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Tuesday, March 12, 2013

Cronyism at the Movies

I recently had dinner with a new friend who wanted to talk about politics. She hadn’t heard of libertarianism before, and in the middle of my bumbling attempt to explain it, she interjected, “Oh, so you like capitalism.” While this was a good starting point for us to be speaking the same language, I found myself unable to agree without explaining the difference between capitalism and cronyism.

I have no qualms with capitalism—a business creating valuable products and selling those products for a profit. Profit is a great motivator. Unfortunately, the motivation for profit can lead some business owners to engage in cronyism—that is, when a relationship with government yields increased on-paper returns for the business, but these returns come at the expense of consumers and taxpayers.

The way Crony Chronicles puts it,

To the extent that government remains in the business of handing out cash to its friends, lobbying the government for special favors is rational, even if it is harmful to taxpayers.

Examples of cronyism are pervasive, and some of them are just plain odd. Consider Mayor Carl Brewer of Wichita, Kansas. After insisting that the city help fund the construction of an IMAX theater, he set up shop inside the theater’s café, selling his company’s BBQ sauce. The sauce comes with a sandwich order, whether you ask for it or not.

When you reflect on the fact that the film industry is heavily subsidized, is watching a movie in a subsidized theater while eating a sandwich with the mayor’s BBQ sauce . . . Cronyception? 

To learn more, visit our educational module on cronyism, or go read more tales of cronyism at Crony Chronicles.