Crony Capitalism and Coporatism

Writing for the Telegraph, Daniel Hannan makes an important distinction that is often lost in the back and forth of economic debates.

The past four years have seen governments throughout the West turn to a ghoulish corporatism, in which selected private companies are bailed out with public money. Understandably, people from across the political spectrum have reacted angrily. The Tea Partiers and the Occupiers are both protesting against the same thing, viz the rescue of large banks by taxpayers.

But whereas the Occupiers, in a slightly inchoate way, believe they are complaining about capitalism, free marketeers point out that, in a capitalist system, bad banks would have been allowed to collapse, their assets sold to more efficient competitors. Bondholders, shareholders and some depositors would have lost money, but taxpayers wouldn't have contributed a penny.