Sunday, May 04, 2014

Gary Becker, crony capitalism, inequality

I just saw that Gary Becker has died. He was one of the greats and his ideas will stimulate others for many years. The Becker-Posner blog was required reading in my class at USC -- where students were asked to pick one of the posts and elaborate in a term paper. BP managed to cover most of the interesting public policy topics -- and to demonstrate the applications of economic thinking.

Crony capitalism is the capitalism of our time.  Becker's 1983 paper made it clear that the incentives surrounding most public policies -- focused benefits and diffused costs -- make crony capitalism almost an inevitability.

The extent of lobbying, the size and complexity of the IRS tax code, the heft of the federal register, the size of various fiscal deficits (funded or unfunded) at all levels of government -- in almost all nations -- attest to the problem as well as Becker's wisdom explaining it all.

It's a wonder (and a testament to markets) that we have any growth at all.

Everyone's favorite topic these days inequality. Today's NY Times Magazine, for example, feasts on it. Our crony capitalism exacerbates inequality. Whole professions are closed to new entrants. The Institute for Justice devotes itself to fighting bizarre licensing laws. Similarly, politicians devote themselves to preserving the status quo in lower education. Wall Street bailouts enriched the rich. The list goes on. It's no small irony that those who make a career fretting over inequality are deeply involved in locking it in.


The ideas of free market economists are best spread by people with real political credentials and savvy.  Here is a recent public lecture by Ron Paul. Listen to the whole thing.