espite the ideological
miles that separate them, activ-ists in the Tea Party and Occupy Wall Street movements agree on one thing: both condemn the recent bailouts of wealthy and well-connected banks. To the Tea Partiers, these bailouts were an unwarranted federal intrusion into the free mar-ket; to the Occupiers, they were a taxpayer-financed gift to the wealthy executives whose malfeasance brought on the financial crisis.
To both, the bailouts smacked of cronyism. In this paper, I show that the financial bailouts of 2008 were but one example in a long list of privileges that governments occa-sionally bestow upon particular firms or particular industries. At various times and places, these privileges have included (among other things) monopoly status, favorable regulations, subsidies, bailouts, loan guarantees, targeted tax breaks, protection from foreign competition, and noncompetitive contracts. Whatever its guise, government-granted privilege is an extraordinarily destruc-tive force. It misdirects resources, impedes genuine economic
1. According to Occupy Wall Street activists, “Corporations . . . run our govern-ments . . . have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses.” New York City General Assembly, “Declaration of the Occupation of New York City,” http://www.nycga.net/resources/declara-tion/ (accessed April 30, 2012). And according to the Tea Party Patriots, “The Tea Party movement spontaneously formed in 2009 from the reaction of the American people to fiscally irresponsible actions of the federal government, misguided “stim-ulus” spending, bailouts, and takeovers of private industry.” Tea Party Patriots, “About Tea Party Patriots,” http://www.teapartypatriots.org/about/ (accessed April 30, 2012).