“Like a black hole, cronyism bends the economy toward the state, inexorably shifting wealth and opportunity from the public to policymakers. The more power government amasses, the more privileges are bestowed on the government’s friends, the more businesses invest in influence instead of innovation, the more advantages accrue to the biggest special interests with the most to spend on politics and the most to lose from fair competition.”
That was Sen. Mike Lee (R-Utah) speaking at the Heritage foundation against corporatism, a system in which private profits are being embedded into the law, and enforced by the bureaucracy.
“Once profits depend on serving congressmen instead of customers, the interests of the elite diverge from those of the nation. Innovation slows, and true inequality – inequality of opportunity – emerges. The American people are forced to work for big businesses instead of the other way around. The middle class falls and the middle-men rise,” Lee summarized.
He’s right.
Whether it is health insurance companies getting guaranteed customers via Obamacare’s individual insurance mandate — a provision those companies pushed for.
Or Government Sponsored Enterprise (GSE) near limitless financing for housing via Fannie Mae and Freddie Mac that helped fuel the housing bubble of the 2000s that nearly wrecked the global economy.
Or more than $1.6 trillion of bailouts to banks that bet poorly on that housing bubble.
Or Pell grants and government-subsidized student loans that fuel the rising costs of tuition and directly benefit universities and colleges with guaranteed profits.
Or wind, biofuels, agriculture, and a host of other subsidies for favored industries.
Or simply regulations that favor one industry over another, such punishing coal electricity to the benefit of natural gas.
Or billions of favorable guaranteed loans via the Export-Import Bank just to help out a single company.
In short, this endless stream of subsidies and regulations favor big business and punish disfavored competitors, at the expense of the American people. They fuel artificial demand for certain products and punish consumers of others, driving costs to the moon for food, energy, education, health care, and housing.
Or as Lee put it, the outcome is “record corporate profits and jaw-dropping gains among elites, but slow growth, stagnant wages and limited opportunities for everyone else.”
What’s worse, corporatism poisons our political system that purports to represent the people, and instead finds ways to cheat them out of their hard-earned money, whether via direct taxation or higher costs of living.
What ails Washington, D.C., Lee suggested, “is not that there is too much money in politics. It’s that there’s too much politics in the economy: three-and-a-half trillion dollars in direct federal spending, and almost $2 trillion more redirected through regulations.”
It truly is a black hole. And like the real-life heart of the galaxy, corporatist government tends to pull everything into its orbit. To restore our republic, the only solution is to return to a government of limited powers — that cannot choose winners and losers.
Robert Romano is the senior editor of Americans for Limited Government.
