Who is to blame for crony capitalism?
The answer may seem simple, and yet that is the unlikely question posed yesterday in an Atlantic article by Timothy Carney entitled “The Case Against Cronies”. Even more unusually, Carney argues that politicians are not the only ones at fault for a political atmosphere of cronyism and patronage.
In fact, he states that responsibility rests just as much on the companies that accept and even seek out government freebies. He writes:
“…in the age of crony capitalism, libertarians must declare that some means of pursuing profit are immoral and call on executives to reject them. This would create a positive case for capitalism — arguing that the pursuit of profit, in the context of fair and open competition, helps the whole society. The new corporate social responsibility, redefined for libertarians, must stand athwart crony corporatism yelling ‘stop’.”
Here Carney presents a very interesting case for corporate responsibility, not just for libertarians but for fiscally responsible citizens of all stripes. Businesses themselves must stand up against crony capitalism and, as patrons of business, we the citizens must remind them what is ethical. In this vein, Carney calls for an end to cronyism through a “customer rebellion”.
This article should ring especially true for Connecticut residents, as Governor Malloy and the Department of Economic and Community Development have engaged in one of the most egregious crony capitalistic policies in the nation.
In fact, starting with the First Five and Small Business Express experiments and continuing into the Next Five program, the Malloy economic development agenda reads like a “how-to guide” for picking government-sponsored winners and losers.
“It is these arrangements,” writes Carney, “—in which the industry loses, but one company wins, or a few big companies—that free marketeers should pay more attention to.”
So what are Nutmegers to do?
We can scream about Malloy’s policies until we are red in the face, but in the end he will follow his misguided plan because he truly believes in it.
Instead, citizens need to employ their two greatest weapons: economic and political power.
Carney has already described the first, urging consumers to be more conscientious of the companies they are patronizing. Why give more money to a firm like Bridgewater Associates, the largest hedge fund in the world, after they have received $115 million of your tax dollars?
And as far as the second, we must exercise our political power by voting out politicians who engage in crony capitalism. It’s an unfortunate fact that men like Dannel Malloy believe crony capitalism is sound economic policy, so the problem can only be truly fixed in the voting booth.
Thanks to Mr. Carney, the players have been identified. Now, it is up to us consumers to put pressure on both the politicians and corporations who benefit from crony capitalism.
The only other option is to let those same actors defile the free market and then complain that the system is broken.
In this case, it’s not the game, it’s the players.