Economics, Free Enterprise

Cronyism is just as threatening to free enterprise as big government

Virtually every speaker at the GOP convention this week will rail against the escalation of big government and the marginalization of free enterprise, and the damage this is doing to our nation. We agree that out-of-control government is not only unsustainable—it will also make our country a land of learned helplessness instead of earned success, and it will unfairly steal our children’s future. It is immoral.

But we hope GOP convention-goers also remember that, beyond statism, there’s a second and equally-worrying threat to economic liberty in America today: Cronyism, the process by which market competition is shut down by political actors to benefit particular individuals or firms. Think the GM bailout, the Solyndra deal, the Farm Bill, or a thousand other examples of un-free enterprise today at the hands of politicians and their insider friends in the private sector.

Statism and cronyism are fundamentally about the same things: Letting political power allocate economic resources rather than markets. Both reduce competition and entrench stagnation. They hurt ordinary consumers, squash the process of creative destruction, suffocate honest entrepreneurs, and make America more like Greece. Cronyism is not free enterprise, it’s not fair, and it’s not the American way.

Unfortunately, both parties have a soft spot for cronyism. To call out cronies often means denouncing donors and powerful friends. But nothing is truly going to change in America until we meet both threats to liberty–not just one of them.

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