Ohlers: Drain the swamp by dismantling crony capitalism

As Milton Friedman noted “the great threat to freedom is the concentration of power… Even though the men who wield this power initially be of good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp.”


Dead on. The bigger the government the bigger the cronyism. That’s just the way it works, what Hunter Lewis (co-founder of this site) sometimes calls the “Progressive Paradox.” The more some try to solve social “problems” with the power of the state the more entrenched corruption (and often the problem being “solved”) becomes. This is the nature of the state, and the nature of collectivism.


(From The Houston Chronicle)

What causes crony capitalism and how can it be tamed?

Stephen Haber explains in his book, “Crony Capitalism and Economic Growth in Latin America: Theory and Evidence,” corruption is generally more than a set of illegal activities and nefarious actors, but rather a symptom of a larger political malady. Haber argues that some less developed countries are unable to guarantee the protection of private property from their governments, which in turn facilitates the rise of illicitly entangled crony networks that dissuade confiscation by any one group.

In the case of the United States and other more advanced industrial economies, the tumor of corruption is symptom of a cancerous government expansion that has centralized power over the better part of the last century. During this period, total government spending swelled from about 10 percent of GDP to close to 40 percent, more than 20 percent of which is federal.

At the same time, the population is increasingly subordinate to the will of regulatory agencies, which, since the 1950s, have expanded the number of pages in the code of federal regulations from 10,000 to 80,000. At the center of this vast power concentration is a small but elite group of power brokers. The total number of federally elected politicians and federal employees (including military) and elected officials in 2017 was over 2 million, or a little more than one-half of one percent of the population. Of these, there are 537 elected politicians and slightly over 400,000 senior staff with any material influence, creating a nucleus of power that is just over one-tenth of one percent (about 0.13 percent) of the population. Each year, this minuscule group directs a sum that is in excess of 20 percent of the entire national wealth and restricts many of the means of production through regulation.

Click here for the article.