Thursday, January 07, 2010

Paul Ryan Bumps Back. Hard.

Paul Ryan doubles down on Crony Capitalism. (This is the long version of the Forbes piece previously mentioned.)

Today’s crony capitalism has been accelerated by an aggressive program by President Obama and the Democratic congressional leadership. It manifests in the federal government’s active role in picking economic winners and losers. Big businesses use their connections, muscle, and influence to carve out exemptions and favors for themselves. Many established firms actually lobby for harmful tax and regulatory policies, knowing they are in a better position to survive than their less powerful competitors. In this environment, a business’s commitment to customer service shifts from consumers to politicians.

Phillip Morris SUPPORTED the Obama-signed law curtailing tobacco advertisements, folks. (It was declared un-Constitutional yesterday.)

For a business to succeed, it will need to outmuscle its competition in the corridors of Congress, rather than in the open market.

Check GE's lobbying budget. Or just count the GoldmanSachs people now in VERY high Administration positions.

TARP has evolved into an ad hoc, opaque slush fund for large institutions that are able to influence the Treasury Department’s investment decisions behind-the-scenes. No longer concerned with preserving overall financial market stability, Treasury’s walking around money continues to be deployed to reward the market’s Goliaths while letting its Davids suffer. We were told that the financial giants, most prominently Goldman Sachs and JP Morgan, were “too big to fail.”

Ever notice that nobody is "too SMALL to fail"??

With risk aversion preventing small businesses from accessing capital, job losses continue to mount and the engines of economic growth continue to stall. Small firms have to file for real bankruptcy - not the bailout bankruptcy afforded to AIG, Bank of America, GM, Chrysler, and others.

Ryan is hardly one-sided in his criticism, and his most important observation is red-highlighted below:

Neither political party is immune from fostering this pervasive culture of crony capitalism. My own party - the party of Lincoln and Reagan - neglected the principles it passionately championed in decades past. Republicans became more interested in securing political power as an end, rather than a means of limiting the federal government’s power over our lives. The Republican Party has recently confused being pro-business with being pro-market. The poisonous earmark culture was emblematic of businesses, large and small, working their connections to carve out political favors for financial gain.

This is not rocket science. The bigger the Gummint, the better the return on rent-seeking.

Big businesses’ frenzied political dealings are not driven by party or ideology, but rather by zero-sum thinking in which their gain must come from a competitor's loss. Erecting barriers to competition is a key to maintaining advantage and market share. With Washington leading the way, it makes sense for the big boys to redirect their resources to their lobbying shop and government affairs office. They’re far less interested in expanding the economic pie than with making certain that they get their slice


And just in case you didn't read the red-highlights above, here it is again:

We should focus on removing the hurdles the government has erected, rather than further centralizing power in Washington.

You could substitute "Madison" for "Washington" with similar results, by the way. It's fairly obvious that the Legislature and Governor are VERY capable of screwing up almost everything they touch. See, e.g., "mental health benefits."

HT: FoxPolitics


Anonymous said...

So tell me why "crony capitalism" isn't the same thing as classical fascism, such as Italy or Germany had? There was cooperation between the government and various favored businesses then, and any number of other similarities you may care to find.

Dad29 said...

Who's arguing with you?

Steve said...

Did you see Paul Ryan's response at National Review?

Also - John Stossel added his thoughts here: