|The Fairy Market: Bartering with the Apple of Time, by Penney Hughes aka Wylde Iris, 2013.|
Unfortunately this is not an optimal approach to economic policy. It ignores deep Hayekian insights about the problems inherent in picking winners and punishing losers from on high. It expands an economy of favors and phone calls in which insiders will inevitably profit more than innovators. It embodies the crony capitalism that only yesterday Republicans opposed.Deep Hayekian insights my ass, if I may say so. Douthat doesn't know any more about Friedrich von Hayek and the Austrian School of economics than I do, and indeed I venture to say that what he knows is the same thing, that picking out winners and losers in the market is the job of that Invisible Hand, in its whirlwind of creative destruction, and government involvement in the process is thus kind of sacrilegious and likely to lead to earthquakes and floods, no doubt, or at least some similarly uncreative type of destruction.
This is for example why President Obama's green energy loans program was such a dismal failure, with only 20 out of 21 projects making it beyond the startup stage to make some real money and pay their loans back, for a total loss rate of just 2.3%. Sure, Obama showed himself to be pretty good at picking winners, but his picking of losers was just pathetic, he could barely find any losers at all other than that unfortunate Solyndra. Wait a minute, to us non-Austrians that sounds kind of successful.
I did not realize that the lovely old-left term "crony capitalism", meaning the habit of rich people in high public office of doing favors for their rich capitalist cronies, had been adopted by the right to mean something entirely different—I knew it was being used by fools like Trump and Palin to mean "things I want you to think I'm not involved in"—but it has, in the language of Wikipedia:
Supporters of capitalism generally oppose crony capitalism as well, and consider it an aberration brought on by governmental favors incompatible with free market. In this view, crony capitalism is the result of an excess of socialist-style interference in the market, which inherently will result in a toxic combination of corporations and government officials running the sector of the economy.In other words, crony capitalism is now a synonym for industrial planning, the economic policy style that has allowed Germany and Sweden and South Korea, among other countries, to maintain enormously profitable manufacturing sectors with high-wage jobs and very low unemployment in spite of globalization and free-trade agreements. Because "toxicity" is an inherent feature of such systems, according to the same thinkers who claim that cutting the taxes of the rich inherently benefits the poor.
This is some first-order language abuse, designed to make you confuse normal industrial planning with corruption. as you can see from the way Ross develops it:
well, it could be worse. Trump is putting a celebrity spin on something that happens under both parties: George W. Bush’s administration came in with steel tariffs and went out with the Wall Street bailout, which was followed by the G.M. bailout under President Obama; meanwhile, ethanol salesmen and sugar moguls and defense contractors and green-energy tycoons all jostle for their share of federal favors, and at the state level the bribery is even starker. Trump will make the cronyism more personal and public, and his own conflicts of interest will bear watching. But if he sticks to jawboning individual companies — as opposed to instituting tariffs and starting trade wars — he won’t necessarily make the underlying sclerosis that much worse.I'm sorry, you know, I understand that those punitive 2002 steel duties may not have been the best approach to the problem (and so did Bush, after the WTO declared them illegal in 2003), but how many cronies did Bush have, exactly, in the steel industry? Answers such as, "All of them, Katie," will not be accepted. And Obama didn't bail out GM, he bailed out GM and Chrysler and would have bailed out Ford as well had it asked. Not because Ford wasn't enough of a crony (it took no bailout funds but did ask for a $9-billion line of credit, of which it used $5.9 billion). Ross name-checks GM rather than the auto industry as a whole specifically to make it sound cronyish when it isn't. Cronies are people (with names like Koch, Adelson, and Wynn).
The real thing the doctrinaire conservatives get upset about in these contexts certainly has nothing to do with any meanings of the word "crony" in any case. It's the questioning of the miraculous rightness of the Invisible Hand, or less metaphysically the idea that any democratically constituted authority should question the judgment of the "rationally selfish" bourgeois through whose individual decisions the Hand is believed to operate. It's the bourgeois religion, according to which whatever the bourgeois wants is right, however destructive it may seem over the short run.
Thus in these cases from the Bush and Obama administrations, where anyone outside the circle of the Hayekian initiates can see that what the president was trying to do was to help working people remain employed (even George W. Bush had some desire to help folks, which is why Ross and his cronies have worked so hard to write him out of the movement's history) or in the case of the clean fuel initiatives, where Obama is trying to push industry to contribute to rescuing our planet from destruction, Douthat sees it as "picking winners and losers", or essentially playing God (he's really not a very good Catholic, have I mentioned that? He worships the Market instead of the Holy Trinity).
And Trump in his Carrier game is neither a crony capitalist in the traditional sense nor an industrial planner. He's an Emperor, plucking 800 people out of their sorrow (as compared to 1,612,000 employees in the auto industry rescue) to demonstrate his compassion to the admiring crowd.
Douthat's idea for what a Trump administration might do instead of interfering with the magic of he Market is a familiar list of items employers won't have to pay for:
His daughter’s child-care subsidy could be reconfigured to deliver more to the working class; it could be combined with the larger earned-income tax credit envisioned by Paul Ryan or the wage subsidy that Marco Rubio is championing, and both could be folded into a tax reform that makes good on Trump’s Treasury nominee’s recent promise to prioritize middle-class tax cuts over tax cuts for the rich.Well, leaving aside the practicalities of giving tax benefits in June to people who are living paycheck to paycheck all year round, offering parents an annual refund for payments they can't afford in a given month, and the pretty obvious fact that Mnuchin is bluffing about middle-class taxes just as much as it Trump was bluffing all year on the same subject, until he ended up abandoning it in August.
But what he doesn't see is that such programs pick winners just as much as the positive direct-to-business incentives liberal programs offer; only the winners they choose are the shareholders in the low-wage industries they are effectively subsidizing, Walmarts and McDonaldses and (for Trump) non-union construction. They—cronies not of Trump, who I think really doesn't have cronies as such, but of Ryan and his theorists and their shipmates on the National Review cruise—will be winning a lot over the next four years, even as Trump travels around the country displaying his imperial magnanimity to the crowds.