Restore US economic growth by stopping crony capitalism 

‘All he’s got left is to take all the anxiety that is building in America and try and tap into it and channel it toward class resentment,” House Budget Committee Chairman Paul Ryan, R-Wis., recently said about President Barack Obama.

“These are powerful emotions — fear, envy, anxiety, resentment — very powerful emotions, but dark emotions,” Ryan said. “They are extremely divisive. But it seems to me that’s the plan.”

It is difficult to refute Ryan’s assessment of Obama’s “millionaires and billionaires must pay higher taxes.” Ryan has a different view of government’s role in society. Instead of attacking income inequality through redistribution, Ryan believes government should foster income mobility through equal opportunity and economic growth.

“Grow the pie versus redistribute slices of a shrinking pie,” Ryan recently told The American Enterprise Institute’s James Pethokoukis. “That’s what our society has always prided itself on. That’s the American system we’ve had.”

So how does Ryan want to ensure equal opportunity and enable economic growth? “End the corporate welfare and crony capitalism … Stop rigging the rules for the powerful and well-established … Don’t subsidize higher-income individuals nearly as much as everyone else.”

Will this work? Are crony capitalism and corporate welfare really holding up our economic recovery? Consider a recent New York Times story showing how Obama’s clean energy policies, including loan guarantees, cash grants and price controls, “almost guaranteed” big profits for “financial firms like Goldman Sachs and Morgan Stanley, conglomerates like General Electric, utilities like Exelon and NRG.”

So some rich Obama donors are getting wealthy off the taxpayer dime. That doesn’t hurt the rest of us, does it? In fact, it does. In his book, “Government’s End,” Jonathan Rauch explains:

“Economic thinkers have recognized for generations that every person has two ways to become wealthier. One is to produce more; the other is to capture more of what others produce. … By definition, the power of government to solve problems comes from its ability to reassign resources, whether by taxing, spending, regulating or simply passing laws.

“But that very ability energizes countless investors and entrepreneurs and ordinary Americans to go digging for gold by lobbying government. In time, a whole industry — large, sophisticated, professional and to a considerable extent self-serving — emerges and then assumes a life of its own. This industry is a drain on the productive economy, and there appears to be no natural limit to its growth.”

High taxes, health insurance mandates, subsidies and complex regulatory regimes are the bread and butter of the crony capitalist economy. Big business can afford the lobbyists and lawyers to manipulate the tax and regulatory system in ways necessary to stay competitive. Startup firms cannot. The result: fewer new businesses, less competition and less growth.

Last week, the Heritage Foundation’s James Sherk noted that, according to recent Labor Department data, job losses are at an all-time low. But then why is unemployment still above 9 percent? It is because that same data also show that job creation is at an all-time low. Entrepreneurs simply are not starting businesses at the same rates they used to. Crony capitalism is stagnating our economy.

Ryan is right. Removing the barriers to job creation, not divisive income redistribution, is the American system we once had. We need to get back to it.

Conn Carroll is associate editorial page editor of The Washington Examiner.

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