Public-Private Partnerships or Just Crony Capitalism?
Published September 19, 2012 at Rock River Times
“Public-private partnership” has become the latest buzzword among the political class and its supporters. Often used in combination with “economic development” (another favorite campaign slogan), it conjures the rosy image of government and the private sector walking hand-in-hand toward a more prosperous future. More careful observers, however, see nothing more than a mask for cronyism and corruption. In truth, these partnerships may enrich a few, but they hardly ever yield the promised benefits for the public.
The “public-private” concept works in several ways: either government partners with private business to build and maintain public projects, or government invests in private business in order to foster the growth of certain industries, supposedly for the public good. Rather than stay out of the marketplace, government officials use their influence and authority to grant special favors to their friends and colleagues in the business world.
When government officials and business leaders maintain a close relationship for their own financial benefit, as is often the case with public-private partnerships, it is sometimes called “crony capitalism.” Crony capitalism is marked by favoritism when it comes to handing out legal permits, government grants, business contracts, and special tax breaks. Self-serving friendships or familial ties between businessmen and government officials mean that anyone not on the “inside” of these relationships is excluded from the process.
My latest column has been posted at the Rock River Times, check it out:
To many people, it seems natural to think that an elite group of central planners can accomplish more than free people pursuing their own interests. When there is a problem in the economy, they reason, government action is the best way to solve it. This is often called Keynesian economics, after the economist John Maynard Keynes, who believed that government should spend tax dollars to stimulate the economy. More than that, this belief embraces the notion that a very small number of politically-connected individuals know where, when, and how the rest of us should spend our money as well.
Economist F.A. Hayek called this notion a “fatal conceit,” because no one person or group of people can ever hope to manage the complexities of a modern economy. Unfortunately, the predictable results of government intervention in the economy is that government grows even larger than before, a few well-connected people get rich, public debt increases, and the average citizen is left out of the process. More unfortunate still is the fact that the Rockford political class, and politicians in Winnebago County generally, seem to be enamored with this top-down approach.
Read the entire column at the Rock River Times