Government Cronyism

Cronyism is any government-provided privilege to a particular business or industry and comes in a variety of forms including privileges such as monopoly status, favorable regulations, subsidies, bailouts, targeted tax breaks, and protection from foreign competition. A recent example was the government bailout of wealthy and well-connected banks in 2008. Whatever its form, cronyism destroys free markets. It allows the government to assume an expanded role for which it lacks the necessary market knowledge and adequate resources to properly regulate. It disrupts the free flow of resources, impedes economic progress and breeds corruption. On a larger scale, cronyism negatively impacts innovation, diminishes economic growth, and weakens the bonds of social trust. Free markets, on the other hand, provide greater benefits through mutual and voluntary exchanges, permitting maximized gains from trade. They promote innovation by allowing hard working and creative individuals to address needs in the market rather than focusing on new ways to obtain favors. Protecting against government-provided privileges is vital to protecting our economic freedom and supporting sound economic growth.

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