Monday, November 17, 2014

Thorner: Wrong Kind of Government Breeds Cronyism

Crony Capitalism

By Nancy Thorner – 

Americans’ rights and prosperity are being threatened by cronyism, Ayn Rand Institute’s Steven Simpson said last week during a symposium hosted by Heartland Institute in Chicago.

“The issue is that government has too much power and has strayed far beyond its proper purpose of protecting rights,” Simpson declared.

Simpson’s definition of “cronyism” differs from the explanations typically offered by Democrats, Republicans and independents.

 Special Interests and CronyismAfter stating how appropriate it was to be in Chicago so soon after the elections, Simpson said those on the Right, the Left and Libertarians all complain about cronyism in much the same way.

  • Cronyism is to gain money and influence.
  • Cronyism involves business and government colluding to redirect favors to others.
  • The economy itself is crony capitalism.

Ralph Nader’s latest book, “Unstoppable”, sets forth the concept that corporations equal cronyism.  As such Nader wants to abandon the corporate state.

Simpson doesn’t give much credence to the conventional view that special interest are influencing our political system and skewing it at the expense of many.  True, money is spent to finance political causes — $3.9 billion in the recent November elections — but what is the problem with politicians being financed?  Is this corruption?

A bigger problem is why so many individuals want to influence the political system, at which point Simpson defined special interest groups as:  “A group of people voluntarily accountable with one another to influence the political process.”   Followed by:  “What is wrong with that?”

 Big Business and Cronyism

As to the belief that cronyism involves business and government colluding to redirect favors to other, this likewise must be evaluated.  Issues arise because of the way people perceive cronyism from different political angles or points of view.  But even individuals on the opposite side of the political spectrum seem to see big business as a bull Tim Carney of the American Enterprise Institute (AEI) in his book, “The Big Ripoff”, advances how big businesses work with statist politicians to diminish the prosperity and freedom of consumers, taxpayers, and entrepreneurs.

On the Left, Nick Cristoff of the New York Times in an Opinion piece, “Crony Capitalism Comes Home,” argues to take crony out of capitalism.

Just maybe something is wrong with our political system that requires people to band together and businesses to collude with government to influence political outcome?  Are bad people involved?  Might we have a political system that doesn’t allow people to operate freely?

What happens when people think that bad people are influencing a good system?  Just what is the take away or the result?  The natural outcome is that there is an attempt to restrain the bad people with term limits, etc.  Consider the IRS scandal which happened because it was decided that Tea Party groups had too much influence with politics. Consider also the attempt recently to restraint political speech on Facebook and the Internet. The threats from Washington to stifle freedom, entrepreneurship and creativity online have never been greater. Washington politicians want the money, and they want more and more control over our speech.

 Cronyism, a Packaged Deal

Simpson spoke of cronyism as a packaged deal, where “Big is Bad” and “Influence is Bad”.  However, the difference between big government and big business is that big government does too much, that having the experts it knows best, while business grows big by satisfying its customers.

While special interest group can’t force government to accede to their wishes, government has the power to force people to do what it wants them to do.  Government controls through the force or laws of regulations.  If government influences what we are able to do, it is only natural that individuals want to influence government.  Consider Comcast and the issue of “net neutrality”.   Comcast wants to be able to charge people special rates and doesn’t want government to control their own property.  The government, however, wants to decide what “net neutrality” looks like and what Comcast may charge.  The result:  Comcast lobbies government.  Bigger guys can naturally influence government more!

Through lobbying, businesses try to influence what shouldn’t exist in the first place, which kills innovation. Government with its power to tax also has the ability to destroy. Individuals and interest groups give money to help candidates win who reflect their interests, such as “Vote for me and I’ll raise taxes on the rich” or “Vote for me and I’ll favor labor over business.”   Individuals accordingly use the power of government for protection or to benefit themselves.

 Growth of Government

What kind of government do we have?  To most people the response would be “a democracy.”  In 2008 Obama proclaimed he had received a mandate from the people to radically change this nation.  According to President Obama, what the majority wants, the majority gets!   Does government really exist so what the majority wants the majority gets?  Doing something for the public good means that one group of people will be sacrificed for another.

Our system of democracy calls for the establishment of interest groups to influence politics.  If we believe that interest groups are corrupt, then our democracy is also corrupt.  What we now have is a sort of de facto democracy when government has more control than “We the People.”  When government becomes our enemy, people have no choice but to try to influence it and then decide what government must keep its hands off.

The concept of government by our Founding Fathers was a limited one to protect individual rights. The growth of government is not an accident. Through the years government has been created that has a monopoly on power.  The downfall of such a government is that government can’t force people to be productive.

Republicans, Democrats and Libertarians are guilty of misunderstanding government power and the use of force in our lives.  Big business is seen as operating like pirates (as bad people), yet it is government regulations that control what businesses do.  Government, because of its power, actually legalizes crime through its power to control and tax.  Businesses then try to defend themselves to receive some sort of break or concession to reduce government power.

The history of taxation was presented as a wonderful example of cronyism. Taxes can remain high with set tax rates if all sorts of exemptions (loopholes) are provided to give little bits of crumbs of freedom to string along taxpayers.

Mobsters, knowing they are corrupt, are slightly more honest than government which is clothed in moral authority.  People who seek power over our lives don’t want clear laws.  Accordingly, unclear laws lead to cronyism when the meaning of the law is interpreted by different people in different ways.  Some of the confusion that exists today lies in the unclear ways some of the provisions of the Constitution were originally written, specifically:  commerce and taxing power.  According to Steve Simpson, these two powers are responsible for the tremendous growth that has taken place in government.

Non-delegation Doctrine Abused

Attributing to government control is the disregard for the doctrine of non-delegation — that one branch of government must not authorize another entity to exercise the power or function which it is constitutionally authorized to exercise itself.  It is explicit or implicit in all written constitutions that impose a strict structural separation of powers.  Only rarely has the Supreme Court invalidated laws as violations of the non-delegation doctrine. Exemplifying the Court’s legal reasoning on this matter, it ruled in the 1998 case Clinton v. City of New York that the Line Item Veto Act of 1996, which authorized the President to selectively void portions of appropriation bills, was a violation of the Presentment Clause, which sets forth the formalities governing the passage of legislation.  With Dodd-Frank, Congress abdicated its responsibility to set clear rules of the road. The legislation is complicated and contains substantial ambiguities, many of which will not be resolved until regulations are adopted, and even then, many questions are likely to persist that will require consultation with the staffs of the various agencies involved.

Simpson believes the entire regulatory system is unconstitutional. Even so, business groups are bracing for an onslaught of regulations.  With many unfinished policy goals and the midterm elections now in the past, the Obama administration is determined to complete a host of President Obama’s unfinished Businesses and interest group therefore act in self-defense against government and behave morally when fundamental power comes from government. The sugar industry was cited as the beneficiary of cronyism for many years.

 A Solution?  

Steve Simpson was at a loss to come up with a clear solution to counter the system of government that is in place, for It is the type of government we have. Businesses must defend their right to influence government for the right reasons.  Simpson spoke about the Koch brothers being vilified by Democrats as rich businessmen who fund Republicans.

It stands to reason that more government brings more cronyism, but how to untangle the mess that we have created?  Young people must be educated about the consequences of cronyism and how regulations stifle innovation.

About the ARI (Ryn Rand Institute), it is a nonprofit organization headquartered in Irvine, CA.  It works to introduce young people to Ayn Rand’s novels, to support scholarship and research based on her ideas, and to promote the principles of reason, rational self-interest, individual rights and laissez-faire capitalism to the widest possible audience. The Institute is named for novelist-philosopher Ayn Rand (1905 – 1982), who is best known for her novels The Fountainhead and Atlas Shrugged.  

The ARI on Tour event spotlighting Steve Simpson on Nov. 11 was the third of ten scheduled ARI on Tour events that will take place in Chicago during 2014 -2015.  The first event was held in September, with the final tour event scheduled for June, 2015.  December’s event will feature Onkar Ghate. His topic: Religion vs. Freedom.

In promoting its mantra of a free society, the monthly ARI on tour events are likewise presented at venues in Irvine, CA; New York, New York; and Palo Alto and San Francisco, CA.  Steve Simpson is just one of many experts at ARI who advocate ideas and principles that will place this nation on the road to a free society through engaging Americans across the country to help change the direction of this nation and its culture.  Tour information can be found here.