New Research From Henderson on Cronyism

Today Mercatus published a new piece on the economics and history of cronyism. It is by Professor David Henderson. David highlights his piece in an OpEd over at Real Clear Politics and in a blog post at EconLog. In the latter, he quotes a fascinating section from the paper about a certain Texas Congressman, his wife, the FCC, and a Texas radio station.

While that is one of my favorite parts of the piece, I also really like this anecdote:

Members of Congress are notorious for pushing for a particular weapons system or airplane engine even when Department of Defense officials have made it clear they do not want these things. In the 1990s, for example, Dianne Feinstein, a U.S. senator from California, pushed for the B-2 stealth bomber even though the Defense Department did not want to spend further money on the program. Senator Feinstein made an interesting slip in defending the program that gave away her true motive: “The bomber,” she declared, “can deliver a large payroll, precision or carpet.” In the Congressional Record the next day, her remarks were amended to read “payload.”

The anecdote brings to mind the impending defense sequester and the rumblings from certain Republicans that it will eliminate jobs (who knew that the power to “raise and support armies” was intended as a jobs program?).

2 thoughts on “New Research From Henderson on Cronyism

  1. Chad

    I like seeing the example of the B-2 used…fascinating machine, but if you look at where all the different parts are manufactured, they were intentionally spread around to a number of Congressional districts to increase the number of Representatives who would vote to preserve the program to avoid losing jobs back home.

  2. Ladan Nekoomaram

    Great analysis (the gum visual) on how cronyism actually decreases wealth. It’s about more than the moral argument–it’s about what’s right for our economy.

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