Tuesday, April 30, 2013

The Case Against Cronies: Libertarians Must Stand Up to Corporate Greed

by Timothy P. Carney


April 30, 2013

The Republican attack on President Obama's economic policy has changed subtly, but significantly, in the last three years. In 2009, he was allegedly a "socialist" and a "Marxist" who lusted for government control of the entire economy. But lately, that has given way to more nuanced charges of "crony capitalism" -- of giving special, friendly treatment to certain companies and industries, or allowing powerful corporations to essentially write the laws, themselves.

Republicans shouted about Obama's green energy handouts and industry bailouts. Mitt Romney assailed him for picking winners and losers. "Free enterprise works," Romney said in early 2012. "Crony capitalism does not." The anti-cronies expanded their focus beyond the White House, voting out government officials seen as cozying up to businesses, like Sen. Bob Bennett of Utah and Rep. Bob Ingliss (a.k.a.: "Bailout Bob").

Voters despise government officials who get in bed with corporations. But what about corporations who cozy up to government? Are companies who use cronyism to grow their profit acting unethically?

The question makes some free-marketeers uneasy. After all, we not only tolerate the fierce pursuit of profit, but also we defend it against taxes and heavy-handed regulation. Milton Friedman famously said, "The social responsibility of business is to increase its profits."

But in the age of crony capitalism, libertarians must declare that some means of pursuing profit are immoral and call on executives to reject them. This would create a positive case for capitalism -- arguing that the pursuit of profit, in the context of fair and open competition, helps the whole society. The new corporate social responsibility, redefined for libertarians, must stand athwart crony corporatism yelling "stop."