NCPA - National Center for Policy Analysis

Government Cronyism and the Erosion of the Public's Trust

October 22, 2012

Public trust in the government has eroded in recent decades due to the perceived preference the government gives to favored groups. Government cronyism often happens in the form of preferential tax treatment, preferential regulation, influence on policy, and subsidies, says John Garen, the Gatton Endowed Professor of Economics at the University of Kentucky.

Since the 1960s, popular opinion and trust in the government has been on a downward trend.

  • Trust in government peaked in 1966 at 76.6 percent.
  • By 1976 it had fallen to 35.6 percent.
  • In the early 2000s, trust in the government had risen to 48.3 percent.
  • But in 2010, it was at its low of 21.5 percent.

There are many causes for the mistrust of government. According to some research, the level of public mistrust correlates with the number of government regulations and overall size of government. For instance, between 1966 and 1976, there was a sharp increase in federal regulations -- around the same time that public mistrust increased.

Public trust is important to the government for a variety of reasons. Studies by social scientists have shown that people are more willing to reciprocate cooperation if there is trust. Public cooperation entails cooperation and involvement with government functions and civic duties that rely on a willing populace. The more engaged people are with their government, the more efficient the government is in responding to the demands of its citizens.

Moreover, government cronyism has deleterious effects on the nation as a whole. Indeed, it encourages the shifting of resources to a select group with which the government is earning favor. However, this stifles any serious solution to economic problems the rest of the country faces. In the long run, investments in human capital will focus more on developing lobbying skills rather than economically productive skills.

Taken together, a government that encourages the reallocation of resources away from economically productive efforts into political activity creates a negative spiral that is difficult to break. As economic growth slows and mistrust in the government increase, people are less likely to cooperate with the government or become productive members in society.

Source: John Garen, "Government Cronyism and the Erosion of the Public's Trust," Mercatus Center, October 11, 2012.


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