Bastiat on Crony Government

Wednesday, February 01, 2012

Via RealClear Politics is a link to a blog that excerpts a comment made by the economist Frederic Bastiat 150 years ago that is, I agree, as "fresh as a daisy". Here is the excerpt:

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law -- which may be an isolated case -- is not abolished immediately, it will spread, multiply, and develop into a system.

The person who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state because the protected industry is thus able to spend more and to pay higher wages to the poor workingmen.

Do not listen to this sophistry by vested interests. The acceptance of these arguments will build legal plunder into a whole system. In fact, this has already occurred. The present-day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it. [bold added by Adam Sharp]
Notice the clarity here! Bastiat states that the government is acting the part of a criminal enterprise above the law. Note, too, the recognition that controls breed controls, from the standpoint of the crime victims seeking reprisals. (Other victims will also run to the government for "redress" when the economic distortions caused by central planning inevitably -- but not always obviously -- harm their interests. This "redress" will also excuse the creation of more economic controls, rather than the repeal of the ones already on the books.)

The only thing I can add here is that I strongly object to the term "crony capitalism". Capitalism exists only when the state does not attempt to run any part of the economy, and political cronies can only exist when it does. Perhaps "crony government," a term I recall Harry Binswanger suggesting, would be a better. Whatever we call it, we should keep from blaming capitalism by association for a problem it does not cause.

-- CAV


Today: Changed "Other crime victims" to "Other victims" in parenthetical comment. 


Anonymous said...

I would opt for just using the term cronyism and describe it with the phrase "capitalism in name only".

Vigilis said...

Gus, although F. Bastiat's quotation excerpt has remained perfectly fresh, 162 years of unfortunate legal precedents tend to render such crispness legally suspect.

Lawyers have most American citizens convinced that only attorneys are capable of and should be allowed to interpret case law. How very convenient and lucrative for them!

Gus Van Horn said...


I disagree, for that fails to place the blame where it belongs: on the inappropriate use of government.


May be, but the problem doesn't lie in the interpretation of our laws, but in which laws are legislated, and which we're allowing to remain on the books.


Anonymous said...

We don't have true free market capitalism - we have corporatism.

Gus Van Horn said...

The whole point of this post is that we do not have free market capitalism. The "corporatism" you see is a direct result of the fact that some large businesses receive government favors.