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That was the word that stuck out to me.
Eric Cantor, the Republican House Majority Leader led by 34 points according to his pollster. He lost by 10. That’s a shellacking.
Eric Cantor was the first sitting House Majority Leader ever knocked off in a primary. Cantor was also one of Wall Street’s best friends and the embodiment of crony capitalism—the disease eating the heart out of the GOP.
It’s easy to overstate the effects of a political upset, so I waited a few days to let the emotions of the moment ebb. Five days later, I think it’s safe to wade into the future of Washington’s relationship to Wall Street and big business.
For me, that future looks brighter. For crony capitalists, though, I see a descent into the Maelström. Cantor’s crushing defeat to an economics professor signifies the end of the Republican establishment in Washington and Jefferson City. Here’s why.
1. Crony Capitalism Undermines Republican Principles
A politician who is a “friend of business” is exactly that, a guy who does favors for his friends. A politician who is pro-market is a referee who will refuse to help protect his friends (or anyone else) from competition unless the competitors have broken the rules. The friend of business supports industry-specific or even business-specific loans, grants, tariffs, or tax breaks. The pro-market referee opposes special treatment for anyone.
The Export-Import Bank is a perfect example of “pro-business” cronyism. Ex-Im offers US taxpayer cash to foreign companies who buy US products. Actually, Ex-Im is really just a public financing scheme for Boeing. Boeing stock cratered after Cantor’s loss. Boeing’s business model relies on government intervention in the markets. That’s not business-that’s bribery. And bribery is what Boeing and crony capitalist politicians love most.
Think about it. Should one company’s stock price rise or fall because one Congressman wins or loses? No! Of course not. And Republicans should be appalled.
Beginning with Barry Goldwater, the GOP has moved toward libertarianism when it comes big business vs. free markets. I admit that the GOP was firmly in the pocket of big business for most of the 20th century. Its only principle was a rising stock market. But that pro-business perspective began to change with Russell Kirk and William F. Buckley. By the time I reached college in 1982, few Republicans questioned the idea that businesses were on their own against competitors, foreign or domestic. The Republican Party’s only assistance for business was to reduce government regulation and taxation.
But big business never gave up. As technology lowered barriers to entry into many industries and markets, business looked to government to erect new barriers. For example, automobile dealership associations in Missouri, New Jersey, and other states want to outlaw direct sales of cars to consumers. As St. Louis native Don Peppers points out, that kind of protectionism for the riverboat industry prevented St. Louis from becoming an economic hub.
About this time, a variety of railroads began trying to build their own networks to the West, but the St. Louis city government refused to grant the permits required for constructing railroad bridges across the river at their location, even though St. Louis was the logical choice and would have been a perfect place for a rail hub. Apparently, the politicians in St. Louis felt their duty was to protect the riverboat industry, at that time their life and blood, from any and all competition.
So the railroads turned to Chicago, building immense rail facilities and attracting the businesses that drove Chicago to become one of the fastest growing cities in the entire world throughout the rest of the 1800’s. Today Chicago is the third largest city in the US, almost ten times as big as St. Louis, which still calls itself (ironically) “the Gateway to the West.”
The Missouri Automobile Dealers Association spent a fortune influencing Missouri’s Republican legislators to block Tesla and other innovative companies from competing. Fortunately, House Majority Leader John Diehl let HB 1124 die without a vote in the House after the Senate approved it. Don’t be surprised, though, if MADA gets another protectionist bill or amendment passed in 2015. Like the Missouri Hospitals Association, big crony businesses fight a lot harder to protect their antiquated, greedy present from a modern, effective future.
The Republican Party supposedly stands for fair, free markets, viewing government as a neutral arbiter in the enforcement of contracts. In practice, crony politicians like Eric Cantor make careers out of protecting big donors from competition, oversight, and innovation. That’s why Virginia voters tossed Cantor out, and that’s why I’m so enthusiastic about the republic’s future. Especially when we see the rising libertarianism within the largest generation in American history.
2. Millennials Are Growing More Libertarian
Like a lot of center-right pundits, I had a blast demonizing candidate Elizabeth Warren. Senator Warren holds a lot of demonic views. When it comes to cronyism, however, Elizabeth Warren is the most consistent and effective Senator in the USA.
Back in February 2013, I pointed out on this blog that Elizabeth Warren was the only Senator to go after then-Chairman of the Federal Reserve Bernanke over “too big to fail.” Since then, Warren has continued the fight as Congress’s strongest opponent of crony capitalism.
“It’s been clear for some time now that young people are growing more disillusioned and disconnected from Washington,” said Harvard Institute of Politics Polling Director John Della Volpe. “There’s an erosion of trust in the individuals and institutions that make government work — and now we see the lowest level of interest in any election we’ve measured since 2000. Young people still care about our country, but we will likely see more volunteerism than voting in 2014.”
That distrust of institutions, especially government, should result in a tidal wave of support for the GOP. Unfortunately, the Republican establishment would rather lose elections than lose big business support. That “business first” behavior cost Eric Cantor his job. Establishment Republicans with leadership potential would be wise to think about Millennial libertarianism. (I’m looking at you, Ann Wagner.)
If the GOP in Missouri and across the US would narrow its focus to liberty and fiscal responsibility, the Republican Party could surge in 2014 and 2016. Readers know that I’ve stopped calling myself a Republican because I can’t stand crony capitalism—the GOP’s principal source of amusement these days. I’m now a right-leaning libertarian independent. And I want a much shorter title, damnit!
A strong pivot to libertarianism could propel the GOP, but clinging to pro-business, prohibitionist policies and rhetoric will result in a new liberty party rising before 2016.
3. Voters Increasingly Willing to Punish Cronyism
Let’s return to Elizabeth Warren.
Ryan Lizza of The New York Times must think a lot like me. He noted last week that Elizabeth Warren shares something in common with David Brat, the man who crushed Eric “Crony” Cantor last week.
Yes, Warren and Brat are both college professors, but that’s just the beginning of their similarities. Here’s what Lizza wrote:
From what I’ve observed, Brat has not talked like a forty-seven-per-cent conservative complaining about how tax dollars are being shovelled to the undeserving poor (although maybe he does believe that and didn’t emphasize it in the campaign). He comes across, instead, like a ninety-nine-per-cent conservative who sees the real villain as corporate America and its addiction to government largesse. One of his biggest applause lines is about how bankers should have gone to jail after the 2008 financial crisis. Brat is the Elizabeth Warren of the right.
And there’s more:
In his campaign against Cantor, Brat turned every issue into a morality tale about big business cheating ordinary Americans. He attacked Cantor for supporting the farm bill (“Do those billions of dollars go to the small American farmer? No, they go to huge agribusiness, right? Big business again.”), the flood-insurance bill (“Who does that go to? A lot of the money goes to gazillionaires on both coasts who have homes in nice real-estate locations.”), and the STOCK Act, an effort to stop insider trading by congressmen, which Cantor gutted by including an exception for spouses. In his Stephenson-inspired stump speech, Brat was more worked up about the STOCK Act than anything else. He promised, “If you tell your friends or neighbors about this issue, I will be your next congressman!”
People are sick and tired of politicians protecting their powerful donors from presumably weak people–the 99 percent. But we’re not powerless. In fact, we wee people have ALL the power. What scares the crap out of the crony class is our increasing willingness to apply our power in our interest.
As William F. Buckley wrote in Up From Liberalism, we will horde our power like misers. We will not willingly cede another ounce of our power to General Motors, the NAACP, the United Nations, or the US government. We will keep and use our power as WE see fit.
And that begins with tossing out the friends of big business–in Congress and in Jefferson City and Springfield.
Let’s Get Together And Feel Alright
Let’s take these three lessons from Cantor’s loss to an anti-cronyism professor and change the future. Let’s accept that we might need help from Democrats like Elizabeth Warren. Let’s accept that we might have to let go of some traditional conservative issues like marijuana prohibition. Let’s drop the ancillary shit and save the damn republic.
I’m in it if you are. I won’t support big government over big business, but I don’t think that’s even possible anymore. Anything that grows the government also seems to grow Fortune 100 balance sheets. If we make a list of the pro-liberty, pro-market causes we can support together–the left and the right, libertarian, liberal, and conservative–we will give American freedom and American prosperity a new birth. And we can become pleasant in the process.