Crony Capitalism / Rent-Seeking / Corporate Welfare / Revolving Door (CongressionalGlossary.com)

Crony Capitalism / Rent-Seeking / Corporate Welfare / Revolving Door

Corporate welfare refers to subsidies and regulatory protections that lawmakers confer on certain businesses and industries. When considering budget issues, federal policymakers are supposed to have the broad public interest in mind. Unfortunately, that is not how the federal budget process usually works in practice. Many federal programs are sustained by special-interest groups working with policymakers seeking narrow benefits at the expense of taxpayers and the general public. Cato

If you want to look at the welfare for the rich and corporations, start with the federal Internal Revenue Code. That is the King James Bible of welfare for the rich and corporations. Special breaks in the tax code are the reason that there are thousands of lobbyists in the halls of Congress, hundreds of lobbyists around each state legislature and tens of thousands of tax lawyers all over the country.

Ten Examples of Welfare for the Rich and Corporations, by Bill Quigley, March 16, 2014, HuffPo

Giving Away Money Costs More Than You Think

[C]corporate welfare often subsidizes failing and mismanaged businesses and induces firms to spend more time on lobbying rather than on making better products. Instead of correcting market failures, federal subsidies misallocate resources and introduce government failures into the marketplace.

While corporate welfare may be popular with policymakers who want to aid home-state businesses, it undermines the broader economy and transfers wealth from average taxpaying households to favored firms. Corporate welfare also creates strong ties between politicians and business leaders, and these ties are often the source of corruption scandals in Washington. Americans are sick and tired of “crony capitalism,” and the way to solve the problem is to eliminate business subsidy programs.

Corporate welfare doesn’t aid economic growth and it is an affront to America’s constitutional principles of limited government and equality under the law. Policymakers should therefore scour the budget for business subsidies to eliminate. Budget experts and policymakers may differ on exactly which programs represent unjustified corporate welfare, but this study provides a menu of about $100 billion in programs to terminate.

“Corporate Welfare in the Federal Budget,” by Tad DeHaven, Cato, July 25, 2012

Capitalism v. Cronyism: Why Can’t You Buy a Tesla in Utah?

Wholesale crony capitalism is a particularly worrisome form of cronyism, not only because of its broad scope, but also because it ossifies existing power structures and political equilibria. Unions, particularly teachers’ unions, are steadfast supporters of leftist politicians, who, in turn, pay for that support with taxpayer dollars by protecting unionized teachers from having to worry about the quality of their performance on the job in the classroom.

The Rise Of Crony Capitalism, by Jonathan Macey, February 11, 2016, Hoover

What are some examples of crony capitalism? Quora

Corruption, Rent Seeking and Multiple Equilibria

Rural Business-Cooperative Service, USDA
Market Access Program, USDA
Emerging Markets Program, USDA
Foreign Market Development Program, USDA
Export-Import Bank
Overseas Private Investment Corporation (OPIC)
Small Business Administration
Commerce Department’s Economic Development Administration
Department of Housing and Urban Development’s Community Development Block Grants
Appalachian Regional Commission
Rural Utilities Service (once the Rural Electrification Administration), USDA
Bureau of Land Management
Foreign Military Financing
Jones Act
Solyndra
Energy Department grants and financing
Advanced Technology Vehicles Manufacturing, DoE
U.S. Trade and Development Agency
U.S. Maritime Administration, DoT

What is Crony Capitalism?

Congress created the usual special interest frenzy with its latest iteration of the farm bill. Agricultural subsidies are one of the most important examples of corporate welfare—money handed out to businesses based on political connections. The legislation suffered a surprise defeat in the House, being viewed as too stingy. But it is certain to return.

Fiscal responsibility is out of fashion. The latest federal budget, drafted by a Republican president and Republican-controlled Congress, blew through the loose limits established under Democratic President Barack Obama. The result is trillion-dollar deficits as far as the eye can see.

Spending matters. So does the kind of spending. Any amount of corporate welfare is too much.
Business plays a vital role in a free market. People should be able to invest and innovate, taking risks while accepting losses. In real capitalism there are no guaranteed profits. But corporate welfare gives the well-connected protection from many of the normal risks of business.
. . .
While corporate welfare suggests money for big business, firm size is irrelevant. There is no substantive difference between, say, the Small Business Administration and the Export-Import Bank. Both turn capitalism into a rigged game of Monopoly.

Aid comes in many forms. There is spending, typically in grants, loans, and loan guarantees; limits on competitors, such as tariffs and quotas; tax preferences, attached to broader tax bills to benefit individual companies and industries. All help ensure business profits.

“Corporate Welfare Lives on and On,” by Doug Bandow, Cato, August 29, 2017

LSE Research: Washington’s Revolving Door

Revolving Door

Although the influence powerhouses that line Washington’s K Street are just a few miles from the U.S. Capitol building, the most direct path between the two doesn’t necessarily involve public transportation. Instead, it’s through a door—a revolving door that shuffles former federal employees into jobs as lobbyists, consultants and strategists just as the door pulls former hired guns into government careers.

Revolving Door, from OpenSecrets

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