Grading the Candidates on Cronyism

It looks like a Trump-Clinton race for president, but Cruz and Sanders still have mathematical paths to their party nominations. In this blog I grade these candidates on their ability to combat cronyism.

For the record, I chose not to grade Kasich because he cannot obtain the number of delegates required to obtain the Republican nomination. His only chance is in a brokered convention, in which case there could be a multitude of other possibilities.

Let’s start with a definition. Cronyism exists when firms are able to sidestep the market and profit through collusion with government. This can be done in lots of ways, including government grants, favors, or regulation of competitors. Some refer to cronyism as crony capitalism. There’s nothing capitalistic about it, so I prefer to use the simple term, cronyism.

Hillary Clinton: Grade of F. Secretary Clinton has received a ton of support from Wall Street donors. She proposes to heavily regulate most major industries, including banking, energy, and healthcare; her recent attack on the coal industry is a prime example. High regulation means that it will be necessary for companies to play by her rules to succeed. In a Clinton administration, you can expect more collusion between government and business. They call it cooperation and partnerships, but it’s still collusion.

Bernie Sanders: Grade of D-. Senator Sanders would have gotten an F as well, but he is inclined to take over some industries altogether. If the feds run a single-payer healthcare system, collusion between government and business is reduced because private healthcare providers would be eliminated, not just regulated.

Donald Trump: Grade of C. Trump is difficult to grade because of his outsider status. He’s played the political game extensively as a businessperson, but there are two possible explanations for this type of activity. Sometimes executives cuddle up to government to gain unfair access to markets or to place restrictions on competitors, but sometimes they pursue government to fend off regulatory efforts by their competitors or activist groups. Trump is a disrupter, so my guess is that he would tackle some forms of collusion. But he is short on specifics. Trump proposes to “close loopholes” in his tax plan, but it’s difficult to tell how this would play out.

Ted Cruz: Grade of B+. Cruz is one of the best, but I’m not an easy grader. His opposition to the corn subsidies during the Iowa primary tells us that he’s not afraid to take on big business. His tax proposal would be a boon for the economy, but it retains the earned income tax and child credits, as well as deductions for savings plans. This signals a general comfort with eliminating a lot of government intervention, but perhaps not all of it.

There are some caveats with my grades. Sanders did a little better than Clinton, but only because he prefers a complete takeover of some industries. Neither Sanders nor Clinton have much respect for property rights or business liberty. Cruz didn’t get an A, but it’s impossible to eliminate all cronyism in one swoop. Trump is a wild card, but given the nature of Washington, he might be able to put a dent into the current system.

5 thoughts on “Grading the Candidates on Cronyism

  1. Cronyism is bad but its only one reason to vote for a candidate. I agree that Donald Trump is a wild card but he is strongest on border security. I agree with the grades but I have decided that Trump is the best candidate overall.

  2. Parnell’s right when he mentioned the ethanol subsidies in Iowa. Ted Cruz had the courage to stand up to the corn lobby. This is what it takes to defeat crony capitalism.

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