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The Conservative Crusade Against Crony Capitalism Turns Out to Be Another Crusade Against the Safety Net

Drew Angerer/Getty Images

The explosive response to Thomas Piketty’s Capital in the Twenty-First Century has provoked mostly predictable reactions from the right. Some conservatives are questioning whether inequality is really getting worse, while others are questioning whether it’s even a problem. But the intellectual weight of Piketty’s arguments and the apparent popularity of his thesis are forcing at least a few conservatives to respond in other ways—namely, by urging Republicans to talk about their own solutions for inequality.

Here, for example, was strategist and Weekly Standard editor Bill Kristol on Sunday, during one of his regular appearances on “This Week”:

[I have] some quarrels with Piketty. But, actually, I, myself, tell my fellow conservatives, don't be afraid of this. Let's have a debate about what policies are better for the middle class. I think the Republican Party has become not critical enough of crony capitalism. … So there's no reason not to go back to those policies, which were pro-middle class and have new policies that really care about middle America and take on crony capitalism.

I, for one, would welcome a serious conservative agenda on inequality. Liberals don’t have all the answers and, surely, conservatives can come up with some creative new ways of improving economic security for the poor and for the middle class.

But is “crony capitalism” conservatives' best answer to Piketty?

The phrase sounds familiar because it’s the same one conservatives started tossing around in 2010 and 2011, when they were making a big fuss over Solyndra and the supposed corruption of Obama Administration efforts to bolster the green energy industry. (My former colleague Tim Noah traced its origins back to John Stossel, the libertarian journalist from Fox News.) The slogan became popular again in late 2012 and early 2013, following all that talk about the “47 percent” and the “takers” that bruised Republicans in the presidential election. It was about that time, as I recall, conservative writers like Tim Carney and Ben Domenech started transforming the slogan into a more formal agenda.

The idea, very roughly speaking, is to highlight the ways that government helps the wealthy and well-connected—and then strip away those programs and policies, so that, finally, the little guy can get ahead. In some tellings, it's about opposing "bigness"—as in big business and big government. These days, the agenda typically includes items like eliminating Obamacare’s “risk corridors,” which protect insurers from unexpected losses, and downscaling or eliminating the Export-Import Bank, which provides loan guarantees to American companies that can't obtain cheap credit from the market. The risk corridors amount to an insurance company “bailout,” conservatives say, while the Export-Import loans amount to a huge gift for Boeing and a few other companies. Among those making the case in Washington right now is Mike Lee, the Republican senator from Utah and a leader of the right wing. Rush Limbaugh has taken up the banner, too—most recently as a cudgel against immigration reform.

In principle, clearing out overly cozy and sometimes corrupt relationships between government and business is a worthy goal—one, in fact, that would have plenty of support on the left. Liberals rarely celebrate these arrangements. They merely tolerate them as politically necessary means for achieving broader goals, whether it's helping millions of people to get health insurance or keeping manufacturing jobs in the U.S. If conservatives are up for achieving those same goals without forking over cash to corporations, liberals will stand with them. Similarly, if conservatives want to improve transparency or curb lobbying, so that corporations find it harder to manipulate the political system, there’s a vast network of progressive-leaning, good-government organizations working on those causes already.

Ryan Budget Cuts via CBPP

But these aren’t the sorts of changes most conservatives have in mind. They don’t want to eliminate Obamacare’s reliance on private insurers. They want to eliminate Obamacare itself—and replace it either with nothing or with something that would expose millions more to crushing medical bills. Similarly, it’s not as if conservatives targeting the Export-Import bank have come up with some great new agenda for bolstering wages or creating jobs, either for the short- or the long-term. On the contrary, they continue to oppose measures like extended unemployment insurance (which at the very least would help the currently unemployed pay their bills) and infrastructure spending (which would take advantage of low borrowing rates to make investments that even some relatively conservative economists agree make a lot of sense right now). 

It’s hard to imagine how such a conservative agenda would reduce inequality even a little bit. If anything, it would seem to increase inequality. Say what you will about the Affordable Care Act, but it includes a pretty substantial redistribution of money down the income scale. Taking it away means taking away Medicaid and tax credits for the poor and (to a lesser extent) the middle class, even if it also means taking away some profits from insurance companies.

And this is nothing new for conservatives. This is the same crowd that loves the Ryan budget, which envisions a government that collects fewer taxes from the rich and spends far less money on the poor. Conservatives suggest that such an agenda will actually lift up the poor while helping the middle class—and, who knows, maybe some delude themselves into believing it will. But they provide no compelling evidence to back up that claim. The whole idea rests on the premise that government is the primary cause of inequality, not the market itself—a premise that seemed absurd even before Piketty demolished it. (Jonathan Chait went through the problems with it last year.)

Some conservatives, to their credit, take seriously the problems of an unequal society and what it means for those who aren't among the economic elite. But those conservatives are the exceptions. Most just don’t think inequality is that big a deal, if they even care about it in the first place. (A few even say so clearly.) I suspect many of these conservatives are talking about crony capitalism again for the same reason they were doing it a year ago—because saying nothing would look bad, and this weak answer is the best they’ve got.