"GOP field takes aim at crony capitalism—finally"


I, me, me, lt

That's the headline on this piece from your lead reporter on the crony capitalism beat, the Washington Times' Timothy P. Carney. Excerpt:

Although the Republicans' professed belief in free markets would imply a rejection of corporate welfare, GOP cries of "crony capitalism" and critiques of subsidy sucklers and regulatory robber barons usually come only from the party's back bench. It's striking, then, to hear this talk from prominent Republicans on center stage at a presidential debate.

It's part of a small but growing trend toward free-market populism in Republican rhetoric, if not action.

When [Newt] Gingrich called out General Electric by name for profiting from special tax breaks and green subsidies, he was expressing a growing conservative distaste for GE, which has visibly embraced President Obama's subsidize-and-regulate economic policy. On everything from climate change and windmills to health care and embryonic stem cells, CEO Jeffrey Immelt has positioned GE to profit from big government, often lending the company's unmatched lobbying clout to the administration's efforts.

Obama's pick of Immelt as jobs czar was a fitting symbol of the symbiotic relationship between the industrial giant and Obama's agenda.

[Michele] Bachmann, meanwhile, steered the discussion of Perry's 2007 unilateral mandate of an HPV vaccine to the question of cronyism, benefitting drugmaker Merck. "We cannot forget that in the midst of this executive order there is a big drug company that made millions of dollars because of this mandate."

Bachmann went on, about sounding like a populist: "The governor's former chief of staff was the chief lobbyist for this drug company. The drug company gave thousands of dollars in political donations to the governor, and this is just flat-out wrong."

A week earlier in Iowa, Sarah Palin also attacked "crony corporate capitalism."

Whole thing here; link via Instapundit.

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  1. I guess we’re getting our Morning Links one at a time today…

    1. Seems that way.

      Today’s Thursday, right?

    2. I think it was Ron Bailey’s turn to do Morning Links today, but he caught some retard in his flu vaccine yesterday so he’s sick in bed.

      No ableist!

      1. Thank you for making my morning.

  2. I think what passes for ‘privatization’ in many cases, where the government simply pays a private actor to do something the government was doing (rather than just allowing market forces to address the service), is going to invite crony capitalism.

    In theory though you are going to have some favoring of some businesses by any government in a society in which most goods and services are expected to be produced in the private sector. If you have a police force it needs to buy its uniforms, guns, cars, etc., from someone.

    It’s therefore important to have a well-policed, transparent system of bidding for government purchases.

    1. For sure we do. And we mostly do. You have to remember the shear number of government contracts that go out. And the vast majority of them are honest, which is amazing when you think about it.

      The problem is that when you start handing out that kind of money, the people on the receiving end of it are going to act rationally and try to get you to spend as much as possible. That is not good for making rational choices about spending. Every spending program has a contractor who loves it and is going to use its political influence to advance it.

      1. And the rational response is to say bye-bye to all such contracts. Having any is going too far.

    2. The terms private and public sector (whence, “privatization”) are pretty shit to begin with. “Public” really means government, including lots of things the government prefers to keep fairly private. “Private” means technically owned by someone other than the government, but says nothing about how much influence the government has in its operations. I suppose looking at the economy solely in terms of who holds the deed to a company makes sense for a world view based on old school Capitalism versus old school Marxism, but it ignores a lot of practical importance.

      Would be useful to break things down into maybe four sectors:
      1) government (what used to be “public”.)
      2) government-service (privately owned but primarily serve government or government-service demand, like military contractors or construction teams for public infrastructure)
      3) hybrid (GSEs; heavily regulated utilities like power, water, or telecoms; some central banks; state-owned industries that primarily serve private demand — distinguished by heavy government influence or even outright control, but serve private demand or are not officially part of the state)
      4) market (everything else — privately owned, privately run, less regulated and in a more competitive field).

      So, while moving services from #1 to #2 could be worthwhile from a fiscal perspective (given fair, open, and competitive bidding), libertarians should save their hosannas for moving services from #1 to #4.

      Oh, I don’t really disagree with anything you said, though.

  3. Search out Palin’s comments on crony capitalism. They speak volumes about GE, among others.

  4. “Every spending program has a contractor who loves it and is going to use its political influence to advance it.”

    This is why I think it is dishonestly partisan to rail against public employee groups and not contractors. I can see the logic that the former have very incentive to use the government as a feeding trough, but so does the latter. Public employee groups can turn out voters, but contractors have employees too who usually know where their bread is buttered and can turn out. Both groups have gobs of money to influence things.

  5. Since they never put up a morning links, I will put this here. Everyone should read this Orin Kerr editorial in the WSJ today. It makes the hair on the back of my neck stand on end. It is behind the paywall, so I will quote it liberally.

    Imagine that President Obama could order the arrest of anyone who broke a promise on the Internet. So you could be jailed for lying about your age or weight on an Internet dating site. Or you could be sent to federal prison if your boss told you to work but you used the company’s computer to check sports scores online. Imagine that Eric Holder’s Justice Department urged Congress to raise penalties for violations, making them felonies allowing three years in jail for each broken promise. Fanciful, right?

    Think again. Congress is now poised to grant the Obama administration’s wishes in the name of “cybersecurity.”

    The little-known law at issue is called the Computer Fraud and Abuse Act. It was enacted in 1986 to punish computer hacking. But Congress has broadened the law every few years, and today it extends far beyond hacking. The law now criminalizes computer use that “exceeds authorized access” to any computer. Today that violation is a misdemeanor, but the Senate Judiciary Committee is set to meet this morning to vote on making it a felony.

    The problem is that a lot of routine computer use can exceed “authorized access.” Courts are still struggling to interpret this language. But the Justice Department believes that it applies incredibly broadly to include “terms of use” violations and breaches of workplace computer-use policies.

    Breaching an agreement or ignoring your boss might be bad. But should it be a federal crime just because it involves a computer? If interpreted this way, the law gives computer owners the power to criminalize any computer use they don’t like. Imagine the Democratic Party setting up a public website and announcing that no Republicans can visit. Every Republican who checked out the site could be a criminal for exceeding authorized access.

    If that sounds far-fetched, consider a few recent cases. In 2009, the Justice Department prosecuted a woman for violating the “terms of service” of the social networking site The woman had been part of a group that set up a MySpace profile using a fake picture. The feds charged her with conspiracy to violate the Computer Fraud and Abuse Act. Prosecutors say the woman exceeded authorized access because MySpace required all profile information to be truthful. But people routinely misstate the truth in online profiles, about everything from their age to their name. What happens when each instance is a felony?
    In 2010, the Justice Department charged a defendant with unauthorized access for using a computer to buy tickets from Ticketmaster. Ticketmaster’s website lets anyone visit. But its “terms of use” only permitted non-automated purchases, and the defendant used a computer script to make the purchases.

    In another case, Justice has charged a defendant with violating workplace policies that limited use to legitimate company business. Prosecutors claimed that using the company’s computers for other reasons exceeded authorized access. The Ninth Circuit Court of Appeals recently agreed.

    The law even goes beyond criminal law. It allows civil suits filed by private parties. As a result, federal courts have been flooded with silly disputes. In one recent case, an employer sued a former employee for excessive Internet usage from work. The alleged offense: visiting Facebook and sending personal emails. In another case, a company posted “terms of use” on its website declaring that no competitors could visit?and then promptly sued a competitor that did.

    Remarkably, the law doesn’t even require devices to be connected to the Internet. Since 2008, it applies to pretty much everything with a microchip. So if you’re visiting a friend and you use his coffeemaker without permission, watch out: You may have committed a federal crime.

    Until now, the critical limit on the government’s power has been that federal prosecutors rarely charge misdemeanors. They prefer to bring more serious felony charges. That’s why the administration’s proposal is so dangerous. If exceeding authorized access becomes a felony, prosecutors will become eager to charge it. Abuses are inevitable.…..n_newsreel

    1. “Abuses are inevitable.”

      The iron law of all government authority. For sure.

    2. I would have thought that the 9th Circuit wouldn’t do shit like this, especially with Alex Kozinski around.

      Incidentally, you might not want to Google Alex Kozinski at work. The 3rd and 4th images in the image returns were…interesting, and certainly bordering on NSFW.

    3. dovetails nicely with “ATTACK WATCH”

  6. I just heard about the solar power company thing on Fox yesterday (and then a much more fair report on it on NPR this morning). Iirc we were giving money to this private company. Not a tax break of favorable regulatory environment, but just giving money to it. I can’t see how any liberal could support this, this is a prime example not only of crony capitalism but of “private profits and socialized costs.” It’s terrible.

    1. I am not sure that the solar power company thing was a case of corruption. It seems like more of a case of incompetence and bureaucratic inertia. The politicals wanted to put something on their resume. They wanted to give their boss, the President, a talking point. They had a company that was run by a big donor that hit all of the political hot buttons, green jobs, American manufacturing and so forth. Now the guy running the company was probably a crook. But I don’t think the people in the White House were. I think they were probably just stupid. Once the project got going and their name was on it, they were too invested to notice that the company didn’t actually make anything of any value. They did that not because they were getting rich or wanted to rip off the tax payer. But instead because once these things get started and an organization decides they are a good idea, there is usually no stopping them.

      1. Cui bono? If no one really, then no big deal. If it looks like political rewards were being given, it is a big deal. No way to know without looking.

        1. You have to remember how stupid most politicals are. They don’t know anything about much of anything beyond running campaigns and raising money. What being a donor gives you is access. This allows you to put on your dog and pony show directly to these people. Since they don’t know anything, it is real easy to sell them a line of bullshit. I am quite sure that is what happened here.

      2. I guess I was trying to say that the government should not be handing money to private actors in general, regardless of how competently they do it…

        1. The shouldn’t be for the reasons I give. The politicals don’t know enough to know what is a worthy project and what isn’t. I was agreeing with you.

        2. Well, that’s not possible the way things are today. For instance, all those bureaucrats need office supplies. If you mean that they shouldn’t be handing out money except to purchase goods and services necessary to support legitimate government activity, I tend to agree.

    2. Here’s the deal though with solar tech specifically. China heavily subsidizes its solar industry, to the extent that America, which used to be the world leader in solar tech production, now has only 7% of the market, with China dominating. We will simply, definitely, lose out if we don’t subsidize our own industry to compete. If we ever decide to start transitioning to clean energy, we’ll be buying it all from China like we do most everything else these days.

      Sure it’s picking winners and losers, but we’ve already been doing that for decades as you know, and we seem to be continuing to pick oil and coal as the “winners.”

      1. And if the Chinese want to pay for us to buy what would otherwise be stupid and inefficient energy, more power to them. And unless you plan to take the state of Texas or some plot of land around that size out of production, you will never produce jack squat with solar power.

        1. You seem pretty certain about that. Funny how there are no bounds to human innovation in capitalism, except when we’re talking about a hippie dippie thing you have a cultural problem with like clean energy. You better hope it will work, because we can’t burn oil and coal forever.

          China has succeeded in this market by mass producing cheap solar panels. The US has tended to go in the direction of improving upon the technology and making more efficient devices. We could use that to our advantage if we had the will. But we’ll never get there with oil industry water carriers like you suddenly finding constraints in what’s possible with human innovation.

          1. They can produce all they want. But the laws of physics will remain what they are.


            Better to use nuclear or coal. Solar is a dead end.

            1. That guy’s study is hardly definitive, if you read far enough to get to the criticisms. There is no law of physics that says solar power can’t work on a large scale–that’s just a question of technology. After all, the entire planet is already and always has been powered by the sun.

              What’s contrary to the laws of physics is assuming oil and coal will last forever.

              1. It will last well beyond our lifetimes. And it will make us wealthy enough we can develop fusion or space based solar or something better to replace it.

                  1. There will always be oil, there will come a point where the cost of delivering it will be greater then the market will bear.

                    An interesting fact though is that people have been predicting the imminent collapse of oil as an affordable energy source since the 1920s. Why is this? Well, see the evil oil companies keep finding new places to pull oil from. For example, in the earliest days of the oil industry Pennsylvania was the world’s biggest oil producer.

      2. So the Chinese want to flood the world with stupidly cheap solar panels and waste a lot of money in the process?

        Great. Let them. There is no reason to follow that moronic policy here in the name of competition.

      3. So China will pay us to buy solar power equipment? Sweet. Though, as long as we’re doing that, we should haggle for a bigger subsidy from them.

        As for the U.S., we should probably concentrate on making things that people will pay us for, rather than vice versa.

  7. What next, if the some Republicans recognize that crony capitalism is not free market will they then recognize that government owned or supported capitalism is not free market and free trade. Will Dubai Ports no longer be considered free market but instead be recognized as a government owned corporation. How about Baosteel the Chinese state owned and largest state steel maker in China will no longer get most favored trading status because it is not part of the free market?

  8. This new found Republican disdain for crony capitalism will last for .. oh it’s gone.

  9. There would be no GOP without crony capitalism. What’s twisting their panties is cronyism in the Democratic party. It’s why they can say they hate “special interests,” but then talk as if the only special interests out there are unions. As their entire existence owes itself to doing the bidding of corporate lobbyists, you can tell that this is just another in a long line of talking points in service of destroying the competition for the entrenched interests who own them.

    1. For once, Tony is seeing clearly. Amazing.

    2. You mean lobbyists like the ones a Solyandra Tony. You mean lobbyists like that?

      1. Yep, I fully expect you not to ration your concern proportionally but to get hysterics over that while completely ignoring the oil industry, defense contractors, and financial industry that pretty much own government.

        1. Good thing all those companies stopped getting money when the Democrats took over Congress in 2006. Not like they didn’t raise the deficit 400% or anything and create a golden age for the very people you claim to hate.

          Come to Washington and look around Tony. It is a boom town. Hundreds and thousands of millionaires. And they are all contractors and lobbyists. And they are rich because hacks like you keep the money flowing.

          Every time you scream about cutting spending, where do you think that money goes you fucking retard?

        2. “Yep, I fully expect you not to ration your concern proportionally but to get hysterics over that while completely ignoring the oil industry, defense contractors, and financial industry that pretty much own government.”

          Ron Paul has NEVER ignored these. And a good part of the Tea Party did strongly oppose TARP, to my amazement.

          But I do agree with you about GOP candidates not named Ron Paul or Gary Johnson. They’re going after Democratically-aligned pinatas. They should fight stadium subsidies, defense subsidies, and oil subsidies too.

  10. If I believed in copyrights and patents (I don’t), I would say those GOP members should send Ron Paul, Lew Rockwell, Reason Magazine, Murray Rothbard’s estate, and the Cato Institute a big fat royalty check.

  11. If we ever decide to start transitioning to clean energy, we’ll be buying it all from China like we do most everything else these days.


  12. Accusing Perry of crony capitalism in the case of the HPV vaccine is unwarranted. You could make the case with some of the funds he used to draw in businesses, but in this case, Perry clearly made an emotional decision as he watched a 31 year old woman who he had befriended die of cervical cancer. It’s not an excuse, but people should be careful about accusing someone of corruption through uncertain evidence.

    1. “but in this case, Perry clearly made an emotional decision as he watched a 31 year old woman who he had befriended die of cervical cancer.”

      Show your work.


        I honestly think the Merck check had little to do with it. Politicians support the things they do because they are creatures of almost pure emotion. I know it’s common here to think of them as cold, reptilian sociopaths, and many are that way, but the biggest damage is done by the ones with the best of intentions.

        Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. -CS Lewis

        1. What you say is a reasonable statement on its own merits.

          Except in this case, as the article indicates, Perry “clearly” didn’t meet the woman in quesiton until AFTER he’d already signed the Executive Order.

          In other words, timeline fail.

          “After Governor Perry got in Texas trouble for signing an executive order in 2007 mandating the HPV vaccine, Heather tried to convince lawmakers to let it stand, and in the process met Governor Perry. But more than a meeting, it sparked a friendship.”

          1. Well I figured she’d been around pushing for the vaccine or awareness. Like all the people Obama trotted out to make people afraid to oppose the healthcare bill.

  13. CEO Jeffrey Immelt has positioned GE to profit from big government,

    Sadly, that is almost certainly the smart way to bet.

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