The War on Small Business by Carol Roth

Author:Carol Roth
Language: eng
Format: epub
Publisher: Broadside e-books
Published: 2021-05-11T00:00:00+00:00

Chapter 11

Trading Capitalism for Cronyism

Why the “Game Being Rigged” Is Coming from Government, Not Capitalism

By the end of April 2020, around one-third of the coronavirus deaths in Indiana had been in nursing homes and long-term care facilities. Though many other states were reporting data on a facility-by-facility basis, according to the Indianapolis Star, the state of Indiana was withholding those data and relying on facilities to report statistics directly to families. Though Indiana governor Eric Holcomb blamed it on private enterprise, when the Indianapolis Star had investigated Indiana’s nursing homes the previous month, it had found that 90 percent of the state’s facilities “are owned by county hospitals, which are units of local government,” and received billions of dollars in public money, including Medicaid and Medicare payments.

The Star’s investigation also revealed that the hospitals had, over the two previous decades, diverted north of $1 billion in federal payments for nursing homes to unrelated projects, many of which were undisclosed by county hospitals.

The pressure caused by the discovery pushed Indiana government officials to agree to share aggregate facility data but not data on a facility-by-facility level. The Indianapolis Star reported advocates as saying that the entire scenario “reeks of cronyism” and did a disservice to the state’s residents. A frustrated resident who had been trying to get information on a facility his mother was in was quoted as saying, “I’m guessing the nursing home association has a very close relationship with the current administration, so they are trying to block it.”1

It is not surprising that we would see cronyism playing a substantial role in the 2020 fallout because it has been an increasing factor in government creep, power, and, ultimately, failure. It’s also a pillar of the war on small businesses.

To understand that and why it is the antithesis of capitalism and protection of individual rights and ultimately how it has created a government burden that has played a significant role in 2020, it is vital to understand what cronyism is and is not.

“Crony Capitalism” Is to Capitalism as Chinese Checkers Is to Checkers (i.e., Cronyism Is Not Capitalism)

To understand cronyism, we have to compare and contrast it to capitalism, with which it is often confused. We often hear as an objection to capitalism that “the game is rigged” and that “the few and powerful get special treatment.” However, though the blame is misplaced on capitalism, what those decriers are objecting to is not free markets but government power.

Inexplicably, people who raise those issues typically think that more government power is the solution.

The concept of capitalism and its free market foundation means that companies must compete in the market for customers, talent, and capital based on innovations, risk, product differentiation, customer service, and other tools at their disposal. A free market allows any person or entity to enter the market at any time and try to compete on those factors. Furthermore, no entity receives any special advantages it hasn’t earned.

However, government power—without exception—leads to interference with the free markets under the label of cronyism.

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