A major problem with America’s economy is what’s often called “crony capitalism” or simply “cronyism.” In other places, I’ve defined cronyism as the situation in which free markets are hollowed out and replaced by political markets.
Businesses become less interested in meeting consumer demand and much more focused on extracting privileges, favor, grants, etc., from the state. When people speak about “the Swamp,” cronyism is often what they have in mind. Economic entrepreneurship gets displaced by political entrepreneurship.
With good reason, cronyism is often associated with liberal-leaning large cities like Chicago or New York, not to mention government-centric towns like Washington D.C. and Brussels. But there’s no shortage of conservatives who go down this path.
I was reminded of this when recently reading a Bloomberg Businessweek article about how cronyism has manifested itself in the state of Wisconsin. Wisconsin’s economy has been taken in a more free market direction over the past eight years by conservative political leaders but even they haven’t proved immune to the crony temptation.
But what’s especially interesting about this article is the way in which it lays out the cost to taxpayers. Entitled “Inside Wisconsin’s Disastrous $4.5 Billion Deal With Foxconn,” the article illustrates how, financially-speaking and in employment-terms, there is a huge gap between the rhetoric and the reality of the deal. That, I’m afraid, is all too common in these cases. If ostensibly fiscal conservatives want to avoid these situations, I’d suggest that they read the Bloomberg article very carefully.