110 Harms of Crony Capitalism

Guest Post by Neera Badhwar, Professor Emerita of Philosophy at the University of Oklahoma and is affiliated with the Departments of Philosophy and Economics at George Mason University.


David Forsyth interviews me about crony capitalism. While cronyism is both unjust and harmful, I argue that not all businesses that engage in cronyism are equally at fault. And some may not be at fault at all.

But you may prefer to read my discussion of crony capitalism in https://www.libertarianism.org/columns/cronyism-toxic-friendship-between-business-government, where I also reject the claim made by some libertarians that seeking tax credits is not cronyism because “the state never had a right to impose taxes on us in the first place.” This argument proves too much. If it’s ok to seek tax credits, it’s also ok to seek subsidies and low‐​interest or guaranteed loans, because they also draw on the taxes that the state “never had a right to impose on us”.

Libertarians Should Support a Politics of Place (and Vote Local)

I’m reading Ezra Klein’s book Why We’re Polarized with my students this semester and while I disagree with some of his prescriptions, his diagnosis seems accurate and at least one prescription seems particularly powerful: the importance of building a politics of place.

Klein’s overall point, which I think is mostly right, is that our focus on national politics polarizes us in a way that is both actively harmful to American civic life but that also undermines the areas where our votes and our advocacy and our opinions have an actual chance of making a difference, namely the state and local level.

In general in American politics, there’s far too much emphasis on national politics and not nearly enough on state and local politics. The reality is that the vast majority of the really awful rights violations – at least those affecting American citizens – are done by the state and local governments. National politics tends to brutalize people overseas or those trying to enter our country, but it is state and local politicians that profit off the poor, brutalize the vulnerable, execute the innocent, and engage in a variety of corrupt and vicious practices that make us all worse off. (The Innocence Files on Netflix, produced in conjunction with the Innocence Project, is a good reminder of how brutally unjust state and local governance can be).

Klein’s argument is not new. It’s basically the same argument made by the Anti-Federalists against the Federalist support of strong national government, made by Hayek in his essay “The Use of Knowledge in Society”, and made by many other libertarians in their support for bottom-up economic policies, but I see it less explicitly when libertarians talk about politics. In fact, I’ve seen Facebook posts from a lot of well-known libertarian scholars this week poo-pooing voting in general. What all these posts focus on is the Biden-Trump binary, as though voting for president doesn’t also usually involve voting for lots of other people in lots of other elections that we might very well have an impact on at the same time.

It seems ironic that libertarians seem to have fallen for the same sort of nationalism that other people have. Possibly it’s a visibility issue. The federal government is huge, unwieldy, very expensive, and kills hundreds of thousands of people overseas, so it seems like a good enough target for small government ire. And of course federal elections are in fact pretty stupid. Your vote won’t really count in any meaningful mathematical way (though it may count in a symbolic way, which is often overlooked).

But we need to keep our sights on two levels of government at the same time: the federal government’s bloat and mismanagement as well as state and local government’s immediate effects on people’s lives. And of course as many people have pointed out, your vote may in fact have an effect on a local election, while it’s very very very unlikely to have an effect on a national one, particularly with the electoral college in place.

State and local governments are precisely the best targets for libertarians for a lot of reasons. States decide who gets life in prison or the death penalty and local prosecutors decide whether to use coercive plea deals or hide exculpatory evidence and local police decide whether to police for safety or profit or whether to choke unarmed men to death. Not only that, but your state representatives also decide how democracy itself functions when they decide whether and how to gerrymander districts, whether third parties like the Libertarian Party get a chance at all with systems like ranked choice voting or whether, as in New York State, the governor simply wields election law as a way to punish third parties that criticize the job he’s doing.

If we took Hayek seriously we’d reject national politics as largely out of our control and instead embrace local and state politics. If we took Hayek seriously we’d vote more often in local elections, we’d use our Facebook platforms to encourage local voting on issues relating to criminal justice reform and other areas of serious injustice, and we’d run for local office more, advocate for local reforms more, and generally engage in much more local activism than I think we as libertarians generally do.

That’s a loss not only for the visibility of libertarian principles, but it also weakens our bench when it comes to actually getting libertarians into political office upstream (assuming that’s a worthwhile goal). But more than anything, the libertarian disdain for democracy (rightly criticized by people like Jacob Levy) knocks us out of the elections – whether as voters or candidates – where libertarian positions are the most needed and most likely to be heard. And that’s a loss for us all.

Meanwhile, in a Parallel Election

I voted!

No, not in the u.s. election – Ἀθηνᾶ κρείττων!

Nah, I voted for which book we will read next in the Auburn Science Fiction and Philosophy Reading Group.

This was a more cheerful and civilised affair than the u.s. election in at least seven ways:

1.  Minority choices have no trouble getting on the ballot; any individual member of the group can nominate a book (or several), without having to collect multiple signatures on a petition.

2. The number of participants is small enough that any individual vote has an actual chance of making a decisive difference to the outcome.

3. Voting involves rank-ordering the candidates via an online Condorcet poll, so no one has to choose between voting for their favourite among the front runners and voting for their favourite absolutely.

4. We choose a new book every month or two, so there’s strict rotation in office with very short terms – no perpetually incumbent books.

5. The reading group is a purely voluntary association. If any members aren’t happy with the winning choice, and want to go off on their own to read and discuss a different book, the rest of us wouldn’t dream of trying to stop them, let alone telling them that by voting (or by not voting) they have committed themselves to reading the winning book.

6. All the books nominated look worthwhile, and I would be happy to read and discuss any of them.

7. Facebook has not been reminding me every few minutes to vote for the next book.

O idéal lointain!