Government favoritism toward particular firms comes in many forms, such as direct loans, subsidies, bailouts, tax breaks, government-created monopoly, regulatory barriers to domestic competition, and tariffs or quotas on foreign competition. Such practices waste resources, stunt economic growth, encourage corruption, and violate standard notions of justice. They also confuse pro-market policies with pro–favored business policies.
What do those who benefit from government favoritism believe about favoritism? How do they view the role of the government and competition in the economy? Matthew D. Mitchell addresses these issues in A Culture of Favoritism: Corporate Privilege and Beliefs about Markets and Government.
Assessing the Mindset of Favored Firms
Mitchell worked with a public opinion firm to conduct a national survey of business leaders, focusing on those who believe they work for favored firms. Then he compared their attitudes to those of business leaders who do not believe their firms to be favored. The survey considers business leaders’ views about markets, about government, and about favoritism itself.
Compared with other business leaders, the leaders of favored firms are more likely to agree with the following— sometimes contradictory—statements:
How Favored Firms Think about Markets
How Favored Firms Think about Government
Government should more heavily regulate markets.
Regulations benefit consumers.
Regulations benefit the economy.
Competition is limited by government (they may view this as a good thing, given their belief that competition is unfair to business).