The Economics and History of Cronyism: A New Paper from David R. Henderson at Mercatus

It is deeply encouraging to see the increased interest around the issues which arise when the state and business fuse. Attached is the most recent paper from The Mercatus Institute on cronyism. The author, David R. Henderson, is an associate professor at the Naval Postgraduate School.

He begins his paper;

“Cronyism is the substitution of political influence for free markets. It comes about when government has a lot of power over private-sector decisions and when the government officials in power have great discretion over how to use it. Cronyism is not simply a zero-sum game that takes from some and gives to others; it is negative-sum. The losses to the losers substantially outweigh the gains to the winners. In short, cronyism destroys wealth. By shifting power to government, cronyism makes political power more important and increases the competition for that political power. The way to reduce or end cronyism is to reduce or end that government power.

It’s an excellent paper which examines well cronyism in America both present and past, Republican and Democrat.

Click here for the paper.