R&L Preview: Peter Schweizer on our Cronyist Culture
Religion & Liberty Online

R&L Preview: Peter Schweizer on our Cronyist Culture

After being sentenced to federal prison in 2001 for racketeering, Louisiana’s former governor Edwin Edwards, long famous for his corruption and political antics, humorously quipped, “I will be a model prisoner as I have been a model citizen.” In his 1983 campaign for governor against incumbent David Treen, Edwards bellowed, “If we don’t get Dave Treen out of office, there won’t be anything left to steal.” The kind of illegal corruption once flaunted by Edwards is on the decline. There is less of a need. Legal corruption in government is more prevalent and easy enough to secure.

Cronyism is a mammoth problem and Peter Schweizer explains how it’s effortlessly accomplished in our nation’s capital. “Members of Congress trade stocks based on privileged information. They insert earmarks into bills to improve their real estate holdings. Campaign contributors receive billions in federal grants. Nobody goes to jail,” says Schweizer.

Peter Schweizer is the William J. Casey Fellow at the Hoover Institution, Stanford University and a best-selling author. He is a partner in the Washington firm Oval Office Writers which provides speech writing and communications services for corporate executives and political figures.

His most recent book is Throw Them All Out: How Politicians and Their Friends Get Rich off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison (Houghton Mifflin Harcourt, 2011). It was the subject of a feature on CBS’ 60 Minutes and in Newsweek. I interviewed Schweizer recently on the subject of cronyism. Below is a preview of an upcoming interview in Religion & Liberty:

R&L: People assume automatically that big business or corporations equate to capitalism and a lot of times there’s sort of a reflex on the right to defend those things. Why is that often wrong?

I think it’s wrong almost all the time. And the examples I would give would be to look at Wall Street, which is one of the least free market bastions in America today. And there is this reflective instinct that conservatives have to defend Wall Street and I can’t for the life of me figure out why. And the reason is that these are institutions that are already highly regulated, especially in the banking industry. They have investments and assets that are protected and guaranteed by the federal government when it comes to individual depositors in the banking system. I wrote a book a few years ago called Architects of Ruin. If you look back at the history of the last 20 years, you come to the realization that firms like Goldman Sachs, for example, has been bailed out five times over the last 20 years. They were bailed out first in 1993 when they bought a bunch of Mexican government bonds that went bust. The same thing happened with the East Asian Crisis and Latin American Crisis. The Treasury Department intervened and they didn’t even lose any money on the deal.

The point being is that the big Wall Street firms get bailed out because they are politically connected, and that has nothing to do with the free market. And I think the same thing goes for other areas as well. Large firms, like the Wall Street firms for example, are generally in favor of Dodd Frank, which creates this highly complex, and expensive regulatory maze that most people can’t even understand. If you’re Goldman Sachs with your size and scope and assets and the number of attorneys that work for you, and you’re competing against a firm that is one third your size, the firm that’s one third your size is going to have a much more difficult time complying with those regulations. So large firms like complexity and government likes to deal with a smaller number of large firms rather than a large number of small firms. It’s just easier for them. So you see collusion between big government and big business. I would say some of the biggest enemies of the free market today in America are big corporations.

R&L: Do you believe that term limits would strengthen economic liberty and free markets in this country?

I think it would have a transformative effect on a whole host of areas, because what we have in Washington is a cultural problem. I think that we can continue, and should continue, to have the debate to talk about the merits of the free market system, to talk about philosophically why smaller government is better government but the bottom line is, there are lots of conservative politicians who know those arguments, who probably even believe those arguments, but once they’re in Washington they essentially become corroded in those commitments. And I don’t think it’s an intellectual transformation, as if they change their mind intellectually. I think it’s a cultural one, and it’s the comfort that comes from knowing you’re in Washington and knowing that if you can set your kids up as lobbyists, if you’ve got side businesses that family members are involved in, if you want to lobby after you leave office, if you want to get a consulting gig with a big industry, all of that argues for expanding government, not for reducing government.

This idea has been pushed that we need to have this highly specialized, very smart leadership who’s been there for a long time, who understands the issues to help us run the country, so to speak, and run the economy. To which my response is, look at the results with the economy and with the national debt. I think if anything the experience argues for injecting more citizen legislators who are going to make the tough choices rather than continuing to rely on the self perpetuating elite.

Ray Nothstine

Ray Nothstine is editor at the Civitas Institute in Raleigh, North Carolina. Previously, he was managing editor of Acton Institute's Religion & Liberty quarterly. In 2005 Ray graduated with a Master of Divinity (M.Div) degree from Asbury Theological Seminary in Wilmore, Ky. He also holds a B.A. in Political Science from The University of Mississippi in Oxford.