December 29, 2014

Crony Capitalism Abounded in 2014

Veronique de Rugy

George Gibbs Chair in Political Economy
Summary

Today I would like to focus on what hasn’t changed: The commitment of Republicans and Democrats to special business interests at the expense of all of us.

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It is the time of year when we take a look back at the last 12 months and try to learn some lessons. There is a lot to choose from: For instance, this year we got confirmation that President Barack Obama’s policies and the president himself are unpopular with not just Republicans, but with Democrats, too. We learned that some influential liberals are fully aware and wiling to manipulate and deceive the American people to pass legislation that isn’t popular. And the more we learn about the Affordable Care Act and its cost, the less we like it.

But today I would like to focus on what hasn’t changed: The commitment of Republicans and Democrats to special business interests at the expense of all of us. Here are five examples:

A nine-month reauthorization of the Export-Import Bank: The agency is the best example of a program that benefits rich and well-connected companies like Boeing and Caterpillar but also large financial institutions like JP Morgan. The Ex-Im Bank is set to cost the taxpayers money in the next 10 years, it is hurting non-subsidized companies, and it creates some capital market distortions. But in spite of this evidence and some bipartisan opposition to its reauthorization from pundits and economists, most Republicans and Democrats caved to pressure put on them by the National Association of Manufacturers and the Chamber of Commerce.

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