Populism, Markets, and the Elite
Cable news personality Tucker Carlson recently delivered a fifteen-minute monologue that has created quite a stir. Carlson suggests that market capitalism is a “tool” used by the bourgeoisie—with help from their political benefactors—to enrich themselves at the expense of the proletariat. And he’s not alone. The re-emergence of American populism has created a game of “for the people” one-upmanship that has politicians and members of the commentariat casting blame for societal ills squarely on the economic and political elite.
Mr. Carlson is half-right. There is, indeed, evidence that the economic and political elite have contributed to many of today’s most-pressing social ills, including anemic economic growth, rising barriers to opportunity, and increasing economic uncertainty. His error is in asserting that market capitalism is the means by which the elite have done this. The elite’s “tool” is not market capitalism but state control of markets.
A free and open market is actually a threat to the economic elite. It is an opportunity for the gale of creative destruction to wash away the dominant market players—especially those that fail to adapt to changing tastes or technologies (e.g., Sears).
What market elites often crave is not free and open markets, but protection from free and open markets. They want barriers to entry, they want regulations that raise their rivals’ costs, they want rules that lock-in existing technologies, and they want mandates that guarantee customers.
For the better part of four decades, economists have amassed evidence of this. Their case studies of electricity, railroads, radio, airlines, taxis, oil, natural gas, banking, trucking, television, wireless spectrum, pharmaceuticals, ride sharing, hospitals, energy, alcohol shipment, and countless professions have made it clear that firms don’t want free market competition. They want government intervention. See, also, this helpful compendium of expert quotations on the matter, compiled by our colleague, Adam Thierer.
And they’ve gotten it. That’s why it is strange to see Mr. Carlson and others refer to ours as a “free market economy.” By almost any measure, the United State is considerably less than free. Here, the private exchange of goods and services comes with a heavy dose of government intervention.
Consider (in no particular order and not exhaustive):
- Total government spending (federal, state, and local) is approximately 35 percent of GDP.
- The federal tax code, with its maddening complexity, manifest inefficiencies, and unjust inequities is largely a mess because special interests want it to be.
- There are over a million federal regulatory restrictions (state and local, too).
- Fannie Mae, Freddie Mac, and other federal interventions privilege housing-related commercial interests.
- Corruptive government contracting practices abound.
- Trade rules and regulations privilege certain firms at the expense of consumers and other businesses.
- Government loan guarantees benefit the banking industry and the privileged commercial interests that receive them.
- Government bailouts reward commercial interests for their failures at the expense of taxpayers.
- The Federal Reserve plays a significant role in bailouts and the favoring of politically-powerful commercial interests.
- Copyright and intellectual property laws foster intellectual privilege.
- State alcohol laws privilege distributors at the expense of consumers.
- State and local government officials bestow Targeted Economic Development Incentives upon select firms at the expense of taxpayers and non-privileged firms.
- Occupational licensing protects politically-connected incumbents from competition and is particularly detrimental to the poor.
- Certificate of Need laws limit the supply of health care services.
- Local zoning and land-use regulations artificially restrict the supply of housing and drive up prices for consumers.
Do self-serving politicians enrich commercial interests at the expense of the average citizens? Yes. But they don’t do it in the way Mr. Carlson and others think they do. Blaming market capitalism misses the mark. Rather, the appropriate target should be political capitalism, which economist Randall Holcombe defines as “an economic and political system in which the economic and political elite cooperate for their mutual benefit.” Indeed, the elites who use government to plunder the plebes would in fact see their wealth and status undermined in a truly competitive free market.