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Despite the ideological miles that separate them, the Occupy Wall Street Movement and the Tea Party Movement are united in their condemnation of recent government bailouts of well-to-do and well-connected banks. To the Occupiers, these bailouts are a transfer of resources from Main Street to Wall Street. To the Tea Partiers, they were an unwarranted intrusion into the free market. To both, the bailouts smacked of cronyism.
But cronyism is about much more than bailouts. Governments grant special privileges to particular firms or industries in a number of ways. These include monopoly status, favorable regulations, subsidies, loan guarantees, targeted tax breaks, protection from foreign competition, and noncompetitive contracts. No matter its guise, government-granted privilege is incredibly destructive. It wastes resources and undermines competition. It benefits special interests at the expense of general interests. And it undermines the legitimacy of both government and business. Government-granted privileges are also antithetical to economic freedom. As both the Heritage Index of Economic Freedom and the Mercatus Center’s Freedom in the 50 States have demonstrated, economic freedom is a necessary condition for economic prosperity.
Join us as Mercatus Center Senior Research Fellow Matthew Mitchell discusses the different types of government-granted privilege and the harm they do as outlined in his recent Mercatus study, “The Pathology of Privilege: The Economic Consequences of Government Favoritism.”
More About the Speakers
Senior Research Fellow, Mercatus Center at George Mason University
Ambassador Terry Miller
Director, Center for International Trade and Economics and the Mark A. Kolokotrones Fellow in Economic Freedom