Corporate Welfare: An Attack on the Free Market

Problems_bignessThe ability of huge companies to secure massive government contracts through lobbying and cronyism is not a development of the free market but a distortion of it. It is a kind of corporate welfare that ends up redistributing wealth not creating it.

Scholar Samuel Gregg explains that crony deals redistribute “risk in a given society based Subscription8.11on an individual’s or company’s ability to persuade government officials to back a project, rather than selling their wares in the marketplace….Over the long term, corporate welfare incentivizes businesses to lose their capacity to adapt to changes in the marketplace, while simultaneously increasing their ability to extract resources from the state” (Samuel Gregg, Becoming Europe: Economic Decline, Culture, and How America Can Avoid a European Future, Encounter Books, New York, 2013, p. 284).