Quotation of the Day…

by Don Boudreaux on May 13, 2016

in Adam Smith, Crony Capitalism, Other People's Money, Seen and Unseen, Subsidies, Trade

… is from page 212 of David Schmidtz’s excellent essay “Adam Smith on Freedom,” which is chapter 13 in Ryan Patrick Hanley, ed., Adam Smith: His Life, Thought, and Legacy (2016):

First, we labor under a ubiquitous threat of being shackled by crony capitalists.  [Adam] Smith wondered how internally stable a free market could be in the face of a tendency for its political infrastructure to decay into crony capitalism.  (The phrase “crony capitalism” is not Smith’s.  I use it to refer to various of Smith’s targets: mercantilists who lobby for tariffs and other trade barriers, monopolists who pay kings for a license to be free from competition altogether, and so on.)  Partnerships between big business and big government lead to big subsidies, monopolistic licensing practices, and tariffs.  These ways of compromising freedom have been and always will be touted as protecting the middle class, but their true purpose is (and almost always will be) to transfer wealth and power from ordinary citizens to well-connected elites.

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