Ethics Should Hinder Lobbying and Crony Capitalism

May 9, 2013

Republicans are increasingly accusing President Obama of engaging in crony capitalism. They point to green energy handouts and industry bailouts as examples of how Obama shirks free markets and allows private companies to engage in cronyism to grow their profits. Conservatives must continue to push for more separation between corporate interests and public governance, says Timothy Carney, senior political columnist at the Washington Examiner.

  • Economist Milton Friedman once said that the social responsibility of business is to increase its profits, a belief that many free-market proponents and corporations agree with.
  • However, libertarians must declare that some means of pursuing profits are immoral and promote crony capitalism and should thus be deemed unacceptable.

Since Obama took office, corporate-government collusion has been rampant. Among the many examples are the 2005 and 2007 energy bills, which required drivers to buy ethanol; the 2008 bailouts for the financial and auto industries; the 2009 smoking regulatory act basically written by Phillip Morris; and the saving of the Export-Import Bank after extensive lobbying by Boeing, a company that receives many subsidies from the bank.

  • In recent years, corporations have become increasingly successful at lobbying for more spending and stricter trade regulations despite efforts to reveal the biggest corporations' actions.
  • For the companies that embrace big government to pad their profits, often the most successful way of shedding light on the situation is to shame them into backing off.
  • Another way to discourage the cozy relationship between big business and government is to remind the companies that those who seek favors from the government usually end up incurring the costs of getting stabbed in the back -- like tobacco or insurance companies have experienced in the past.

One of the most conscientious ways for consumers to affect this process is to vote with their dollars by supporting companies that prioritize ethical stands over absolute profit-making.

  • The reality, as investments in the green energy industry have proven, is that the government is terrible at picking winners and losers and only the free market can allocate resources efficiently.
  • One of the primary problems is lobbying, which is not bad in and of itself, but is used too often to create new subsidies and protective regulations that benefit few at the expense of the free market as a whole.

Source: Timothy Carney, "The Case against Cronies: Libertarians Must Stand Up to Corporate Greed," The Atlantic, April 30, 2013.

 

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