‘Public-private partnership’ is an invitation to the worst form of cronyism, and it is not hard to see a lot of this coming down the pike in the next year or so. Alas, it is not at the federal level where Republicans have the most to lose in being on the wrong side of crony capitalism. If the GOP fails to get this message (and policy) right at the local and state levels, the results will be catastrophic.
Indeed, in city and county politics, it is the predominant issue and will dictate the direction of localities for the next generation. Special and targeted incentives are the ultimate slippery slope. The silly defense I most often hear for governmental sweetheart deals with business is that Republicans are supposed to be defenders of business and promoters of growth. Of course, that is correct.
Targeted incentives, though, that favor a particular company or sector fool nobody. They do not promote growth; they reward the already big and powerful who have the lobbyists, lawyers, and influence to reap the benefits of a gravy train. Local and state politicians should be fostering a pro-business culture, and they should be doing that with universally low tax rates, not special low tax rates for a particular company; they should be doing that with a culture of low regulation, not special, one-off waivers for this or that business.
The Right must be committed to stopping this, from deplorable stadium deals for billionaire sports-team owners to appalling tax favors for connected real-estate developers. Equal opportunity for all means one set of rules for the entire population. When a city council or a county board decides that it, holding the public purse strings, will decide whom to credit back tax dollars and for what, it has defied any reasonable definition of equal under the law. There is a concerted effort to manufacture ambiguity around the difference between crony capitalism and legitimate governmental support for business and growth. Not surprisingly, that effort comes from crony capitalists.
Too many Republicans who indict Fannie Mae and Freddie Mac as a perilous example of business and government in bed together become suddenly paralyzed with confusion and nuance when a big company wants a special tax break for a new factory or hotel it wants to build. We cannot afford to impose a double standard: to oppose subsidies when we do not like the company, product, or sector in question but then to change our mind when we favor them. Likewise, the decision for an employer or a developer to build a project or invest in a community only if it receives a special treatment not afforded to others is corrupt at its core. Local government can support the free market by not distorting it. City councils should find ways to remove from their regulatory framework impediments to growth and business. If they do, they will create 50 times more benefit than they would with all the special tax breaks they could dream up.
Those who believe that defeating liberals at the ballot box is the highest ethic we are held to (it isn’t) ought to seize this message. For 40 years, crony capitalism has been the basis for more Republican election losses than every social issue combined. There is a non-crony way to be highly supportive of business and growth: Ensure a very low tax base because of a very non-intrusive government (non-intrusive governments cost less) and combine that with very light regulation. Low tax, low regulation — for everyone.
These are basic right-wing orthodoxies that, fairly and consistently upheld, create even playing fields and promote the dignity of the open marketplace. Whether they are called subsidies, mandates, incentives, loan guarantees, or anything else, crony privileges have no place in local, state, or federal politics — not just because it is bad government, but because it makes for a bad society.
“This growing partnership between business and government is a destructive force, undermining not just our economy and our political system, but the very foundation of our culture,” Charles Koch wrote in 2012 in the Wall Street Journal. It would be a shame for the Republican Right to contribute to such a demise, when it has such a golden opportunity right now to be part of the solution…
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David L. Bahnsen is a trustee of the National Review Institute and the founder and chief investment officer of The Bahnsen Group, a wealth-management firm in Newport Beach, CA.