The Pathology of Privilege: The Economic Consequences of Government Favoritism

Mercatus Research, July 2012

50 Pages Posted: 17 Aug 2012 Last revised: 18 Oct 2014

See all articles by Matthew D. Mitchell

Matthew D. Mitchell

Fraser Institute; Knee Center for the Study of Occupational Regulation; Mercatus Center at George Mason University

Date Written: July 9, 2012

Abstract

The financial bailouts of 2008 were but one example in a long list of privileges that governments occasionally bestow upon particular firms or particular industries. At various times and places, these privileges have included (among other things) monopoly status, favorable regulations, subsidies, bailouts, loan guarantees, targeted tax breaks, protection from foreign competition, and noncompetitive contracts. Whatever its guise, government granted privilege is an extraordinarily destructive force. It misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector.

Keywords: crony capitalism, rent seeking, privilege, unproductive entrepreneurship

JEL Classification: H1, H2, P1, P5

Suggested Citation

Mitchell, Matthew D., The Pathology of Privilege: The Economic Consequences of Government Favoritism (July 9, 2012). Mercatus Research, July 2012, Available at SSRN: https://ssrn.com/abstract=2130566 or http://dx.doi.org/10.2139/ssrn.2130566

Matthew D. Mitchell (Contact Author)

Fraser Institute ( email )

1770 Burrard Street
4th Floor
Vancouver, British Columbia V6J 3G7
Canada

Knee Center for the Study of Occupational Regulation ( email )

P.O. Box 6025
Morgantown, WV 26506
United States

Mercatus Center at George Mason University ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://meractus.org

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
402
Abstract Views
1,915
Rank
134,463
PlumX Metrics