No matter who wins today’s election, one thing is for certain: This country will remain deeply divided on the proper role of government. While the debate has been healthy in many respects, it has also been equally damaging. In many ways, the President-elect and his new Congress will greet tomorrow and find a wounded country. With all the talk of the “need to compromise”, “reaching across the aisle” and giving “everyone a fair shot”, the next President and Congress could do no better than to attack the biggest root cause of public acrimony: crony capitalism. In fact, to defeat crony capitalism, one can assemble a powerful coalition voting-block that defies simple “left/right” categorization.
Before going any further, let’s define “crony capitalism” simply as “capitalism” without a level playing field.
Where capitalism results from two trading partners making each other better off through free and honest trade, crony capitalism tips the playing field to one party’s favor. Maybe it’s a regulation that forces the one party to trade with the other. Perhaps it’s a special tax treatment that makes viable an otherwise non-economic transaction. Or possibly it’s a single paragraph inserted into the tax code, one that applies only to a single company. Favorably, of course.
Crony capitalism amounts to a thumb on the scales of economic justice. But the damage doesn’t stop there.
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
In “the immediate”, the favored group gets their benefit. And as we shall see, the “longer effects” of this system are devastating to the very character of the country itself.