Home
/
RELIGION & LIBERTY ONLINE
/
Subsidies or tax breaks, both are cronyism
Subsidies or tax breaks, both are cronyism
Oct 29, 2026 2:11 PM

Last week, President-elect Donald Trump along with Vice President-elect Mike Pence, who is the current governor of Indiana, struck a deal with United Technologies, the pany of Carrier, in order to save over 1,000 jobs from being sent from Indiana to Mexico. This deal will supposedly give Carrier over $7 million in tax break incentives and it has everyone across the political spectrum reacting in different ways.

People on the far-left such as the self-described democratic-socialist senator from Vermont, Bernie Sanders say “It is not good enough to savesome of these jobs.” According to Sanders, the President-elect should be doing more to intervene with the private market in order to save more jobs.

Republican Speaker of the House, Paul Ryan overlooked the fact that the government is meddling in private business in order to defend Trump’s actions by saying “I think it’s pretty darn good that people are keeping their jobs in Indiana instead of going to Mexico.”

On one hand you have a democratic socialist advocating for more intervention on the private market and on the other hand you have prominent leaders within the Republican Party (the party that many perceive as championing the principle of free enterprise) defending actions that resemble crony capitalism. Even the VP-elect, someone who many thought of as a smart fiscal conservative, is giving up on the ideas of free enterprise. He said this in a statement shortly after the Carrier deal “The free market has been sorting it out and America’s been losing.”

The most surprising response to the Carrier deal came from pany itself. In a statement released shortly after the deal was finalized pany said this: “This agreement in no way diminishes our belief in the benefits of free trade.” How ironic.

At libertarian think-tank, Mises Institute, which promotes the ideas of Austrian economist Ludwig von Mises and others from the same tradition, writer Tho Bishop defended Trump’s actions with Carrier. In an article Bishop recently posted to the Mises website titled In Defense of Trump’s Deal with Carrier Bishop said this “While some have described Trump’s approach as crony capitalism, if the terms of the deal really are limited to tax relief, such claims are baseless.”

Had the terms of the deal been centered on the government giving subsidies to Carrier as an incentive to keep jobs in the United States, I don’t think Bishop, Sanders, Pence, or Ryan would still be defending it. But because it is a special tax break given to Carrier that somehow makes it a good thing in their eyes.

This highlights mon misunderstanding of basic economics, which is the idea that targeted tax breaks for panies are effectively different than subsidies therefore making the former a permissible action. U.S. Representative Justin Amash understands this well. Right after conservatives and libertarians began defending the Carrier deal, Amash tweeted this:

govt taxes each person $10 and gives just you $1

=

govt taxes each person $10 except taxes just you $9

They are economically identical.

— Justin Amash (@justinamash) December 1, 2016

Amash explains in 140 characters how a targeted tax break is economically equivalent to a subsidy. It puts one firm at an advantage to peting firms with the help of the government. This is clearly crony capitalism.

This is not to say that people like Rep. Amash and other advocates of free markets are in favor of the current corporate tax system. If the government wants to prevent jobs from being sent overseas, corporate tax rates should be simplified and lowered but when this happens in the form of special favors to specific firms the American people do not benefit.

If conservatives and libertarians want to be a part of the movement that stands for free enterprise and equal opportunity, they need to stop praising such deals and start identifying crony capitalism with accuracy and criticism.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Acton on Tap Tonight: Ayn Rand at the Movies
Don’t forget about tonight’s Acton on Tap, from 6:30pm-8:00pm in East Grand Rapids. The event will be taking place at the Derby Station (2237 Wealthy St. SE, East Grand Rapids 49506). Tonight’s Acton on Tap will focus on the release of the movie version of Ayn Rand’s Atlas Shrugged: With the release of Atlas Shrugged-Part 1, Ayn Rand’s libertarian manifesto finally arrives on the big screen. Bruce Edward Walker, in an Acton PowerBlog review of the film, said that he...
Review: The Dressmaker of Khair Khana
Poverty is inevitable in a war zone, right? One’s movements are restricted, buildings and businesses are damaged, people flee. Add to that random acts of violence brought by the Taliban and the already damaged economy of Afghanistan in the mid-1990s and poverty seems unavoidable. Never underestimate the entrepreneurial spirit. In The Dressmaker of Khair Khana: Five Sisters, One Remarkable Family, and the Woman Who Risked Everything to Keep Them Safe, journalist and Harvard Business School student Gayle Tzemach Lemmon sets...
Review: AEI’s Common Sense Concept Series
Over the last several years I find myself more and more being drawn into conversation about religion—specifically, Orthodox Christianity—and economics. Originally, my interest in the economic side of the conversation was minimal. Embarrassing though it is to say now, I only took one economics class in college and while I got a “B” I was an indifferent student of the subject. Thanks to personal friendships I’ve discovered the work of economists such as Ludwig von Mises and Fredrich A. Hayek—two...
Can Maronites bridge the cultural divides in Lebanon?
Patriarch Bechara RaiAs a Lebanese Maronite Catholic student in Rome and a new intern at Istituto Acton, I had the great honor and privilege to attend the audience of the new Patriarch of Antioch of the Maronites, Bechara Rai, with Pope Benedict XVI. The April 14 audience gave me the occasion to think about our new Patriarch’s role in promoting the entrepreneurial vocation in Lebanon. Our new patriarch seems to be a very active, energetic man, in keeping with the...
Considering Atlas Shrugged on Film
This piece was originally written for the Breakpoint blog. Crossposted with their permission. Christians have a deep ambivalence about Ayn Rand that probably draws as deeply from the facts of her biography as from her famous novels. When the refugee from the old Soviet Union met the Catholic William F. Buckley, she said, “You are too intelligent to believe in God.” Her atheism was militant. Rand’s holy symbol was the dollar sign. Ultimately, Buckley gave Whittaker Chambers the job of...
Hardships of Ethanol
Everywhere we look we are facing rising prices. We find them at the gas pumps and now we see them at our supermarkets. Food prices are climbing, and just like gas prices, they are having broadly felt adverse effects on Americans. The Wall Street Journal sat down with C. Larry Pope, the CEO of Smithfield Foods Inc., the world’s largest pork processor and hog producer by volume, to discuss the rising food prices and how they are affecting his business....
‘Christ is Risen’ hymn in Beirut mall
Before we leave Bright Week, some paschal flash mob public square Spirit from a shopping mall in Beirut. Source: Sat-7 Arabic ...
Fight of the Century: Keynes vs. Hayek Round Two
From EconStories.tv: According to the National Bureau of Economic Research, the Great Recession ended almost two years ago, in the summer of 2009. But we’re all uneasy. Job growth has been disappointing. The recovery seems fragile. Where should we head from here? Is that question even meaningful? Can the government steer the economy or have past attempts helped create the mess we’re still in. John Maynard Keynes and F. A. Hayek never agreed on the answers to these questions and...
Playing the Washington Blame Game
The blame game in Washington is heating up on skyrocketing gas prices. Republicans are criticized as being in the back pocket of the oil industry and partaking in crony capitalism. The Democrat Congressional Campaign Committee is even cashing in by hosting a fundraiser that is based on what has been the House Republicans “decade long relationship of protecting Big Oil taxpayer giveaways, speculations and price gouging…” However blame is also placed on Democrats, with accusations of placing barriers to prohibit...
Review — Witness to Transformation: Refugee Insights into North Korea
A mere mention of North Korea brings to mind the repressive regime of Dear Leader Kim Jong-il. Although Kim has been satirized in the West as an impish consumer of cognac and NBA paraphernalia, his grip on society is both chilling and inescapable. The country frequently receives news coverage for its nuclear aspirations, unjust penal system, and horrendous human rights record. However, a recent academic study by Stephan Haggard and Marcus Noland uncovers yet another facet of the North Korean...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved