Crony Capitalism


It doesn’t matter if you are a Republican or a Democrat—a liberal or a conservative—or if you live or do business in Boise, Idaho or Washington D.C. The impact of a very few special interest groups that represent a small minority of citizens can have significant ramifications on our future growth and our quality of life.

Seven years ago Jonah Goldberg wrote a book devoted to the concept of “crony capitalism” He defined this as a symbiotic relationship between big business and big government. It takes on many forms but is most visible in the many organizations that lobby and give finance to political campaigns at all levels of government. In Jonah Goldberg’s book “Liberal Fascism” he describes the way large business were able to box out smaller and newer startup companies during the rise of Fascist regimes in Germany, and Italy and Japan. The natural progression of this type of business climate led to the devolution of market economies and then to totalitarian forms of governance.

The purpose of our Federal and State Constitutions is to secure the rights of individuals and not groups or classes of people or guilds or special interest groups. Businesses look to governments to provide the rule of law, contract integrity, and the protection of intellectual property. Part of what governments do is to maintain these conditions.

When governments enter into the marketplace as they sometimes have to do to protect individual liberties, they must be very careful that they don’t become a primary buyer or seller of goods and services. When businesses are utilities, it often times becomes difficult to see what the role of government is as it tries to maintain a level playing field between competing interests. A well demarcated line becomes a diaphanous veil and government no longer is the referee, but develops a vested interest in the outcomes of businesses. The regulations imposed on companies and utilities can be used for the good of the people or more often than not as a tool for big business to create barriers to entry for entrepreneurs and competitors who bring new ideas and processes into the market.

Today we see where the money that flows from businesses that contract with government agencies or are regulated by those agencies or both, and who receive the benefits of operating in a secure but hopefully not favored environment has been allowed to have a leverage over all branches of government out of proportion to the number of people they employ or when compared to the State’s overall domestic output. Small businesses and individual contractors who make up the largest proportion of our State have very little leverage with our legislators—though I must admit in my experience many of our legislators in Idaho recognize this inequity.

It is very important to point out that the guilds, trade organizations, lobbyists and unions who represent these organizations have little in common with the customers, employees, vendors or constituents that they themselves serve.

For example does IACA serve the companies it represents? Or does it represent people who buy electricity or health insurance. Part of consumers bills go to help the businesses that serve them as customers pay for lobbyists or political contributions or media access, to give the business an advantage in the marketplace when dealing with their customers. Another example would be the IHA or the IMA both represented on IACI. Does the IHA represent the best interests of the hospitals or the patients they are supposed to serve? What about the IMA and doctors. Does the IMA serve their doctors in the way a guild would represent a profession or do they represent the patients who the doctors are supposed to have a primary allegiance too? And what about the employed doctors, do they work for hospitals or their patients? And who represents them the IHA or the IMA? A portion of every hospital bill goes to support those organizations when legislation is considered regarding patients’ rights, any willing provider legislation, scope of practice, and most recently anti-trust defense. IACI does an outstanding job of representing the interests of the businesses that supports it. But it once again needs to be realized that the interests of these businesses are not always aligned with consumers, patients, customers, and political constituents.

The recent events surrounding the executive director of IACI are sad and unfortunate on any number of levels. A good reputation with one’s family and community are the work of a lifetime.

What the e-mail exposed was a prideful exhibition of self-importance. The Rudyard Kipling admonition of being “drunk with site of power” immediately comes to mind. The community, the businesses represented by IACI, many good individuals including family members and legislators all are made less by this event. But also it points out a governance problem with the IACI Board.

The IACI Board for a long time has felt comfortable with the leverage that they have enjoyed over the legislative process for years in our State. They may even at times have felt entitled to that influence. But they should always remember that they represent only a small number of businesses in this State, and they certainly represent a minority of workers and consumers in the State.

The relationships of IACI / IMA / IHA and others to our legislative process are beyond symbiotic. It often times appears that there is a “Quid Pro Quo” involved.

What happens to the ED of IACI is the business of their Board. I hope there is room for forgiveness and redemption while at the same time I hope the Board is mature enough to recognize the shortcomings and ramifications of their organizations attempt to have undue influence over the legislative process. The behavior of the executive director was only a manifestation of the Board’s desire for disproportionate influence on the process.

In the end I vote for my legislator, and I hope she considers my positions after she has examined her own conscience about an issue and tries to understand the constitutional ramifications of her vote. My desires as a constituent place third in the process.

The place for a lobbyist is to educate and inform. At no time should a campaign contribution or access to media be part of the calculus in making a decision about public policy or the budget, or how much I should or should not be taxed.

IACI and its influence at all levels of government in Idaho is exactly what Jonah Goldberg was talking about when he coined the phrase “crony capitalism”