Columnist Thomas Frank took issue in today’s Wall Street Journal with a recent piece at Forbes.com. My Forbes piece warns of the threat posed by the rising nexus of big government and big business. With the federal government actively involved in picking economic winners and losers, big businesses continue to use their connections, muscle, and influence to carve out exemptions and favors for themselves. President Obama and the Democratic congressional leadership have accelerated this pernicious form of crony capitalism. It is wreaking havoc on economic recovery and fueling continued resentment among the American people.
Thomas Frank’s column fails to distinguish the protection of large, established corporations with the promotion of free markets. The role of the government is not to help one company vanquish its competition. As I write in the Forbes piece, “The government does not have a stake in the fight between David and Goliath — our only concern is to make certain that it is a fair fight.”
The Republican party got this wrong too, but not, as Frank contends, through a mythical decade of deregulation and its consequential “fireball of freedom.” In an expanded version of the Forbes column, I write:
Neither political party is immune from fostering this pervasive culture of crony capitalism. My own party — the party of Lincoln and Reagan — neglected the principles it passionately championed in decades past. Republicans became more interested in securing political power as an end, rather than a means of limiting the federal government’s power over our lives. The Republican party has recently confused being pro-business with being pro-market. The poisonous earmark culture was emblematic of businesses, large and small, working their connections to carve out political favors for financial gain.
While Republicans were confused as to the meaning and practice of our principles, the Obama administration and the Democratic leadership are perfectly comfortable with the philosophy underpinning crony capitalism. After all, big business and big government find many ways to enjoy a common cause. So while we Republicans need to rededicate ourselves to our principles, the Democrats running Washington would have to repudiate theirs.
Our financial regulatory system needs to be modernized, emphasizing accountability, transparency, and clear and enforceable rules that minimize moral hazard. A slew of regulatory agencies with thousands of employees didn’t see the financial crisis coming. Adding new agencies, expanding their missions, and having the government double down on the crony capitalism that precipitated this crisis adds dead weight to the economy and expands, not reduces, the risk of future crises.
The argument extends far beyond the financial sector — as the reach of the federal government continues to encroach on nearly all sectors of our economy and our lives.
I’ve been heartened by the passionate response to the column, and your additional feedback on this issue would be appreciated.
– Paul Ryan (R.) is a United States respresentative from Wisconsin.