Cronyism Is Destroying the Public's Trust

By John Garen

Evidently, the realization that the government has not solved our problems has hit home and a frustration has set in. Polling data indicate that our trust and confidence in government is on shaky ground: Gallup surveys show that less than 15 percent of the public report confidence in Congress and fewerthan 20 percent say they trust government. Both have been falling for quite some time and are now near all-time lows.

A competitive presidential race is about to come to a close, but it lacks the enthusiasm of the 2008 election. There is little of the passion for either candidate, despite heightened worries over the economy and an unemployment rate that has been near or over 8 percent since 2009.

An important factor in this growing distaste for politics can be summed up in one word: cronyism. It seems everywhere now, but is not really new. Of course, cronyism wastes resources on boondoggle projects and encourages squandering effort on lobbying the government. But it also has the potential to shatter the public’s trust in many of our institutions of government. Will either party or presidential candidate do anything about it?

If so, the lesson that needs to be learned is that government should nurture the public’s trust and cooperation. Big government is often viewed as a solution to numerous problems. But a smaller, narrowly focused government – allowing few opportunities for cronyism – is the best prospect for regaining the public’s trust and ensuring the effectiveness of government.

Why be concerned about the public’s engagement with and trust in government? Abraham Lincoln said, “With public sentiment, nothing can fail; without it, nothing can succeed.” In other words, the public’s buy-in is needed for many functions of government to work as intended. This is true of the government functions that nearly all agree on: enforcement of personal rights, protection of persons and property, prevention of fraud, assisting in enforcement of mutual agreements and contracts, and promoting competition and preventing monopoly. Public cooperation in these endeavors eases social interactions and also raises economic productivity, while noncooperation does the reverse.

Public cooperation comes from the public’s trust, and it’s a trust that must be earned. A government that repeatedly engages in improper activities and squanders the public’s money on ill-conceived projects and on favored interest groups—as cronyism does —loses the public’s trust and cooperation and augments the slide into social discord and economic stagnation.

Can a government that squanders money on ill-fated “green” energy initiatives be trusted to approve energy-saving appliances? If government airport screeners are caught stealing iPads, can they be trusted to implement airport safety measures? What if the same members of Congress who oversaw regulation of the financial sector during the meltdown also designed new regulations of that sector? Can we trust that it’s done right? If the answer to these and similar questions and is “no,” then public cooperation with government is withdrawn. 

Unfortunately, cronyism seems to surround us. When we see subsidized loans to companies with the right political connections, the continual movement between Wall Street and regulatory positions in Washington, and the deal making with interest groups regarding healthcare reform, people lose faith in the system. These are recent stories, but the problem long predates the current administration and Congress.

Over the years we have heard calls for greater government power and programs that promise to bring great things, like initiatives to end poverty, to remake the American manufacturing sector, to eliminate reliance on fossil fuels, to build nations, to promote home ownership, and to reinvigorate K-12 education. The results of these programs have been deeply disappointing. But another outcome is that the greater power conferred on government has almost invariably heightened political competition for favors and resulted in cronyism. Mistrust of government has inevitably followed.

When government becomes a means for soliciting and rewarding interest groups, society is headed down the road to cronyism and its regrettable consequences. Is our country heading down this path? There is a good deal of evidence that, at a minimum, the United States has drifted uncomfortably far down this road.

Riding ourselves of cronyism by restoring government to its more appropriate and narrower focus is easier said than done. Political and electoral processes tempt politicians to cater to special interests at every turn. But it would be nice if policy makers would really try to hold government to protecting the best interests of all, instead of playing the cronyism game. 

 

John Garen is the Gatton Endowed Professor of Economics at the University of Kentucky and author of research on cronyism and the erosion of public trust from the Mercatus Center’s Project on the Study of American Capitalism.

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