Florida Gov. Ron DeSantis recently signed legislation that strips Walt Disney World of its independent, special-district status after the company objected to the state’s new law regarding discussion of sexual orientation or gender identity in classrooms. While the motive behind this action is problematic, some of its supporters argue that there is nothing to fret about, since it was time to revoke a cronyist privilege granted to Disney 50 years ago anyway. But if this is really a fight against cronyism, the legislation goes about it the wrong way.
Cronyism is the unhealthy alliance of business and government. It takes the form of government officials at the state, local, and federal levels granting special privileges to particular companies or industries. These privileges can include special tax breaks, government loans, direct subsidies, or—as in Florida—so-called “special districts.” I spend a great deal of my work hours researching the harm cronyism causes to citizens. That’s because, as my colleague Matthew Mitchell wrote a decade ago, “Whatever its guise, government-granted privilege [to private businesses] is an extraordinarily destructive force. It misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector.”
If imports were a drag on growth, we should expect to see some connection in the real world between the change in imports and economic growth. If anything, the correlation seems to run in the opposite direction from what the media imply. In recent decades, stronger economic growth has tended to correlate with a rising U.S. trade deficit (as Griswold found in this Cato study.) In the first three years of the Trump administration (2017–19), as GDP growth reached a respectable annual average of 2.5 percent and a total of 6 million net new jobs were added, the overall goods deficit increased by $115 billion, or 15.7 percent. In 2021, the first year of the Biden administration, the U.S. economy expanded 5.6 percent as it shook of the Covid shutdown while the trade deficit grew 18.4 percent from the year before.
Finally, the “trade deficit as a drag on growth” narrative falls even under its own Keynesian logic. The same news stories that repeat the mantra that imports dampen growth routinely note that what drives the rise in imports is rising domestic demand. For example, Axios reported this morning, “Trade subtracted 3.2 percentage points from overall GDP growth, as exports fell sharply and imports soared. This reflects a U.S. economy with significantly stronger domestic demand than the rest of the world” (emphasis ours).
This notion that it is always someone else rather than one’s self who is in need of improvement is based on several false assumptions. It denies any extension of understanding to the one person on earth on whom one has the greatest influence— himself. It stamps the speaker as thinking of himself as a finished intellectual product, as all-wise. And, finally, it ignores the idea of truth as an object of infinite pursuit. This notion asserts a type of egotism in the presence of which learning cannot take place. It is death to the spirit of inquiry.
Economist David Henderson, a fellow at the Hoover Institution, writing at EconLib.org, April 25:
The 2022 Economic Report of the President is finally out. . . . Here’s an interesting passage . . .:
“Official estimates for the year 2021 will not be released until late 2022, but in 2020, the poverty rate fell to 9.6 percent from 11.8 percent in 2019, according to the Supplemental Poverty Measure, which accounts for the resources that many low-income households receive from the government (Fox and Burns 2021). Declines in poverty were even larger for particular racial and ethnic groups, with the supplemental poverty rate among Black and Hispanic Americans falling by 3.7 and 4.9 percentage points, respectively.” . . .
The paragraph quoted above is accurate. But notice what they don’t say. They don’t talk about the huge drop in black and Hispanic poverty from 2017 on. I think part of the reason is the 2017 tax cut. But whether you agree with me or not about the cause, the point is that they focus only on the part that they can arguably attribute, at least in part, to the huge federal subsidies in 2020.
I’ve met hundreds of such students. Here’s what they typically tell me.
- As you’d expect, they’re GMU fans because we say so much that differs from what their official professors tell them.
- One major difference is ideological: GMU professors are a lot more libertarian than their official professors.
- Another major difference is sheer iconoclasm. Official professors respect – or at least fear – current political orthodoxy. GMU professors don’t agree with every thoughtcrime (who does?!), but we’re happy to at least entertain almost any forbidden idea.
- Then there’s breadth: GMU professors care about much bigger and more interdisciplinary questions than their official professors.
- Finally, students detect big gaps in curiosity and enthusiasm. Most official professors, they aver, are boring and narrow. When a student asks them questions, their goal is to swiftly end the conversation and get back to work. GMU economists, in contrast, love, savor, relish, adore, and hunger for intellectual conversation.
That’s what our student fans say. What, though, do the official professors say when students ask them about GMU econ?
To be blunt, the official professors are not kind. True, most are aware that we’re alive. That’s a big implicit compliment; after all, as Hollywood knows, the only thing worse than being talked about is… not being talked about. But what the official professors explicitly say is decidedly uncomplimentary:
“Just a bunch of ideologues.”
“They don’t do real research.”
Are the official professors correct? Let’s start with the “ideologue” charge.
If an “ideologue” is anyone who accepts some Big Ideas, then GMU economists are clearly ideologues. But then again, virtually every professor accepts some Big Ideas. You might think that being a moderate Democrat isn’t a Big Idea, but of course it is. Almost everyone throughout human history would have strongly disagreed with most of what moderate Democrats believe. To be a moderate Democrat is to say that you’re right, and the rest of humanity is wrong. Possibly true, but definitely big.
If an “ideologue” is anyone who accepts some Big Ideas dogmatically, then the label seems unfair. GMU economists are very familiar with other views, we value conversation and debate with people who disagree with us, and we produce what at least appear to be actual arguments. No one’s perfect, but we at least try to start with broadly acceptable premises and see where they lead. Not to be unfriendly, but a large share of non-GMU-econ academics are dogmatic slumberers by comparison.