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.

Global Tax Competition, NHL Lockout Edition

//], via Wikimedia CommonsMy Twitter followers know that I’m a huge hockey fan and that I’m really upset that we have now entered the third work stoppage under NHL Commissioner Gary Bettman’s tenure. But the current lockout, like previous lockouts, has paved the way for the temporary flight of NHL talent to European countries so they can continue earning a paycheck and staying in game shape. That necessarily paves the way for a discussion of comparative politics and economics. Take, for example, the case of Swedish-born Nashville Predators forward Patric Hornqvist, who was going to sign with his former (pre-NHL career) team Djurgarden, even though they’re no longer in the Swedish Elite League:


Following in Roman Josi’s footsteps, the next Nashville Predator is heading overseas during NHL Lockout 2012, as Patric Hornqvist will reportedly play with Djurgarden, the team he played for before coming to North America. Djurgarden is currently in Sweden’s HockeyAllsvenskan, having been relegated last spring from the Swedish Elite League after a 35-year run.

“A Revolution to Overthrow Capitalism”

OWS goons

A few weeks ago we brought you a video from an Occupy meeting where the stated goal was to overthrow capitalism. A few commenters took issue with this, claiming it was an isolated statement and that Occupy is a loose-knit group.

I had the opportunity to be with the Occupy protesters at the RNC and the DNC over the past few weeks and I can assuredly tell you that it is not an isolated statement.  True, there are many groups represented at the demonstrations, and maybe not all of them will outright say that they want to overthrow capitalism. But when you promote a socialist economy, by definition you are advocating the overthrow of capitalism.

I covered the “March on the RNC” in Tampa and was able to have a conversation with a socialist marcher about the economy:

A few of his comments deserve special attention.

“We need to tax the wealthiest people in the country, who aren’t paying their fair share - it’s not shared sacrifice for them.”

This is a common refrain among not only the Occupy movement but among liberals in general.  Consider that the top 20 percent of earners - going way beyond the famed 1 percent - makes a little more than half the money yet pays two-thirds of the federal taxes.  And once you hit $200,000 in adjusted gross income, your tax rate nearly doubles - going from an average of 11.9 percent to 19.6 percent.

Can this Marriage be Saved: Libertarians and the GOP


Conventions aren’t just about the present, conventions are also about the future. As the 2012 Republican National Convention in Tampa draws to a close, one of the most important questions for the party going forward is what role – if any – will libertarians play in the direction of the GOP in the years ahead.

Congressman Ron Paul’s 2008 campaign for the Republican Party’s Presidential nomination helped to launch the modern day liberty movement and gave voice to libertarians within the Republican Party.

The rise of the Tea Party and a second Paul Republican Presidential run gave the libertarian wing of the party hope for the future and increased visibility.

As Paul’s popularity grew in the party, so did the tension between the libertarian wing of the GOP and the party’s establishment. Many in the establishment would have you believe that the tension was more about the behavior of Ron Paul’s supporters than about policy. While there is no doubt that Ron Paul has an intensely loyal and fervent following, the truth is the tension wasn’t about behavior – it was about policy.

Libertarians want an end to foreign adventurism, they want deep cuts in spending across the board (including the military), they want government out of the boardrooms and the bedrooms, they want dramatic tax reform (starting with throwing out the current tax code), they want to privatize social security and Medicare, and they want a return to sound money.

The policy differences between libertarians and the current GOP are real and they are significant. The question going forward is whether this marriage can be saved?

Private Sector Leads Way to Mars


Sure, we’re all stoked as hell about the Curiosity rover going around the planet Mars, Tweeting snarkily all the way, but a real project for Mars, one that will advance our spaceflight programs far, far beyond mere unmanned probes. And it is being done entirely by private sector investors:

A Dutch company that aims to land humans on Mars in 2023 as the vanguard of a permanent Red Planet colony says it has received its first funding from sponsors.

Mars One plans to fund most of its ambitious activities via a global reality-TV media event, which will follow the mission from the selection of astronauts through their first years on the Red Planet. But the sponsorship money is important. That support will help the company — which had been self-funded for the last 18 months — get to the point where it can do the show, officials said Wednesday.

Let Paul Ryan Be Paul Ryan

Paul Ryan

There was a great deal of excitement among conservatives and libertarians about the pick of Rep. Paul Ryan, particularly among those who were rightfully leery about Governor Romney’s credibility when it comes to cutting spending and reforming our entitlement programs.

They say no one votes based on the Vice President, and now we are seeing why.  The GOP establishment is already urging Paul Ryan to drop his support for his own Pathway to Prosperity budget plan – and it appears Ryan himself is already backing away from certain components.

It feels like Sarah Palin all over again.  In 2008, McCain chose the maverick, buck the system Alaska Governor and then promptly tried to shove the square peg in the circle hole.  The results were predictably disastrous.  What is the point in picking Sarah Palin if you don’t let Sarah be Sarah.

One has to wonder whether the Romney campaign is about to make the same mistake.  The reason conservatives and libertarians love Paul Ryan is BECAUSE of his budget plan not IN SPITE of it.  Take away Paul Ryan’s ideas and you have a very nice, telegenic, young Congressman from a swing-state, but you don’t have a game-changing VP pick.  What is the point in picking Paul Ryan if you don’t let Paul Ryan be Paul Ryan?

Mitt Romney should adopt the Ryan Plan, not the other way around.  It would certainly be easier for Romney, a man who has been on almost every side of every issue, to move to the Ryan position than it would be for the principled Congressman to abandon his signature proposals.

If Mitt wanted a yes man, there were plenty of them.  He didn’t pick a Rob Portman or Tim Pawlenty, he picked Paul Ryan.  He should let Paul Ryan be Paul Ryan.

“No More Solyndras?” Well, maybe just one more…


House Republicans have recently put forward a new bill, H.R. 6213, otherwise known as the “No More Solyndras Act.” It was passed by the House Energy & Commerce Committee on August 1st, and sounds quite promising when you consider the colossal mistake that Solyndra, supported by federal loans, was. It’s estimated that taxpayers will lose over half a billion dollars on Solyndra, which went bankrupt last year. Preventing that from happening again is a great idea.

Unfortunately, the Republicans backing this bill are not really saving you from another Solyndra, or Beacon Power, or Abound. For the “No More Solyndras Act” leaves a gaping hole—as in, everything before December 2011 is still totally cool.

See, it’s “No More Solyndras,” not “No Solyndras.” As the text of the bill makes plain, the Act only prevents new applications from new companies, not applications from ones “grandfathered” in:

Occupy DC Infiltrated, Calls for Violent Revolution

Occupy Wall Street - what’s that?  They’ve gone away, right? They haven’t.  They’re regrouping and preparing to ramp up.  Nick Tomboulides, Andrew McCaughey, and Danielle Saul recorded some remarks made by Mike Golash, former President Amalgamated Transit Union, Local 689, and others at a OccupyDC meeting held August 19, 2012.

They are not hiding their goals anymore - and no matter what your stance on the current state of our government, what is being said here should shock all patriots.

GOLASH: Progressive labor is a revolutionary Communist organization.  Its objective is to make revolution in the United States, overthrow the capitalist system, and build communism.  We’re trying to learn something from the historical revolutions of the past, the Russian revolution, the Chinese revolution, the revolutions in Cuba and Eastern Europe.

What can we learn from them so we can build a more successful movement to transform capitalist society?

The “historical revolutions of the past” don’t include the American Revolution - a revolution which created true freedom and prosperity and has been a model for such - but includes revolutions in which dictators were created who brutally tortured and slaughtered millions of their own people?

Regulatory Compliance Costs Don’t Always Have a Dollar Figure Attached

Cross-posted from Friction Tape.

Francois Hollande

Recently elected socialist French president François Hollande.

While I’m not sure I always buy whole-hog the amorphous concept of “regulatory uncertainty,” brought on by the administrative state, as a catch-all explanation for everything wrong with the private sector and our nation’s current unemployment crisis, a fascinating Bloomberg Businessweek Global Economics feature from May 2012 looks at French labor policy (emphasis mine):

[France] has 2.4 times as many companies with 49 employees as with 50. What difference does one employee make? Plenty, according to the French labor code. Once a company has at least 50 employees inside France, management must create three worker councils, introduce profit sharing, and submit restructuring plans to the councils if the company decides to fire workers for economic reasons.

French businesspeople often skirt these restraints by creating new companies rather than expanding existing ones.

Hey, Let’s Not Nationalize Facebook

Dislike (Radiant)

There are dumb ideas…and then there are really dumb ideas. And then there are, so to say, Congressional politicians. We’re not quite at that level yet, but it seems like it. I am of course, referring to a rather silly piece in Slate magazine titled “Let’s Nationalize Facebook,” written by one Phillip N. Howard, a professor of communications and information technology from the University of Washington. His reasons for doing so are:

Over the last several years, Facebook has become a public good and an important social resource. But as a company, it is behaving badly, and long term, that may cost it: A spring survey found that almost half of Americans believe that Facebook will eventually fade away. Even the business side has been a bit of a disaster lately, with earnings lower than expected and the news that a significant portion of Facebook profiles are fake. If neither users nor investors can be confident in the company, it’s time we start discussing an idea that might seem crazy: nationalizing Facebook.


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