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Crony Capitalism Driving Us Crazy

This Texas Tribune article “Where $507 Milliion in Texas Enterprise Funds Went” received only two comments. Is it because we feel hopeless that anything can be done about the state of capitalism we call “crony capitalism”?

Here’s another question, based on this section of Vernon’s Civil Statutes:

How much tax per Texas household should the Legislature levy to host either of the following conventions in 2020 at “Cowboys Stadium” or, specifically, AT&T Stadium in Arlington?

Please write in the dollar amount below which you would support for each convention. Choices:

$100               $50                 $25                 $10                 $5                   $1                    $0

Democratic Party __________      Republican Party __________

If you chose $0, you’re with us — fed up with America’s duopoly!

Republicans co-opt government as fast as Democrats can grow it. Since the “Great Society 60s” Democrats have pushed programs to serve lower economic classes as vendors from the upper classes, predominantly Republican, have competed to operate them. But is this an alliance of Robinhoods and John Galts?

Politicians take credit for helping the poor as big money gets more money – government money! Perhaps nowhere is this ubiquitous and insidious alliance better illustrated than with government subsidies to private corporations, doled out beneath the rationale of job creation? Think “Texas Enterprise Fund.”

The Great Economics Divide among Republicans who now dominate Texas government is between free market true believers and crony capitalists. In the 85st Regular Session, legislative agents of cronyism were just fine with letting true believer Senator Konni Burton’s bill to abolish the Texas Enterprise Fund die in committee without a hearing (See SB393).

TEF operations are a long way from the free enterprise wonders described by the late economist Milton Friedman. TEF underwrites crony capitalism. It does not harness the power of free markets – where decisions are based on the demand for goods and services and capital allocated accordingly – to achieve worthwhile social ends. It instead promotes lobbying and subsidy allocations based on political clout, while being insufficiently structured to promote merit-based capital formation for laudable quasi-public projects like Clean Energy.

It’s bad enough when markets are maligned because of concentrations of wealth. It’s outrageous when wealth concentration is subsidized and pressing societal problems are neglected due to government intervention. Should we be subsidizing car racing at a time when Texans are experiencing water shortages?

All jobs are not good jobs. Forget about how much they pay! What if the jobs created are not just created at the expense of other jobs, but are actually detrimental to society? When political “might is right” in lobbying for economic subsidies, then this becomes an inevitable result — “big money over the little guys” and more citizens less able to “vote” with their dollars, as consumers.

Public-Private Partnerships (PPPs) might be justified when a public good, say Texas’ Electric Grid, requires a rapid mobilization of assets to meet a vital demand – prerequisite being government transparency and clear accounting from private companies. But since its inception in 2004 do the operations of TEF pass that test?

Submitted by Jeff Harper, LIV Board Member

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