A Cautionary Tale or a Hasty Generalization?
Cronyism has a history in the American partnership between industry and the government, but is it the basis of ‘every law’?
In his lecture “Cronyism in America: The Nation’s First Big Business”, Dr. Patrick Newman discusses how cronyism—or government intervention that benefits special interests—is arguably America’s first industrial giant. Newman also makes a bold claim at the very beginning of his talk that “most laws in the United States are examples of cronyism”, and while we would think that most laws benefit the public, he claimed that most do not. After this hasty generalization, I was immediately skeptical of the remainder of his talk, and my skepticism was not dismissed as little empirical evidence was given and only one anecdotal example was provided. While I appreciate the case study that was presented on the Transcontinental Railroad, I feel like it would have been a much more effective argument to connect it to systemic problems of cronyism. Instead, it seems Newman just took one example of cronyism and then claimed that every government-sponsored law ever was cronyism as well. I supply some more reflections below.
Is Government a Good Catalyst?
The example of the Transcontinental Railroad that Newman provided as cronyism is a good anecdote representing how the government is not always the most efficient industrial engine. Newman detailed how the different parts of the railroad owned their own creditors and construction companies, which would inflate the price, and bribe government officials to not say anything by giving them stock in the company. All the while, the railroad was poorly built, which led to unsafe infrastructure. Newman then presented the example of the Great Northern Railway and how it was built privately, for cheaper, and with no government intervention. This is a great case study of how government can often do worse at providing the public good than the private, free-market industry can.
However, I have some questions. First, would the Great Northern Railway even have existed if not for the precedent set by the government-funded Transcontinental Railroad? It is easy to point at those after the first to do something and claim ‘Well, they could have just done it first, with no subsidy or intervention!” But is that a reality? I think about the space race with the USSR in the middle of the 20th century. The United States had a vested interest in space travel, so it delegated resources to NASA to compete to be the first in space and on the moon. Now, someone could look back and say, “Well, SpaceX or Blue Origin could have done it for a fraction of the price!”, but without government-inspired precedent, would we even have gone to space in the first place? I think about the modern example of healthcare. Free-market conservatives often balk at the Affordable Care Act, Medicare, and Medicaid and say that a “free market, private alternative would be much better.” But where is that alternative? And would it even have been discussed if Obamacare had not been instituted in the first place? I feel it may be important for the government to take the first step in some areas, even if the output is imperfect, to inspire others to improve on public priorities. I also think there are many ways that government-funded projects can be more fair, such as in a public bidding process, and instituting bans on public officials from trading stocks.
Show Me the Data
Newman claimed that the “empirical record” showed that most laws in America are examples of cronyism, but he only provided one example, and it was not an empirical example. If cronyism is so rampant and everything the government does is a disservice to Americans, then where is the data? I believe that if prodded further, Newman would have been able to provide data, but unless a significant amount of analyzed data exists, I am not sure this broad claim can ever be supported. I believe that data should be the foundation for all decisions made, especially decisions that affect the public. Data-driven analysis is based on fact, and while it is maybe not as easy to act on as intuition, common sense, or individual aspiration, action based on data is incredibly important. In addition, I think data drives solutions. Once data is acquired and analyzed, action can be taken. I feel this talk would have been more impactful if the speaker said: “Here is data that supports how special interests are ingrained in so much of what our government does, here are some solutions on how we can get back to a baseline.” It would have been great to ask Newman these questions at the talk if I were there! Bottom line, I agree that cronyism is not a good thing; but in order to do something about it, the data has to be convincing, and solutions have to be provided.
While I have explored various perspectives in this essay, it is important to note that I do not necessarily ascribe to any argument made here 100%. This is a writing exercise, and I sought to explore various perspectives after watching the lecture, as per the assignment instructions.