in 2011, I wrote about a depressing picture of tax complexity in America. Let’s continue with the “depressing” theme today. James Bessen, from Boston University Law School, has an interesting article in the Harvard Business Review about the source of corporate profits […]

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Private Investment Leads to Progress, Government Investment Results in Cronyism

According to Economic Freedom of the World, there are five major factors that determine a nation’s economic performance. Here’s the recipe for growth and prosperity. Rule of law and property rights. Small government. Stable monetary policy. Reasonable regulatory policy. Free trade. This great publication is the first thing I check when I want to see […]

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New Video Shows Bailouts Are a Recipe for Moral Hazard and Cronyism

When debating and discussing the 2008 financial crisis, there are two big questions. And the answers to these questions are important because the wrong “narrative” could lead to decades of bad policy (much as a mistaken narrative about the Great Depression enabled bad policy in subsequent decades). What caused the crisis to occur? What should […]

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Elizabeth Warren’s Faux Populism vs. Jeb Hensarling’s Genuine Fight against K Street Cronyism

Let’s compare two politicians, Senator Elizabeth Warren of Massachusetts and Congressman Jeb Hensarling of Texas, to see which one actually has the courage to fight against powerful interest groups. We’ll start with Senator Warren. She portrays herself as the scourge of Wall Street, but it appears that the Massachusetts lawmaker isn’t merely a fake Indian, […]

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Obamacare, Cronyism, and Bailouts for Corrupt Health Insurance Companies

I thought TARP was the sleaziest-ever example of cronyism and corruption in Washington. The Wall Street bailout rewarded politically well-connected companies, encouraged moral hazard, and ripped off taxpayers. Heck, it was so bad that it makes the sleaze at the Export-Import Bank seem almost angelic by comparison. But I may have to reassess my views. […]

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Cronyism, Corruption, and D.C. Nepotism

No matter how much I pontificate about Washington corruption, there’s no way I can get across the true extent of the DC establishment’s self-serving behavior. Washington is rich because government is big and the beneficiaries of this system are enjoying their status as America’s new gilded class. It’s even gotten to the point where children […]

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The Wages of Cronyism, Big Government, and Corruption

The Bible says that “the wages of sin is death,” but the same can’t be said of Washington, DC. The bureaucrats, lobbyists, politicians, contractors, insiders, cronyists, and influence peddlers have rigged the system so that they get rich by diverting money from people in the productive sector of the economy. How bad is the disconnect […]

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A Nauseating Example of Cronyism, Sleaze, and Corruption at the Export-Import Bank

One of my first posts on this blog featured this video showing how big government breeds corruption. I’ve periodically provided examples of how this process works, citing Alaska, Chicago, Wall Street, and Washington. Here’s another example, explicitly showing how big business and big government get in bed together to rape and pillage taxpayers. The sleazy […]

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The “American System” Is Big Government?!?

We can learn a lot by looking at economic history. It’s instructive to note, for instance, that the United States evolved from agricultural poverty to middle-class prosperity in the 1800s – during a time when the burden of government spending was trivially small. Federal spending that century, on average, consumed less than 5 percent of […]

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Moral Inequality and Immoral Inequality

While debunking OECD and IMF research on inequality, I explained that it’s important to distinguish between income that is earned honestly and loot that is obtained thanks to government cronyism. That’s also the message of this video from the Hoover Institution. In the video, David Henderson contrasts how our lives are improved when an entrepreneur […]

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Dishonest Tax Analysis from the New York Times

There are two big policy debates about business profits. The first is whether profits are good or evil. I pick the former. Profits are something to applaud, assuming they are earned honestly (i.e., not the result of subsidies, industrial policy, protectionism, or other forms of cronyism). The second is how profits should be taxed, and […]

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Another Honest Leftist Admits Big Government Requires Big Tax Hikes on the Middle Class

It’s simple to mock Democrats like Joe Biden, Alexandria Ocasio-Cortez, and Bernie Sanders. One reason they’re easy targets is they want people to believe that America can finance a European-style welfare state with higher taxes on the rich. That’s nonsensical. Simply stated, there are not enough rich people and they don’t earn enough money (and […]

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The Economics of Unholy Alliances: Bootleggers and Baptists

The class-warfare crowd and tax lawyers don’t have a lot in common, but both groups oppose the flat tax. An even stranger unholy alliance involves the War on Drugs, which has the support of both the activists who despise drugs and the criminals who get rich selling drugs in the black market. Professor Bruce Yandle […]

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Part IV: Poverty Is a Problem, Not Inequality

My series on poverty and inequality (see here, here, and here) focuses on why we should try to help the poor rather than hurt the rich. We’ll continue with that theme in Part IV, which begins with this video by Russ Roberts of Stanford University’s Hoover Institution. Russ makes some great points throughout the video […]

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