FRAMING THE ISSUE SERIES - 2012 Battle Lines - Part II

Even to the casual observer, it is apparent that we in the United States are in a time during which national public policy agreement on most substantive issues is difficult to achieve.  Further, we notice that our Federally-elected officials find it impractical to reach agreement on even basic legislation governing the finances of the Government.  We have submitted in these pages that the reason for this impasse is that a chasm has opened within the electorate between competing visions for the Country and the Federal Government's role in it.  We further assert that between these competing visions compromise is impossible.  We assert that we must choose.  In a several-part series of Framing the Issue, we now explore the Battle Lines.

Free-Market Capitalism vs. Crony Capitalism

The social populists have been consistent in pointing out income and wealth disparities.  They like to cite Crony Capitalism (meaning the grant of special favors and advantages by the government to a specific person or group, i.e. picking the winners and the losers) as a central reason.  The attempt is to allege fairly directly that most people with wealth came by it wrongly.  This sophistry is handy to the "Lean Forward" crowd as it lays the groundwork for confiscatory taxation of wealth.  While there is little doubt that some among the top quartile in wealth may have come by their winnings wrongly, it is more correct to assert that almost all of the top quartile have come by their wealth substantially upright in the eyes of both law and mores.  Thus, the allegation must be about something else.

Answer:  the wealth distribution outcome is not as desired.  Free-Market Capitalism (meaning the withholding of special favors and advantages by the government to any specific person or group,  i.e. not picking the winners and losers) is actually the concept that is unacceptable to the "Lean Forward" crowd.

In Free-Market Capitalism under the rule of law, the best adapted ideas, products, services, and people succeed.  Opportunity is available to all.  Governmental oversight is targeted, clear, and consistent.  Property rights are embraced.  Dispute resolution is enabled.  Outcomes are disparate.  While Free-Market Capitalism is often messy and inconvenient, grinding poverty yields to economic progress.  And, societal progress for each income quartile is maximized. 

To the careful reader it is apparent that Crony Capitalism itself was not dispositioned above.  The reason is that it is alive and well, just not always where you might have been led to think.

A prime exhibit of Crony Capitalism crept by recently in a monetary settlement between the Bank of America and the U.S. Justice Department.  Justice had sued the Bank of America and its Countrywide Financial unit over alleged discriminatory mortgage lending.  Countrywide had allowed its brokers and agents to negotiate with borrowers on price and terms.  The allegation was that about half of the black and Hispanic borrowers paid more for their mortgage than the average of similarly-situated "non-Hispanic White Borrowers."  One does not have to be a math whiz to see the logic flaw.  Further, the approximately half of the white borrowers that paid more than the average were not included in the subject of the suit.

Holman Jenkins, columnist for the Wall Street Journal, recently summed it up best:  "If this sounds insane, there's another way to think about it:  Public choice theory holds (in essence) that those in power loot for the benefit of the constituencies that keep them in power.  Law and regulation are tools for redistributing resources; the nature of politics is to seize every such opportunity and make it serve a political end.  In the Countrywide settlement, Bank of America (without admitting fault) will hand over $335 million so Justice can distribute money to African-Americans and Hispanics (though not whites) who were charged more than the white average, with any surplus funds explicitly reserved for donations to Acorn-like groups that typically align with the Democratic Party."  Equally true is that, for this political purpose, the $335 million was taken away from the more-productive uses to which it would have been put. 

Crony Capitalism is really about government power.  It is repugnant whether employed ostensibly to favor the wealthy or the poor, the black or the white, the man or the woman.  And, it is repugnant whether employed by Democrats or Republicans.

The middle ground on this issue could ultimately do us all serious harm.  We need to make a choice.  Free-Market Capitalism or Crony Capitalism?

CFA Choice

Free-Market Capitalism

About CFA

The Constitutional Freedom Alliance (CFA) is a group of ordinary citizens driven to promote and restore individual freedom within the United States of America.

Visit us at www.guardourfreedom.org