| April 24, 2013

Protecting the brand: Think tanks battle crony capitalism

Alejandro Chafuen is the president of Atlas Economic Research Foundation, a think tank devoted to the principles of free markets and limited government. In a recent Forbes article (“How Did He Get So Rich? Think Tanks vs. Crony Capitalism”), Dr. Chafuen writes:

Increased publicity about economic transactions where profits are the result of being close to power, rather than serving the customer, have led to a surge in articles and complaints about crony capitalism [here Dr. Chafuen links to an article about Solyndra]. Making a moral case for capitalism obliges us to distinguish between “good” and “bad” capitalism. Think tanks from all over the world that favor free enterprise are trying to counter the flood of news about private players who use government and corruption to increase their profits. Through books, videos, and conferences, they are trying to portray the good side of capitalism.

The Heritage Foundation has certainly shown itself to be in this camp, as has OCPA (see, for example, Paul Ryan’s remarks at an OCPA dinner in 2010). For just as unscrupulous television preachers give Christianity a bad name, crony capitalism gives capitalism a bad name. It tarnishes the brand, making it more difficult for pro-free-enterprise conservatives to win the hearts and minds of voters.

This, of course, is a continuing problem in the nation’s capital. For example, Timothy P. Carney recently reported in the Washington Examiner that “Congressional Republicans and the Obama White House are headed for another clash over corporate welfare, and once again President Obama is on the side of big business while Senate conservatives are on the side of free markets.” This is nothing new: the U.S. Chamber of Commerce has already christened Barack Obama, Joe Biden, and Hillary Clinton more “pro-business” than Jim DeMint.

It plays out in the Oklahoma state capitol, too. Consider: Oklahoma state spending is at an all-time high, and based on what’s happening right now in the legislature it’s about to go even higher. There will be no tax relief this year, but there will be a tax increase. Indeed, several lawmakers are even willing to break a promise they made to their constituents in order to enact this tax increase (and yes, it is a tax increase).

How to explain this? Are liberals running the government? Do Democrats have a 72-29 majority in the House and a 36-12 majority in the Senate? Actually, no, the opposite is the case. Liberalism isn’t much of a force in this state, and the Democrats’ numbers keep shrinking. But crony capitalism is alive and well. Look no further than a recent news story (“Tulsa Chamber cool to tax cuts”) in the Tulsa World:

Education, health care, and economic development incentives took priority over income tax cuts at the Tulsa Regional Chamber legislative breakfast Friday morning.

"(We) would ask for caution when looking into reducing income tax rates," said Chris Benge, the former Oklahoma speaker of the House who is now vice president of governmental affairs for the Chamber. "We would very much stress revenue neutrality."

Again, this is nothing new. The Wall Street Journal last year called out the Tulsa Chamber (and others) for “pleading for corporate welfare that benefits politically connected large corporations, rather than rate cuts for all businesses.” This is the same Tulsa Chamber that later made the Obamacare Medicaid expansion one of its top priorities. Richard Boone, chairman of the chamber's health care task force, said: “This is the best economic development deal the state has seen in decades.”

As I never tire of repeating, “pro-business” is not synonymous with “pro-free-enterprise.” And crony capitalism must never be mistaken for capitalism.

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