Biden Boasts: We Support Crony Capitalism
By Randall Holcombe • Monday March 19, 2012 11:51 AM PDT • 12 Comments
Last week I posted a blog about crony capitalism, with the suggestion that crony capitalism is undesirable. The next day Vice President Joe Biden was bragging that he and President Obama support crony capitalism, as if crony capitalism is a good thing.
Mr. Biden was criticizing Republican presidential candidates for their opposition to the auto industry bailouts. Any government bailout is an example of crony capitalism. Government funds are being used to support private interests. But these bailouts were even more obvious cronyism, because the bailout the Obama administration put together gave stock in the restructured company to his cronies in the United Auto Workers while stiffing the bondholders who should have been in line ahead of the union.
Vice President Biden said, “We’re about promoting the private sector. They’re about protecting the privileged sector.” He has this backwards, as is often the case with political rhetoric. The private sector is the part of the economy that operates without government support, and the privileged sector is the sector that has government supporting it.
If Vice President Biden wants to campaign on the support he and President Obama gave to General Motors and Chrysler (and Solyndra, and Beacon Power and others), that’s fine, because they are campaigning on their record. But when they call this “promoting the private sector,” that’s wrong. It is crony capitalism, and we should recognize it for what it what it is.
Tags: Bailouts, Budget and Tax Policy, Business, Corporatism, Economics, Free Market, Government subsidies, Integrity, Politics, The State 
I’m shocked, that a democrat is using the class warfare card! Shocked, I tell ya!
Rob Nabakowski | Mar 19, 2012 | Reply
So did he say, “We support crony capitalism” or not? Because in journalism when we put quotes around something it, uhhh, generally means it’s what the person, y’know, actually said. Instead of something you just made up.
Jesse | Mar 20, 2012 | Reply
Upon seeing the Independent Institute’s tweet of this article, my initial (anarchist, not crazy) reaction (just based off of the article’s title) was that the author of the article likely also supports crony capitalism, despite how this would be hypocritical.
After a small amount of preliminary research I am willing to publicly make this claim: Randall Holcombe himself supports crony capitalism despite denouncing it.
While I could provide a complete, detailed argument, fully backing up my claim, I am worried that nobody would read it and thus it would not be worth taking the time to write. Thus, unless someone asks me to further back up my claim, I will just provide a brief version of the argument that I would make:
In the above article “Biden Boasts: ‘We Support Crony Capitalism’” Holcombe writes, “Any government bailout is an example of crony capitalism. Government funds are being used to support private interests.”
Despite not explicitly stating that “people who support using government funds to support private interests support crony capitalism,” it is the nature of the English language that this statement can be implicitly assumed from Holcombe’s quoted statement. My reaction to this statement is to point out that all interests are private interests. There is no such thing as a “public interest.” There are only individuals with interests. There can be groups of individuals with shared interests as well, but these shared interests are still individual interests, not public interests. Even if 99.999% of the population shares an interest, it would still be a “private interest,” not a “public interest.”
Therefore, anyone who supports using government funds for anyone’s interests supports crony capitalism by the definition that Holcombe presumably uses. Thus, I would argue that all forms of state capitalism count as crony capitalism. And as it turns out, Holcombe is not an anarchist; he supports the state.
In his paper titled “Government: Unnecessary but Inevitable,” Holcombe makes a statement that seems to contradict the title of the essay: “My conclusions align more with those theorists, such as Hayek and Mises, who see a need for limited government than with those who see the
libertarian ideal as an orderly anarchy” ( http://www.independent.org/pdf/tir/tir_08_3_1_holcombe.pdf ). The title says that government is “unnecessary” yet he says that his views tend to aline with people “who see a need for limited government.”
In any case, Holcombe goes on to support government aggression, rather than reject aggression altogether (the anarchist position), or so I believe, judging by his thesis (I have not read beyond the thesis in the interest of time):
“Without government—or even with a weak government—predatory groups will impose themselves on people by force and create a government to extract income and wealth from these subjects. If people create their own government preemptively, they can design a government that may be less predatory than the one that outside aggressors otherwise would impose on them.” (3).
I take the above to be Holcombe’s thesis and assume that he goes on in the rest of his essay to argue for it and consequently take a position in support of some limited government in order to make sure that others predatory groups do not force an even more tyrannical government on society.
While I do not share Holcombe’s fear that “outside” predatory groups would force a government on people in an anarchist society and while I do not believe that such a fear justifies supporting committing aggression against others (through support of a minimal government) oneself, even if it would be a lesser amount of aggression than the “outsiders” would commit, these two points are both irrelevant to my main argument, namely, the argument that Holcombe supports crony capitalism.
What is irrelevant to this main argument is what I just briefly showed:
(1) Holcome supports a limited government
(2) Support of government funding of any interests is support of crony capitalism because all interests are private interests and the definition of supporting crony capitalism, as implicitly defined by Holcombe himself, is support of government funding of private interests (see above)
(3) Therefore, Holcombe supports crony capitalism
I can go into more detail to bolster my argument if need be, just ask.
#randomlytakingthetimetopointoutoneofthemanymanythingsthatInoticethatmostothersdon’t
PeaceRequiresAnarchy | Mar 20, 2012 | Reply
You’re using quotation marks as if it were a direct quote, which it is not (from what I read on the linked article). It may be a valid inference from his remarks, but it’s a misattribution to suggest it’s a direct quote. Please fix that inaccuracy.
Rob Robertson | Mar 20, 2012 | Reply
This president is anti-capitalism. He practices crony-socialism.
Edmond W Holcombe | Mar 20, 2012 | Reply
Look at the linked article, Rob, paragraph 8, where Biden is quoted as saying “We’re about promoting the private sector. They’re about protecting the privileged sector.” The article prints it as if it is a direct quotation, so it appears (to me) that the quotation is accurate.
Randall Holcombe | Mar 20, 2012 | Reply
Thanks, Jesse and Rob. You’re right. The title of my post wasn’t a direct quotation, and I’ve removed the quotation marks.
Randall Holcombe | Mar 20, 2012 | Reply
Hello Mr. Holcombe,
Your views are clearly drastically different than Mr. Biden’s views, so I regret making the argument that you support “crony capitalism” like he supports “crony capitalism.”
I finished reading the rest of your essay “Government: Unnecessary But Inevitable” and it turns out that your views are far closer to mine than Biden’s. Forgetting the semantics of what sort of state capitalism is “crony capitalism,” I responded to your essay in a much more productive and thoughtful way in a blog post (link at end of this comment).
I argue that government is not an inevitable result of all anarchist societies. Specifically I argue that protection firms would have the incentive to continue respecting everyone’s rights, at least in a certain state of anarchy, and thus would not necessarily form into a new state in an anarchist society.
I also bring up a different conception of what it means to be a libertarian anarchist and conclude that even if you are right that government is “inevitable,” that we still should be opposed to aggression as libertarians and thus still should oppose all aggression, even in the form of “pre-emptive” limited governments.
If you would like to read my response to your essay I would be delighted. You don’t even have to reply to it. Just an acknowledgement that you have read it (or even some of it) and that you will think about some of my criticisms, would be appreciated. Thank you.
http://peacerequiresanarchy.wordpress.com/2012/03/21/randall-holcombes-government-unnecessary-but-inevitable/
PeaceRequiresAnarchy | Mar 21, 2012 | Reply
Thanks for your comments, PeaceRequiresAnarchy. I read your comments in the link you posted. I understand where you are coming from, but I don’t think you accurately represented my views on anarchy and government. I am not inclined to discuss it here, however, because it has nothing to do with this post on crony capitalism.
The feasibility of anarchy is interesting to discuss as an academic issue, but at the moment is politically irrelevant. While you are arguing that it would be better to have no government at all than a really limited government, others are working to make government bigger and more intrusive than it is today. Wouldn’t we do better to view ourselves as on the same side and work together to find ways to shrink the size and scope of government than to argue with each other about whether orderly anarchy is, in theory, feasible?
Randall Holcombe | Mar 21, 2012 | Reply
No,no,no. Please spare us your retoric.
Mike | Mar 21, 2012 | Reply
Thanks, Mr. Holcombe. I agree that we should view ourselves on the same side and work together to find ways to shrink the size and scope of government. I still think the discussion about whether orderly anarchy is feasible is important though, even though we are far from a time when we might actually have a chance at trying out such a society in practice to see if it would indeed work “well”.
David Friedman advocates an approach to get to an anarchist society that includes privatizing all government services until eventually law, courts, and protection services are privatized. It sounds like you might support that sort of route to a free society.
I think it’s important though to understand the theoretical workings of anarchy that way people don’t see limited government as an “end point” but instead see complete anarchy as feasible and something that should be embraced. I think this is important because it then allows you to completely let go of your belief that some government violence/aggression is necessary for a society to be functional.
Even though the views of limited-government advocates are much closer to my anarchist views than the limited-government advocates’ views are to typical peoples’ (like Biden’s) views, I still see a significant and important difference between my views and the limited-government advocates’ views.
The difference is that I am opposed to 100% of aggression and thus consider coercive governments, no matter how limited they are, as unjust and immoral. But, limited government advocates, despite supporting substantially more liberty than the average person who would vote for Romney or Obama, still holds on to that same belief that Romney and Obama supports hold on to, which is that some government aggression is “necessary” and thus somehow justified. I thus see that as a significant roadblock in the intellectual movement to a free society in that these limited government people still support some government aggression, rather than complete freedom/peace/nonaggression.
So an anarchist can say that no aggression is justified, whereas the advocate of even the most limited government must still hold the same view as the advocate of the biggest most tyrannical government. That is, they must hold the view that some aggression is justified. To all who care about someday achieving a free society, I think it is important to say no, it’s not. And that means anarchy, regardless of whether you think that competing voluntarily-funded protection firms would have incentives to behave unethically and reform another government. I wouldn’t cut one innocent person’s finger off from preventing another person from murdering a dozen other innocent people. It would be wrong to harm the innocent person. Rather, I would put in all effort to prevent the murderer from killing the dozen other people. And if it turned out that it would be “inevitable” that I would fail, again and again, so be it. I think that only the mentality of complete opposition to aggression (that is, the mindset of a completely consistent libertarian) is important to the cause of a free society.
Sorry for the off-post-topic rant, and thanks again. Peace.
PeaceRequiresAnarchy | Mar 23, 2012 | Reply