Acton Institute Powerblog

The Moral Crisis of Cronyism and Corporate Welfare

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U.S. Rep. Justin Amash, in an article for www.mlive.com, discussed the recent charter expiration of the Export-Import Bank (Ex-Im) and how that is a good first-step toward reducing the corporate welfare and crony capitalism that has infected American politics and economics:

If a man swipes your wallet, he’s a thief. We don’t ask whether the pickpocket ultimately spent the cash on a worthy cause. Yet, supporters of corporate welfare would have you believe that as long as the companies receiving welfare prosper, you shouldn’t care that the government snatched your money to make it happen.

The moral implications of cronyism are abundant. As public/private partnerships expand, the market system slowly transforms from free enterprise and competition driven by market forces to government control of who succeeds and fails based on loans or bailouts to favored groups and corporations. In an interview with the Acton Institute’s Religion & Liberty, Peter Schweizer discussed how cronyism is creating a moral crisis and how it is affecting the poor:

Our poverty programs get distorted by crony corporations. Just look at how the food stamp program has expanded over the years. Initially, it was a safety net to provide basic provisions, and most people agree basic safety nets are needed. The problem is that when the government started throwing around billions of dollars, the snack food and soft drink industry saw dollar signs. So they lobbied and got the regulations changed so that snack food and sodas are now covered by government assistance. It’s now a $10 billion industry for soft drink companies. Then it got expanded to include convenience stores, and now you’ve got the fast food industry lobbying lawmakers to let people use EBT cards at fast food establishments.

I’m a big believer in free choice, but I believe that if you are getting government assistance, you give up some of your free choice as it relates to how you’re spending welfare dollars. And I don’t think anybody could come to the conclusion that changing the food stamp program in this way actually benefits the poor. It benefits the companies who are receiving tens of billions of dollars every year through the food stamp program, and I would argue, probably to the detriment of people that have grown dependent on the system.

A free market is vital for morality and economic prosperity. The more the market is corrupted by the growth of government and the regulatory state, the more open it becomes to cronyism and the less accessible it becomes to ordinary Americans. Schweizer warns of the danger of a system in which a very small number of people are able to build enormous wealth and power solely due to their connections and access to government:

Not based on any merit, not based on providing a good or service that people value and voluntarily choose to use, but instead, by using the compulsive power of government. And I think that that has an enormously bad effect, not only on our culture, but also on the moral conditions in our society, because it begets more cronyism and more corruption, which is horribly damaging to our country.

To read the full interview with Peter Schweizer, visit Acton’s Religion & Liberty.

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Zack Pruitt Zack Pruitt holds a J.D. from Saint Louis University School of Law and is the Founder and General Editor of www.politicalbeacon.com.

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