It's A Gray Area: Cronyism is not capitalism

We all should long for the days of Mark Twain, who was heard to say: "There is good news from Washington today. Congress is deadlocked and cannot act."

Unfortunately, our Congress today is acting a great deal in sponsoring cronyism. That means that there is a large amount of collusion among businesses and special interests, on the one hand, and government, on the other. The resultant government favors, payoffs and bailouts are enriching those who are well-connected, but are literally making the rest of us impoverished.

Make no mistake about it, cronyism is not capitalism!

As the Mercatus Center at George Mason University says, "A system that privatizes profits and socializes losses is ripe for abuse, and ultimately doomed to fail."

And the contrary, as expressed by economist Milton Friedman, is also true, that no country has ever raised itself up from poverty except through the use of the system of free enterprise capitalism.

So with the coming elections, it is time to focus our attention upon candidates who would reduce the intervention by the government in the marketplace, and to require all companies either successfully compete on a level playing field or go out of business. Governments simply should not be subsidizing businesses or bailing them out.

That means among other things that the federal government should not arbitrarily choose to subsidize ethanol made from corn instead of using other plants like sugar cane, switchgrass or hemp. Most scientists feel that many other plants are much more effective to use than corn, so why not let the market decide this issue instead of the government?

It also means that if a high-speed train is to be built, it should be built with an eye toward making a profit, which will occur if the costs are reasonable, and if riders will use it. And who is in a better position to make those estimates, private investors or the government? The same thing is true with regard to health care, education and programs like Fanny Mae and Freddie Mac, which are directly responsible for our current housing crisis. Government has no business interceding in the marketplace. It only leads to cronyism and other troubles.

Do you know any leaders today who are standing up for all of us on these issues? I do, and I hope you make a point to seek them out. They are saying that in order to get out of our economic doldrums we must go back to our strength, which is the free enterprise system, and also by tightening our belts, which means that government simply must start spending less than it takes in. For decades Washington has sanctimoniously made these demands to so-called third world countries as a condition of getting any further funding from organizations like the World Bank. Well now it is our turn to follow our own advice. This has actually happened in the states of Louisiana and Virginia, so why can it not happen in Washington with the federal government?

How can this be done? The Mercatus Center has three suggestions: fundamental tax reform that returns fairness, which will, in turn, encourage economic growth; budgetary reforms that change our current rules that encourage ever-growing spending; and regulatory overhauls of counterproductive regulations that shackle American businesses. You can read more about these ideas at

To these suggestions I add that we simply must pass a program of sunset laws. This would mean that each and every agency in government would be required to get an affirmative vote from Congress every five years, for example, in order to continue to receive funding. This "audit" would both allow every agency the opportunity to shine by focusing upon their achievements and productive plans for the future, or have their funding cut back for activities that are duplicative, ineffective or even counterproductive.

In fact there are probably several entire agencies that would probably fail to show that they are productive at all. Those should be abolished. What are some examples? The most obvious is the Bureau of Indian Affairs. Most Native Americans sincerely hate this agency because they feel that at this point they do not need the oversight and "protection" of the white man in governing their own affairs. And that is not even to discuss the fact that the BIA "lost" tens of millions of dollars that it was holding in trust for the Native Americans. Put yourself in their position, would you want the government managing your land, natural resources, education and lives?

As to other agencies, Texas Gov. Rick Perry was right (at least about this), and we really should abolish the departments of Energy, Commerce and Education. None of these could stand up to a neutral audit, and their mandates could be much more effectively carried out by competitive industries (under reasonable laws and regulations) for the first two, and by parents and school districts for the last one. Any arguments that we should continue to maintain a Department of Education can be easily countered by asking the simple question of who is in a better position to decide where and how children are to be educated, the government or their parents?

Recently I received an email that said 10 years ago the U.S. had Steve Jobs, Johnny Cash and Bob Hope. Now we have no Jobs, no Cash and no Hope. So as the upcoming elections approach, do our children and our grandchildren an enormous favor, and help us cut back the size, cost, intrusiveness and meddling of our government, and return our economy to capitalism instead of cronyism. It is not an exaggeration to say that this is probably the only way we can save our great country from continuing decline and eventual bankruptcy.

JAMES P. GRAY is a retired Orange County Superior Court judge who lives in Newport Beach. He can be reached at

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