Anti-Cronyism and Free Market Agenda

From the stimulus to cash-for-clunkers, from the bailouts to cap-and-trade, from Dodd-Frank to Obamacare, every name-brand initiative of the Obama era has distorted public policy to privilege well-connected insiders and elites at the expense of taxpayers and consumers.

Special-interest favoritism represents a uniquely malignant threat to the economic, political, and social ecosystem that makes America exceptional.

Policy privilege corrupts the free market by rewarding political connections over competitive excellence. It subverts the rule of law by codifying inequality. It undermines social solidarity by pitting citizens against one another, twisting cooperative communities into rival special interests.

And even as cronyism poisons the moral credibility of our institutions of democratic capitalism, it degrades the economic benefits those institutions yield.

According to a 2010 study by the Kauffman Foundation, all net job creation in the United States between 1977 and 2005 came from firms five years old and younger. Yet half of all new businesses fail in their first five years. That is, almost all new American jobs come from the small fraction of new businesses that rocket from startup to superstardom.

Cronyist policies — from tax loopholes to regulatory advantages to direct subsidies — deliberately tilt the playing field to keep those very firms down, to bury them in red tape and slow their disruptive growth.

But it’s precisely the dynamism that new firms bring into the marketplace that creates the jobs and growth our economy needs.

Our Anti-Cronyism and Free Market Agenda to end this kind of preferential policymaking must be the first step in a true conservative reform agenda. Beyond simply being the right thing to do, it is a pre-requisite for earning the moral authority and political credibility to do anything else.