Cronyism and Corporatism

Excerpts from the 2025 Memorial Lectures presented at the Austrian Economics Research Conference in Auburn, Alabama.

President Trump‘s threat to withhold $9 billion from Harvard University is being framed in the legacy media and academia as a threat to Harvard‘s academic freedom. But there is a pertinent question no pundits are even asking: Why are taxpayers being forced to give Harvard $9 billion?

The goalposts are continually changing (more like fallacy-hopping), but one would-be goal of tariffs needs to be confronted—tariffs for domestic job protection.

People like to believe that national defense is outside of economic analysis, but the reality is that laws of economics are immutable and universal. A case in point is the development of the F-35 Lightning II fighter jet.

Although he has temporarily suspended his threatened tariffs, President Trump‘s demands for “fair trade” make no sense economically speaking. Trump‘s demands of Vietnam alone are beyond head-scratching.

Americans like to believe that the US is a wealthy, indestructible country, but as government debt piles up and inflation ravages the economy, perhaps they need to start worrying. Our present path is unsustainable.

The leftists destroying and defacing Teslas to protest Elon Musk’s foray into American politics provide the latest example of the American far-left being easily co-opted into playing directly into the hands of the political establishment.

President Andrew Johnson, who is best known for being the first president to be impeached, vetoed protectionist legislation that looked to raise tariffs on imported copper. Congress overrode his veto, but his free-trade message is just as relevant today as it was in 1869.

Since the financial crisis, industrial policy has experienced a renaissance in the Western world. Government programs are launched, then large pools of subsidies, targeted R&D funds, and cheap loans are made available for corporations, opening opportunities for cronyism.

While Elon Musk and his DOGE team have made some highly-publicized “cuts” in federal spending, much of the federal budget has been hammered in stone for a long time. It will take fundamental changes in spending patterns to make a real difference.