That’s the title Reason gave to my cover story in the March issue.

An excerpt:

“Donald Trump’s Carrier Deal is Pure Crony Capitalism,” read the headline of a Newsweek op-ed by American Enterprise Institute fellow Claude Barfield. Trump supporter Sarah Palin denounced the deal as “crony capitalism,” too, insisting in a op-ed of her own that “intrusion using a stick or carrot to bribe or force one individual business to do what politicians insist…isn’t the answer.” Certainly they had a basis for that reaction, especially after Vice President-elect Mike Pence’s statement that “the free market has been sorting it out and America’s been losing.”

But a closer look reveals Trump’s up to something a little different, and potentially more damaging. His actions will almost certainly lead to more cronyism than we have now. But his behavior in the Carrier case looks more like President John F. Kennedy’s treatment of U.S. Steel in the early 1960s and President Barack Obama’s treatment of General Motors and Chrysler bondholders in 2009. And it has disturbing implications both for our economic well-being and for our freedom.

Another excerpt:

Someone who doesn’t worry about the implications of Trump’s actions but instead actually likes them is Steve Pearlstein, a columnist for The Washington Post and a professor of political and international affairs at George Mason University. In a Post column titled “Donald Trump’s Carrier deal could make American capitalism better,” Pearlstein writes: “[Trump] knows that he and his new commerce secretary will have to engage in a few more bouts of well-publicized arm twisting before the message finally sinks in in the C-Suite. He may even have to make an example of a runaway company by sending in the tax auditors or the OSHA inspectors or cancelling a big government contract. It won’t matter that, two years later, these highly publicized retaliations are thrown out by a federal judge somewhere. Most companies won’t want to risk such threats to their ‘brands.’ They will find a way to conform to the new norm.”


In his 1944 classic, The Road to Serfdom, economist Friedrich Hayek wrote eloquently about the danger to people of accumulations of government power: “As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.” Larry Summers, drawing on his inner Hayek, actually said it well also. “Reliance on rules and law has enormous advantages,” he writes. “It greatly increases predictability and reduces uncertainty. It reduces expenditures on both guarding property and seeking to appropriate property. It promotes freedom because most of the people most of the time do not take political positions with a view to gaining commercial advantage. The advantages of the rule of law are so great that I would claim that there is no country more than 2/3 as rich as the United States that does not have a strong tradition of the rule of law based capitalism. And I know of no country where the people are free where the rule of law does not largely govern market interactions.”