url?sa=t&source=web&cd=1&ved=0CCYQFjAA&url=http://mercatus.org/sites/default/files/Holcombe_Cronyism_web

Recommendations

Info

CHAPTER 14: CRONYISM AND BIG GOVERNMENT The feature that unites all forms of cronyism is that the power of government enables them. The bigger the government, measured both in its expenditures and its regulatory power, the bigger the potential for cronyism. The larger the government’s budget, the more influence its tax and expenditure policies will have on business profitability and the prosperity of individuals. The larger the government’s regulatory footprint, the more profitability and prosperity will be determined by regulatory favors rather than by productive activity. In this environment, people must become rentseekers as a matter of economic survival. No matter how well-intentioned regulations are at their creation, over time regulatory agencies become “captured” by those they regulate so that regulations benefit the regulated rather than the general public. 1 Big government not only steers businesses toward seeking political benefits, it often gives them no alternative but to engage in the political process to protect themselves from harm. The government often threatens to impose taxes or regulatory costs on businesses, pushing even those that want to avoid the political process CRONYISM AND BIG GOVERNMENT 103
to get involved in lobbying to protect themselves from predatory policies. 2 Businesses are then presented with two alternatives: either attempt to compete against cronies that have an unfair advantage, or become a crony to stay afloat. Those who don’t engage in cronyism must bear the costs that cronies impose on them through government force. One justification often given for expanding the scope of the government is that a bigger government presence in a market economy can help to control the abuses of cronyism. Once we understand the causes of cronyism, however, it becomes apparent that this reasoning is exactly backward. Government powers allow some interest groups to impose costs on others, which forces everyone to engage in the political process to compete to be the cronies who benefit from government interference. Big government does not control cronyism; it causes cronyism. The common element that links all the economic and political systems discussed in this book, except for liberalism and capitalism (as liberalism’s economic component), is that they all are based on the premise that people should turn over control of part of their lives and property to some form of collective <strong>org</strong>anization—most commonly, the government—for the good of everybody. When this surrender happens, some people are able to control the resources of others for the benefit of some in the group and at a cost to others. While there may be a tendency for most people to favor those with whom they have relationships, in The Road to Serfdom Hayek explains (in a chapter titled “Why the Worst Get On Top”) that the incentives inherent in government attract people into positions of power who want to use that power to their 104 LIBERALISM AND CRONYISM
Page 1 and 2:
LIBERALISM AND CRONYISM Two Rival P
Page 4 and 5:
LIBERALISM AND CRONYISM: TWO RIVAL
Page 6:
CONTENTS Introduction 1 Chapter 1:
Page 10 and 11:
INTRODUCTION People often see polit
Page 12 and 13:
who have the power to make decision
Page 14 and 15:
CHAPTER 1: LAYING A FOUNDATION Befo
Page 16 and 17:
hijacking of the term to describe a
Page 18 and 19:
esources can be taken from some for
Page 20 and 21:
suffers from “market failure,”
Page 22:
is a group of cronies in a dictator
Page 25 and 26:
ecause it permits voluntary exchang
Page 27 and 28:
people’s economic well-being. The
Page 29 and 30:
consumer demands. Examples of rent-
Page 31 and 32:
the Politburo and the needs of conn
Page 33 and 34:
consider the benefits and costs of
Page 35 and 36:
upon state privilege and disproport
Page 37 and 38:
their loyalty to the socialist stat
Page 39 and 40:
cronyism from gripping every area i
Page 41 and 42:
communism are well documented and w
Page 43 and 44:
Accountability was embodied by refo
Page 45 and 46:
despite comprising only 3 percent o
Page 48 and 49:
CHAPTER 5: FASCISM Fascism, the pol
Page 50 and 51:
use the sword of the Nazi state to
Page 52 and 53:
planners created a back door for in
Page 54 and 55:
CHAPTER 6: CORPORATISM Corporatism
Page 56 and 57:
puts men and their possibilities in
Page 58:
that this form of guided capitalism
Page 61 and 62: therefore provide sufficient benefi
Page 64 and 65: CHAPTER 8: PROGRESSIVISM Progressiv
Page 66 and 67: people who argue for limited govern
Page 68: Security, Medicare, and Medicaid do
Page 71 and 72: the direct election of senators, ch
Page 73 and 74: argue for narrow individual interes
Page 75 and 76: their roots to diverse sources of i
Page 77 and 78: promises to assume a company’s de
Page 79 and 80: enefits for his former venture capi
Page 81 and 82: prices of firms within the textile
Page 83 and 84: ment the power to make decisions an
Page 85 and 86: of social justice, cronyism has an
Page 87 and 88: for women in the twentieth century,
Page 89 and 90: ecause it advocates granting these
Page 91 and 92: should pay the same as comparable b
Page 93 and 94: way, the US government replaced the
Page 95 and 96: an individual, social justice advoc
Page 98 and 99: CHAPTER 12: CRONY CAPITALISM AND DE
Page 100 and 101: subsidies, political connections di
Page 102 and 103: CHAPTER 13: INDUSTRIAL POLICY The t
Page 104 and 105: “cottage industries” that clust
Page 106 and 107: of complex systems. He applied this
Page 108 and 109: South Korean industrial policy gave
Page 110: The degree to which Japan’s and S
Page 116 and 117: CHAPTER 15: LIBERALISM VERSUS CRONY
Page 118: that power will arise with another
Page 121 and 122: with power support each other to ma
Page 123 and 124: an incentive to cooperate for the b
Page 125: environmental movement often advoca
Page 129 and 130: 6. Ludwig von Mises, Human Action,
Page 131 and 132: 12. James Heinzen, “The Art of th
Page 133 and 134: CHAPTER 5: FASCISM 1. Peter Temin,
Page 135 and 136: CHAPTER 8: PROGRESSIVISM 1. Terry L
Page 137 and 138: 16. Bruce Yandle, “Bootleggers an
Page 139 and 140: 3. Eamonn Fingleton, “Japan’s I
Page 142 and 143: FURTHER READING Acemoglu, Daron and
Page 144 and 145: ABOUT THE AUTHORS Randall G. Holcom
show all

url?sa=t&source=web&cd=1&ved=0CCYQFjAA&url=http://mercatus.org/sites/default/files/Holcombe_Cronyism_web

Create successful ePaper yourself

Delete template?

Save as template?