The Hidden Costs of Crony-Capitalism

If Congress doesn’t approve this highway bill, we will need a 4-wheel drive to navigate our highways. That is usually how it goes when Congress needs to get dumb legislation passed. Ted Cruz wasn’t biting. Attached to the highway bill was re-authorization of the Export-Import Bank.

The Ex-Im Bank was a New Deal relic where big business could go for loans on projects that show no promise for real banks. Ted Cruz called Mitch McConnell a liar on the Senate floor when Mitch called for a vote resurrecting that dead corporate welfare bank. Cruz even mentioned crony-capitalism. I stood and cheered.

Cruz voted (however unsuccessfully) to end funding for Planned Parenthood and the so-called Affordable Care Act that day as well. Two more strikes against crony-capitalism and more cheers for Cruz from me. But then his proclamation against crony-capitalism seemed disingenuous when he voted to continue sanctions against Iran. I could write a whole column about how our politicians have been manipulated into a belligerent attitude toward Iran, but this column is about much more than that.

We must never forget to follow the money in every opinion we form regarding public figures who have power over us. So let’s follow the money right now. Ted Cruz represents Texas, the #1 oil producing state. Iran is #4 in oil reserves worldwide. The oil market stinks right now. Just think what would happen to the price of oil if Iran, who is desperate for cash after years of sanctions, were to once again sell oil on the open market. What would happen to the economy in Texas and Saudi Arabia? Imagine you were a corn producer and you could manipulate government to hobble other corn producers in order to lower supplies and raise the price you receive, that would be the same thing as Ted Cruz and Saudi Arabia enforcing sanctions on Iran. That would be crony-capitalism and it would raise costs for consumers the same as war-inflated oil prices.

The list is long of U.S. business using government to gain an unfair advantage. And it always costs consumers while lining the pockets of businesses with influence on politicians.

Take the Chicken Tax, for example. Lyndon Johnson signed the Chicken Tax into law in 1963 to retaliate against German and French protectionism aimed at imports of U.S. chicken. Light trucks are taxed 25%. Remember the Ford Ranger? They are made in Thailand. Twenty-five percent added to the cost makes them unaffordable here; same with the Toyota HiLux, Mazda B-Series and VW Amarok.

We are looking to someday replace our Honda CR-V. Volkswagen makes a seven passenger van with a turbo diesel and manual transmission that gets 45 miles per U.S. gallon. Volkswagen claims the mini-van market is shrinking so they won’t import (or make EPA compliant) that van. But what about if we want to buy one in Germany and ship it here? Those corn farmers in Detroit and Texas don’t want us to save fuel (and the environment) at their expense so they buy influence in D.C. to make free trade illegal through EPA regulations that do nothing to improve the environment.

Speaking of corn farmers (or wind farmers or sun farmers), why do you suppose the alternative energy zealots don’t ever address government favors to the oil industry as the reason we must be forced to utilize their lousy products? Might they find it easier to feed at the public trough right along with them rather than to demand a level playing field (no government involvement) in energy markets?

To round out a very short list of reasons we hit a ceiling economically, we can’t ignore our education system. If parents and kids had to fund education themselves, the incentive to choose a field of study would be more direct and efficient than a system that seems to have produced surpluses and shortages of workers in various areas. Many students even go on to college to discover what they want out of life. That seems like a pretty expensive search compared to working various jobs, making money in the meantime.

I hope Ted Cruz’s reference to crony-capitalism starts a serious discussion about how government is easily manipulated to benefit a few at the expense of the many. That conversation should go on to enlighten us regarding the relationships of consenting individuals as being superior to any decisions based on some easily manipulated idea of the common good.

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