http://www.nytimes.com/2016/02/23/opinion/campaign-stops/donald-trump-crony-capitalist.html?smprod=nytcore-iphone&smid=nytcore-iphone-share&_r=0Donald Trump, Crony CapitalistBy LUIGI ZINGALES
FEB. 23, 2016
Four years ago, in the first draft of my book “A Capitalism for the People,” I had a section dedicated to how worrisome a Donald J. Trump presidential bid would be for America. I was not prescient. It’s just that having grown up in Italy, I knew how a real estate tycoon — in this case, Silvio Berlusconi — whose career exemplified crony capitalism could become the leader of supposed pro-market forces, and I knew what it meant for the country.
I cut this section after being told that my point was irrelevant: In America, there was no chance that a character like Mr. Trump would ever be seriously considered as a candidate.
Then 2016 happened: After sweeping wins in New Hampshire and South Carolina, Mr. Trump has shattered that notion. The Trump phenomenon caught everybody by surprise. Yet it is a manifestation of a fundamental contradiction long present in the Republican Party: Despite fierce anti-big-business sentiment among many Republican voters, no Republican candidate has emerged to champion them.
This contradiction created the space for Mr. Trump. In spite of being every bit a part of that pro-business establishment, Mr. Trump can pretend to be anti-establishment by sometimes reviling big business, because he doesn’t need its funding for his campaign.
Among self-identified Republicans in a 2010 Booth-Kellogg survey, 43 percent agreed that “big business distorts the functioning of markets to its own advantage,” and only 22 percent disagreed. But the Republican establishment has happily become big business’s mouthpiece. This fracture became evident during the congressional debate on the Troubled Asset Relief Program: Many Republicans in the House voted against it, even though it came from George W. Bush, a Republican.
The Tea Party grew, at least in part, out of this tension, as did the surprising defeat of Representative Eric Cantor, then majority leader of the House, in a Virginia Republican primary in 2014. Mr. Cantor was accused by his opponent, David Brat, of representing “large corporations seeking insider deals, crony bailouts and a constant supply of low-wage workers.”
Why have so few serious anti-establishment candidates emerged in the Republican presidential primaries? A grass-roots campaign for a House or Senate seat is within financial reach for some people, but not a presidential run. Without the support of big business, a Republican candidate would be unable to raise that kind of money.
But Mr. Trump does not need rich donors. To his supporters, he appears to be a free-market evangelist. According to the latest Booth-Kellogg survey, 38 percent of American voters think that Mr. Trump has the most pro-market platform of any candidate (a lead of 13 points over the next candidate). If a cursory glance at his very vague platform — heavy import tax on China, a wall against immigration, etc. — is not sufficient to see how misplaced this trust is, look at Mr. Trump’s career.
As a businessman Mr. Trump has a longstanding habit of using his money and power aggressively to obtain special deals from the government. For example, his Grand Hyatt Hotel in Manhattan was built with the benefit of a decades-long tax abatement obtained through government connections.
In 1985, Mr. Trump circumvented New York State campaign-finance laws by making a $30,000 donation, through several Trump companies, to Andrew Stein, the Manhattan borough president who was running for president of the City Council. Mr. Stein was also a member of the New York City Board of Estimate, the body then responsible for land-use decisions in New York.
Finally, Mr. Trump has a long history of promoting eminent-domain abuses to expropriate private land he wanted.
He is, in short, the essence of that commingling of big business and government that goes under the name of crony capitalism.
We cannot blame voters for being confused about pro-business versus pro-market politicians. The Republican establishment deserves most of the responsibility. Being pro-market means being in favor of competition and against excessive concentration, as Theodore Roosevelt was. Business executives are pro-market when they want to enter a new sector.
But when they become established in a sector, they favor entry restrictions, excessive licensing, distortive regulation and corporate subsidies. Those policies are pro-business (in the sense that they favor existing businesses), but they are harmful and distort a competitive market economy..
With the pretense of defending free markets, the Republican Party consistently supported big business. When did any Republican presidential candidate — other than Mr. Trump — speak in favor of some antitrust enforcement? When did he campaign for tougher enforcement against white-collar crime? When did anyone call for free trade in pharmaceuticals? Or for more competitive pricing of drugs bought by Medicare?
The forced identification between the interest of markets and that of business practiced by the Republican establishment in the last 30 years made it easier for Republican voters to fall for Mr. Trump, a businessman who pretends to uphold free-market principles.
It is an indication of a country’s institutional corruption when inside a main party the only alternative to the prevailing crony capitalism is a tycoon with a long history of shady deals.
