TIMOTHY NOAH SEPTEMBER 15, 2011
The Republican catchphrase of the moment is "crony capitalism." This is odd, because Republicans don't usually like to disparage capitalism in any form. Nonetheless, House Speaker John Boehner, in his jobs speech today, complained that "entrepreneurs and job creators" have been "undercut by a government that favors crony capitalism."
Until today, "crony capitalism" was known mainly as the billy club that Republican presidential candidate Michelle Bachmann deployed to beat up front-runner Rick Perry for getting too cozy with Merck, which employed Perry's former chief of staff (and had given Perry $22,000 in campaign contributions--not the $5,000 Perry claimed) when Perry decided to require teenage girls in Texas to be vaccinated against HPV with Gardisil, a Merck drug. "Well, it's very clear that crony capitalism could likely have been the cause," Bachmann said Sept. 13 on NBC's "Today" show. Make-believe presidential candidate Sarah Palin backed Bachmann up that same day on Fox News: "Fighting the crony capitalism is a tough thing to do within in your own party." Actually Palin had already been beating Perry up with the same phrase. Palin, Sept. 3 Tea Party rally in Indianola, Iowa: "I want all of our GOP candidates to take the opportunity to kill corporate capitalism" (she meant "crony capitalism") "that is leading to this cronyism" (there's the save) "that is killing our economy."
Obviously "crony capitalism" tests well because Boehner and Palin are now using it to attack President Obama. General Electric, Palin complained today, "is now the poster child of corporate welfare and crony capitalism," ostensibly because it "pays virtually no corporate income taxes despite earning worldwide profits of $14.2 billion last year" (has she been lunching with Elizabeth Warren?) but in fact because GE's chairman, Jeffrey Immelt, chairs Obama's Council on Jobs and Competitiveness. Palin said much the same about Solyndra, a renewable-energy company that the Obama administration is now very sorry that it touted.
As best I can make out, John Stossel of Fox News made "crony capitalism" a conservative meme in 2010. "The truth is that we don't have a free market—government regulation and management are pervasive—so it's misleading to say that 'capitalism' caused today's problems," Stossel wrote that year. "The free market is innocent. But it's fair to say that crony capitalism created the economic mess." It's bank bailouts, it's auto bailouts, it's trade protection, it's being nice to unions, etc., etc. The foundational texts appear to be Richard Posner's A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression and especially Timothy Carney's The Big Ripoff: How Big Business and Big Government Steal Your Money, though neither book actually uses the phrase, "crony capitalism."
But of course, "crony capitalism" was a liberal phrase long before it was a conservative phrase. Paul Krugman, for example, used it to cuff President George W. Bush about his pal Ken Lay in 2002. The term came into vogue during the 1980s. It makes much more sense as a liberal phrase because Republicans cozy up to business far more than Democrats do. (That's why Perry is vulnerable to the accusation.) Authentic libertarians can use it in good conscience, but real-world Republican politicians seldom reject business demands to suck on the government teat. That Republicans are using the phrase now suggests that they're starting to worry that public is identifying them too much with the Wall Street barons who created the current financial crisis (and no longer seem to be suffering much because of it). If congressional Republicans really disliked crony capitalism they would back off from their support for Medicare Advantage, the money-losing, government-funded private sector alternative to Medicare, and for-profit colleges, which they want to shield from default limits on student loans. They would also stop trying to interfere with the implementation of the Dodd-Frank financial reform bill.
Research assistance by Thomas Stackpole.