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OP-ED | What Would Friedman Say About Malloy?

by Heath W. Fahle | Aug 3, 2012 4:22pm
(8) Comments | Commenting has expired
Posted to: Opinion

If he still lived, Tuesday July 31st would have marked the 100th birthday of Professor Milton Friedman. The Brooklyn-born son of immigrants, Friedman established himself as one of the world’s foremost economists, culminating in 1976 with the Nobel Prize for Economics. But if Dr. Friedman were able to celebrate his birthday in Connecticut this year, he may well have taken the opportunity to chide the state’s leaders for the cronyism that now masquerades as “economic development”.

Dr. Friedman’s 1978 book “Free to Choose” was turned into a ten part series of the same name by PBS in 1980. Interested viewers can watch the entire program via YouTube. Each episode starts with a 30 minute video narrated by Dr. Friedman highlighting examples and case studies to prove his views on markets and the economy and then moves to a half-hour discussion with Friedman and an assembly of guests debating the points presented in the video.

These debates, marked by unfailing politeness amid sharp disagreement, stand in stark contrast to what passes for debate in the current political context.

Amid an exchange in the first episode, entitled the Power of the Market, Friedman speaks about opposition to free markets from the business community: “The businessmen are very different. Every businessman wants freedom for somebody else. But he wants special privilege for himself. He wants a tariff from Congress and the Congressman, well the way in which the Congressman gets elected is by performing favors for constituents.”

Though spoken more than three decades ago, the words seem equally appropriate today. While Friedman’s students and supporters around the world gathered at one of 123 events in his honor this week, Connecticut’s leaders spent it heralding the latest economic development news.

Gov. Dan Malloy announced this week that Deloitte LLP will be the seventh company receiving government subsidies in exchange for expanding in Connecticut. Through funds offered under Malloy’s “First Five” program, the company will receive between $9 million and $14.5 million in state funds if they meet job creation benchmarks over the next six years.

That announcement came close on the heels of a similar one last week in which the retail giant Dollar Tree, Inc unveiled a plan to locate a distribution center in Windsor. The state incentive package on the deal could cost up to $27.5 million.

Concomitant with these announcements is the still unraveling Speaker Chris Donovan influence peddling scandal in which eight arrests have already been made. Donors seeking special privileges from the legislature for the roll your own tobacco industry are purported to have organized straw donors to Mr. Donovan’s campaign for U.S. Congress in exchange for his help. The Donovan for Congress campaign is alleged to have received more than $27,000 in illegal contributions and has since handed those contributions back to the federal government.

Similarly, there can be little doubt that companies coaxed to Connecticut by Gov. Malloy will be nothing if not vigorous in their support for the Governor when he seeks re-election in 2014. Though Malloy’s government-funded campaign will hold itself up as a model of cleanliness, the ability of SuperPACs to play in state politics assured by American Traditions Partnership, LLC v. Bullock means that the debt will be repaid one way or another.

The result will be the worst of all possible worlds for taxpayers as they both pay for a government-funded campaign system and the cronyism that facilitates the unsavory aspects of the private-funded system.

As noted by Dr. David R. Henderson in his paper The Economics and History of Cronyism: ‘There is only one way to end, or at least to reduce, the amount of cronyism, and that is to reduce government power.”# Similarly, Milton Friedman viewed his role as an agent of change, hoping to persuade people that their interest was better served by expanding individual liberty and curtailing the insidious alliance government and business.

The effort must continue.

Heath W. Fahle is the Policy Director of the Yankee Institute for Public Policy and a former Executive Director of the Connecticut Republican Party. Contact Heath about this article by visiting www.heathwfahle.com


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(8) Comments

posted by: SalRomano | August 4, 2012  8:48pm

Participants lured to Connecticut by Gov. Malloy’s enticement program—have already fleeced the state, thanks to a liberal Malloyism ploy.

posted by: borisvian | August 5, 2012  8:02am

Mr. Fahle decries the dangers of what might(!) happen to the “worlds of taxpayers” with Gov. Malloy to “prove” a point, instead of bringing up the facts of Republican cronyism of J. Rowland, et al.

It’s not Gov. Malloy who was arrested in his office by the FBI, but Republican Rowland. Also, it’s not Gov. Malloy who is currently under investigation, but Republican Rowland.

And you almost touched me with your concern over the “ability of SuperPACs to play…”, how could you possible omit the fact that it, too, is due to Republican cronyism in the Supreme Court?

posted by: Lawrence | August 5, 2012  8:10am

“there can be little doubt..”

What facts do you base this statement on? There are none. It’s your presumption, based on your own politicial bias.

Again, another interesting topic and lead-in which ends up in the same old place.

And you don’t even mention the Citizens United case.

Such joy for the right-wing: bash Malloy for helping businesses in CT, bash Malloy if he does not help businesses in CT.

Fortunately, the only one buying it and regurgitating it is CT’s tiny, right-wing echo chamber.

posted by: robn | August 5, 2012  7:10pm

If the market were truly freed, there wouldn’t be such thing as a bank right now. And please don’t tell me this was a product of too much existing regulation. The crisis of 08 was a product of Gramm–Leach–Bliley which dissolved the prudent legislation in place since the end of the Great Depression ( the time before last when markets were allowed to roam free like wolves ).
Free capital won’t ever be put to its best and most useful purpose, it will be put to the most selfish purposes of the one that wields it.

posted by: halifax | August 6, 2012  7:35am

halifax

Since Mr. Winkie Fahle is so enamored with Nobel Price winners, how about he tell us all about Paul Krugman? Oh, of course not. The leader of the Party of the Felon-in-Chief ain’t gonna go there.

What a joke.

posted by: Heath | August 6, 2012  11:29am

Heath

borisvian said:

Mr. Fahle decries the dangers of what might(!) happen to the “worlds of taxpayers” with Gov. Malloy to “prove” a point, instead of bringing up the facts of Republican cronyism of J. Rowland, et al.

On your point about what “might” happen, don’t kid yourself. The Governor proposed legislation that would have done legislatively what the US Supreme Court did in ATP v. Bullock.

On your Rowland point, I think the “all Republicans are crooked” talking point seems silly in light of Donovan, Newton, and Ganim. Here’s a new talking point for you: “Some people are crooked in every political party.”

On SuperPACs, I refer you to the excellent NY Times magazine piece on the subject by Matt Bai. SuperPACs are a logical but unfortunate byproduct of misguided campaign finance reforms in my view. Instead of allowing it to flow transparently to candidate campaigns, money now goes to private organizations that have a perfectly legitimate right to participate in politics.

posted by: Heath | August 6, 2012  11:47am

Heath

Lawrence said:

“there can be little doubt..”
What facts do you base this statement on? There are none. It’s your presumption, based on your own politicial bias.

After being handed millions of dollars by the Governor, these corporate execs are going to bite the hand that fed them by supporting someone else?

Though Malloy has expanded the practice greatly, economic cronyism isn’t new in CT. Rell & Rowland did it too. The supposedly conservative Governor of Alabama did it to the tune of $158 million to get Airbus. It is misguided in my view, regardless of who is doing it.

And you don’t even mention the Citizens United case.

ATP v. Bullock is Citizens United for state and local politics. I wrote about state politics.

Such joy for the right-wing: bash Malloy for helping businesses in CT, bash Malloy if he does not help businesses in CT. Fortunately, the only one buying it and regurgitating it is CT’s tiny, right-wing echo chamber.

Here is my thesis: the government should treat similarly situated people similarly. Rather than choosing a few individuals or groups for preferential treatment, the government should, as in this case, tax businesses the same regardless of when they got here or how successful they are. That tax burden should be as low as possible so as to attract businesses to start or expand here without the need for state aid.

What part of that is so insane that it cannot be treated logically as a political position?

posted by: Heath | August 6, 2012  11:54am

Heath

robn said:

If the market were truly freed, there wouldn’t be such thing as a bank right now. And please don’t tell me this was a product of too much existing regulation. The crisis of 08 was a product of Gramm–Leach–Bliley which dissolved the prudent legislation in place since the end of the Great Depression ( the time before last when markets were allowed to roam free like wolves ).
Free capital won’t ever be put to its best and most useful purpose, it will be put to the most selfish purposes of the one that wields it.

I don’t think I attributed the current Administration’s cronyism to the 2008 financial crisis.

In fact, I’m pretty sure I attributed it to the businessman’s desire for special privileges for himself and the politician’s desire to get re-elected by doing favors for constituents.

And I’m pretty sure that like Friedman notes in the video, my goal is to persuade people that the current approach to economic development is misguided and that there is political profit for politicians in advocating a different view.