Arnold Kling

Crony Capitalism

Arnold Kling, Great Questions of Economics
Previous Entry Next Entry

Pop Quiz: Can you name an example recently in the news that indicates a scandalous relationship between politicians and big business?

If you answered "Enron," you need to re-take the test. First, read Virginia Postrel's pieces on steel import quotas in The Wall Street Journal or in The New York Times. In the latter column, she wrote

So the free-trade president has just adopted a blatantly protectionist position. His action will raise prices for everyone who buys or makes anything that uses steel. But it will please two steel-making states: West Virginia, which President Bush won by merely 40,000 votes in last year's election, and Pennsylvania, which he lost by only 200,000 votes.

Discussion Question. Opponents of free trade argue that what we need instead is "fair trade." If another country offers us goods at "unfairly" low prices, why would it help us to put up trade barriers in response?

Return to top