Jeremy Kolassa

Recent Posts From Jeremy Kolassa

New Paper: Cronyism & Lobbyists Are By-Products of Big Government


I know we’re focused pretty intensely on the elections, which are only two weeks away, but we always need to focus as well on underlying principles and concepts that drive our economy and our government. Elections come and go; this stuff is forever. In that vein, you really need to take a look at a new paper from the Mercatus Center at George Mason University, by Randall Holcombe:

Crony capitalism describes an economic system in which the profitability of firms in a market economy is dependent on political connections. The term has been used in the popular press but rarely appears in academic literature. However, there has been a substantial amount of academic research on various components that, when aggregated, describe crony capitalism. This literature shows that crony capitalism exists only because those in government are in a position to target benefits to their cronies, and have an incentive to do so, because they get benefits in return. The ability to target those benefits is a result of the spending and regulatory power of government, so big government causes cronyism. One remedy often suggested for cronyism is more government regulation and oversight of the economy, but this remedy misunderstands the cause of cronyism. The substantial and well-established economic literature on the components of crony capitalism shows that big government is the cause of crony capitalism, not the solution.

By “crony capitalism,” of course, he refers to lobbyists, and big business using those lobbyists to get more power and take more wealth away from the public. It’s the reason we had Occupy Wall Street, and why many folks still cry out for “regulation” to “rein in” big business and the big banks.

“I wouldn’t patronize it. I would choose to vote with my dollars. I wouldn’t protest.”

The above line comes from an interview in the New York Times with Noel Biderman, the CEO of a very controversial company—, the “” for married folks looking to have an affair. I’m not commenting on the business itself—well, maybe a little, at the end — but really on one small part that I think appropriately sums up the free market and how we should be dealing with each other:

Q. If someone in your neighborhood opened up a controversial business — a porn shop or a gun store or an abortion clinic — what would be your reaction?

A. Depending on the business, I wouldn’t patronize it. I would choose to vote with my dollars. I wouldn’t protest.

Look at that. “I wouldn’t patronize it,” he says. “I would choose to vote with my dollars,” he says. “I wouldn’t protest,” he says. Really, in a free market, that’s all you have to do.

So many people out there in the world today fail to see what power they hold by virtue of being consumers. Although in the past two decades, big businesses have worked harder than ever to appropriate government power to thwart consumers, it remains that you are the most powerful person the marketplace. Businesses live and die by the money in your wallet. If you choose not to patronize them, they shrivel up and cease to exist.

If you think about it, businesses are slaves to the consumer masses.

It’s true that we need to clean up and out all the cronyism in the modern economy. There can be no doubt that rules and regulations created by lobbyists and passed by legislators hurts our economy, hurts the free market, and most importantly hurts the free choices of consumers. But aside from that, just on a philosophical level, the free market is the most empowering system we have—period.

Minnesota Criminalizes Learning


In the “You Can’t Make This Shit Up” file:

Honorable mentions go to New York City’s Taxi and Limousine Commission for driving out Uber’s online taxi-hailing service and to automobile dealers’ groups in four states for trying to have Tesla dealerships declared illegal. But the grand prize in this week’s unexpectedly heated competition for most creative use of government to stifle innovation has to go to Minnesota.

The Chronicle of Higher Education reports that the state has decided to crack down on free education, notifying California-based startup Coursera that it is not allowed to offer its online courses to the state’s residents. Coursera, founded by Stanford computer science professors Daphne Koller and Andrew Ng, partners with top-tier universities around the world to offer certain classes online for free to anyone who wants to take them. You know, unless they happen to be from Minnesota.

Anti-Johnson Crowd is Full of Cowards

Gary Johnson

Not a day goes by when I get a message from a conservative telling me that I must vote for Mitt Romney, not just because a vote for Gary Johnson (or anyone other than Romney or Obama) would be a wasted vote, but that we must vote for the one guy who has a shot of defeating Obama to save our country. That we absolutely cannot vote for anyone other than Romney, because if Obama gets another four years this country will no longer exist. There’s a reason for this.

They’re cowards.

Some examples of the comments I’ve received:

We are on the preverbial roof of a house while the flood waters are rising. The rescue boat is here to help us off the roof and to drier ground. Are you going to say, no I would rather stay on the roof until a helicopter comes because I like helicopters better?


Let me be clear, Romney was not my first, second, third, fourth,or even fifth choice! But I would vote for the town drunk before I voted for Obama. As far as the status quo you say, well I think we have to STOP THE BLEEDING, you may not agree with that approach but the last four years of the wrecking ball smashing away at the economy everyday I believe we need to try a different approach. Such as getting more people back to work so there is more people paying taxes.

The thing is that there is virtually no evidence that Romney is either A) piloting the rescue boat coming to get us, or B) going to do anything to stop the bleeding. The man is very acutely interesting in expanding our military budget, while doing little to reform our bloated entitlements or actually cutting spending beyond the Corporation for Public Broadcasting—which is a good move, but not enough to save us from the black hole we’re spiraling into.

Swing and a miss: How Firedoglake is way off target

David Dayen of Firedoglake, the liberal social democrat blogging community, has a recent post up about how we have almost reaching our spending cut targets. Since we know that spending has actually increased as of late, not gone down, I had to take a look and see what he was talking about. David writes:

Jared Bernstein of the Center on Budget and Policy Priorities has an important piece that reinforces something I’ve been saying for a long time. Contrary to the opinion of Michael Grunwaldthat there has been no austerity in Obama’s first term, Bernstein lays out the numbers that actually shows the austerity, in both the short- and long-term, that actually encompasses most of what deficit scolds seek in their grand bargain. And this is actually a bad idea, as Bernstein illustrates.

These developments are poorly understood by those—most vocally, SB advocates—who continuously inveigh that we’re not “serious” about cutting spending. In fact, that’s the only thing we’ve been “serious” about so far, such that we’ve actually achieved 70% of the discretionary spending cuts called for in the SB budget plan. This does not count war savings, nor does it include savings on interest payments, which would add another $250 billion to the savings.

Unburying the Middle Class

Joe Biden

Joe Biden made the hilarious comment that the past four years have absolutely “buried” the middle class. While a gaffe for the Democratic Vice President, his party, and his boss, it is also a chance to examine what can be done for the middle class—and Americans in general. David Frum lamented that the GOP isn’t doing more to help the middle class, and in fact has no real strategy there.

On top of all of this, comes an interesting story from the Wall Street Journal, via the Lehrman Institute, the DC think tank that is the gold standard on the gold standard. The piece, written by Sean Fieler, is titled “Easy Money is Punishing the Middle Class.” He writes:

With the Republican Party committed to a gold commission and the Federal Reserve committed to easy money, a substantive debate about the principles underpinning our monetary system is finally in the offing. For sound money to carry the day, Republicans will need to do more than point out the still-hypothetical risks of easy money. The GOP will have to detail the harm that the middle class has already suffered as a result of a policy of low but persistent levels of inflation.

A Tribute to Ed Crane


Today marks a new chapter in the history of the Cato Institute. Ed Crane, president of the libertarian think tank since it’s founding, has retired from his position. His replacement, former BB&T Bank president John Allison, has taken over. Mr. Crane will be missed

I was an intern under the Crane Administration early last year, and had the pleasure of meeting him a few times. He came in and gave us interns a lecture on what Cato was all about, cracking jokes about jacuzzi’s and seat sizes. (Ever watched a movie where a higher up makes a joke, starts laughing, everyone else starts laughing, and then he glares at everybody and they all shut up? Yeah, it was like that.)

What is great about Ed Crane is that he didn’t give in to crazy conspiracy theories or tight ideologies. Mr. Crane is all about individual liberty, smaller government, and not meddling in every country we feel like. He isn’t dogmatic, he doesn’t let himself be shaped by outside ideologies, or hold fast to any sort of dogma. He is just a simple libertarian; if you really want adjectives, then you can say he’s a libertarian minarchist, or the other way around. (It doesn’t matter.)

That’s the beauty of Cato, really, and Mr. Crane’s leadership. It was truly non-partisan because it was non-dogmatic. As long as you generally held to the idea that, on government, less is more, and generally held that across the board, you were accepted at Cato. That’s what we need more of in the liberty movement. We need fewer purity tests, or demonstrations of fealty to rigid ideologies. No more of this “Well you’re not a libertarian because you fail to bow at the altar of Murray Rothbard” (or Milton Friedman, for that matter.)

Poll: Most Americans Want A Flat Tax But Don’t Know It

On Thursday, Fox News conducted a poll showing that the vast majority of Americans think everybody should pay some taxes:

A large majority of likely voters believes all Americans should pay some federal income tax — even if it is as little as one percent of what they make.

Seventy-nine percent say everyone should pay something, according to a Fox News poll released Thursday.  That includes 85 percent of Republicans, 83 percent of independents and 71 percent of Democrats.

According to the IRS, last year approximately 41 percent of tax filers did not pay federal income tax.  The Tax Policy Center estimates that will increase to 46 percent this year.

Republicans and independents are pretty similar on this point; Democrats are 14 points behind, but most of them believe it too. I think they agree for totally different reasons: Republicans want the poor to pony up something for the government services they keep consuming; Democrats still think the rich don’t pay their fair share. It’s all semantics, really; if we’re going to have taxes, everyone should pay them. Fair is fair.

Everybody Is Delusional: On Poll Denialism and Echo Chambers

A bit of controversy has been going around lately with the so-called “Poll Denialists.” These are Republicans and conservatives who believe that Romney’s current poll numbers, lagging Obama’s, are somehow false, a scheme by pollsters to deliberately skew the election towards an Obama victory, and are trying to explain it away with…well, I’m not sure what.

Jay Cost of The Weekly Standard mostly sums it up with “the polls are oversampling Democrats.” Robert Stacy McCain of The American Spectator just thinks it’s beyond any reason to believe that Obama is leading. And there is an entire website called “” dedicated to finding the “true numbers” behind the polls.

This is pretty much balderdash, based on bad assumptions of how polling works and just plain fantasy. Stephen L. Taylor of Outside the Beltway focuses on the latter when he says:

Politics Ruins Everything

Gene Healy, vice president of the libertarian Cato Institute in DC, is pretty much over politics:

I have a confession to make: Even though it’s my job to write about politics, I didn’t watch a single second of the Republican or Democratic conventions — not even a YouTube clip of Clint Eastwood talking to the chair.

I’ve long found electoral politics seedy and dispiriting, but that sensibility has lately become a debilitating affliction: like being a sportswriter struck by the unhelpful epiphany that it’s silly for a grown man to write about other grown men playing a game for kids.

These days, when I tune in to ABC’s “This Week” looking for a column topic, I can’t even make it past the first commercial break. Like Peter says to the management consultant in “Office Space,” “The thing is, Bob, it’s not that I’m lazy; it’s that I just don’t care.”
Politics makes us worse because “politics is the mindkiller,” as intelligence theorist Eliezer Yudkowsky puts it. “Evolutionary psychology produces strange echoes in time,” he writes, “as adaptations continue to execute long after they cease to maximize fitness.” We gorge ourselves sick on sugar and fat, and we indulge our tribal hard-wiring by picking a political “team” and denouncing the “enemy.”

What Healy is talking about is mostly elections and the actual governing process. He cites fellow Catoites Aaron Ross Powell and Trevor Burrus, who write in their essay “Politics Make Us Worse”:

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