Thursday, April 29, 2021

Cruz on crony capitalism

Senator Ted Cruz wrote a blistering Wall Street Journal Op-Ed decrying CEOs who pander to Democrats by making profoundly uninformed public statements. He announced that he will no longer take money from their corporate political action committees. And, he states

This time, we won’t look the other way on Coca-Cola’s $12 billion in back taxes owed. This time, when Major League Baseball lobbies to preserve its multibillion-dollar antitrust exception, we’ll say no thank you. This time, when Boeing asks for billions in corporate welfare, we’ll simply let the Export-Import Bank expire.

Cruz' statement is unintentionally devastating. So what about last time? 

So there it is in front of us, in writing, from a major politician. Political support, and campaign cash bought $12 billion tax breaks, antitrust exemptions, and Ex-Im subsidies. From Republicans. So much for any public policy pretense. And if those CEOs just figured out who has the power to hand out goodies now, and the Democrat's demands for public obeisance as well as cash, well, it's a lot harder to object that the CEOs fall in line.  

21 comments:

  1. InB4 Ted Cruz finds himself running against a well-funded yes-man candidate in the next primary.

    Good luck.

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  2. It always seemed inefficient that a Congress couldn't legally commit to the indefinite future. But all this stuff is bad, so that it's efficient a Congress can't commit!

    Let those who went too far be punished.

    At least once. :-(

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  3. Wow. Just wow. Now how do we make him keep his word? I'd consider it a win if half of politicians stopped taking bribes.

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  4. Why is something so esoteric as critical social justice theories in the middle of public debates?

    It's a good way to levy the moral fiber of Americans to bludgeon any and all opposition, so it's good for cronies. It's algorithmically friendly with its ample use of simplistic linguistic markers and phrases, so it is potentially easy to spread and it is deeply divisive so it generates the sort of click baits everyone enjoys. The race baiting industry is very profitable -- ask DiAngelo, Kendi and the founders of Black Lives Matter how much do they get out of their grift -- as is the counter narrative -- it's not like Milo didn't tell everyone his entire business model is predicated on getting loose nuts on the left do or say patently idiotic things. Sane people on either side who might otherwise be willing and able to have a civil conversation are marginalized and extremists on both sides become the most common figures in social life as they drive out more reasonable voices.


    People are building business and social models predicated on the existence of critical social justice theories in general and critical race theory in particular, so I am not surprised at all by the statement made by Cruz. Cronies just shifted their branding to accommodate the changing social landscape, as they always do, but I think Sen. Tim Scott said it best: "They [Democrats] seem to want the problems more than they want the solutions."

    That's exactly right. Calling people names, directing a cancel culture mob towards the opposition and their supporters or allowing rioters to rampage through neighborhoods with impunity are useful tools. They won't let go of the one true ring.

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    1. Hey, just actually spend some time talking to black people about what they live with every day. An intelligent criticism of cancel culture and identity politics is important. But first do the work of trying to understand what caused movements like BLM. When W E B DuBois, James Baldwin, MLK and now BLM tell the same stories decade after decade calling it a "grift" is intelltually lazy.

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  5. A spectacular own goal from Cruz. Hardly news to anybody who's been staying even slightly awake, but to have it so candidly admitted to is certainly novel.

    Dear oh dear...

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    1. Is it really an own goal? He mistakenly said something, but as you rightly say, everyone already exactly knew this is how it works. So, not even so clear that he will be punished much.

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  6. My view from downunder is Cruz is saying he will retaliate against companies with whom he disagrees with but those companies with whom he agrees with.

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    1. The problem with that statement is that the companies with whom he "agrees" in this scenario are those that aren't issuing official political positions, regardless of the views held by their board members.

      Maybe Coke should stick to selling soft drinks. Maybe if the NBA wanted to be critical of what the US government does, it should stop overlooking the concentration camps ran by its business partner, the Chinese Communist Party. Maybe the MLB should not be using social issues to find an excuse to relocate its activities. And talk about the moment to side with a statement! Jim Crow laws, really? Asking for a free voter ID to vote is now considered on par with telling black people they can't sit in front of the bus. It's exactly the same as those days when Democrats were refusing to sign in legislation to prevent their domestic terrorist friends from lynching black people... Thank God for the good common sense of Major League Baseball. No one would have thought you could be the next Rosa Parks by committing voter fraud in GA if they didn't join the President in his message of unity to the nation about Republicans being racists.

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  7. Is not all this Cruz's rumbling what Hayek's anticipated in The Road to Serfdom?

    If The Government controls de economy "liberty" becomes a farce.

    Of course, one side of the aisle making so clear that this is the case while trying to denounce that this is being the case under the “influence” of “the other side”, could very easily be “the mother of all the ironies”.

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  9. Agree completely on your comment re: Cruz. Made the same exact point in their comment section.

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    1. Sen Cruz violated the only of the Fight Club. Do not talk about the Fight Club.

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  10. In other news (apologies for changing the channel): The May 2021 edition of the American Economic Journal: Economic Policy (vol. 13, issue 2) has some papers of interest and possible relevance to earlier blog topics in this space.

    Fell, H., D. T. Kaffine, and K. Novan: "Emissions, Transmission, and the Environmental Value of Renewable Energy" (#9) Examines the improvement in social welfare of connecting electrical power grids on a regional scale on the utilization wind energy power source capacity. May shed some light on the implications for adoption of a policy of increased capital investment in infrastructure on the welfare of future generations on a 'pay-as-you-use' federal deficit financing option.

    Gruber, J., A. Jensen, and H. Kleven: "Do People Respond to the Mortgage Interest Deduction? Quasi-experimental Evidence from Denmark" (#10) Examines the mortgage interest income tax deduction on household behaviour in the residential housing market in Denmark. The income tax subsidy motivates the purchase of larger properties and the removal of the subsidy is negative for housing prices.

    Jackson, C. K., C. Wigger, and H. Xiong: "Do School Spending Cuts Matter? Evidence from the Great Recession" (#11) Examines the effect of budget cuts for school capital expenditures on educational outcomes. Reduced spending is negative for lower achieving school districts.

    Laliberté, J-W: "Long-Term Contextual Effects in Education: Schools and Neighborhoods" (#12) Examines the improvement in student achievement that comes about with family relocation to a better residential district. Achievement increases as a result of higher teaching standards of the new school district. The paper is suggestive of implications for inner-city schools and charter school movements.

    Nguyen, A.D.M., L. Onnis, and R. Rossi: "The Macroeconomic Effects of Income and Consumption Tax Changes" (#15) Examines the short-term effect of income tax rate reductions vs. consumption tax increases. Income tax rate reductions are positive for economic growth. Consumption tax increases are neutral. A trade-off opportunity is identified.

    Zwick, E.: "The Costs of Corporate Tax Complexity" (#16) Examines the exploitation of income tax deductions by tax preparers and the effect on corporate income tax revenues. Concludes that small business owners could reduce income tax burdens by employing sophisticated tax preparers who are better able to navigate the complexities of the income tax codes.

    Apologies for this diversion, but I find Ted Cruz's mea culpa to be small beer. Politics is the dirty underside of the economy. As it once was in Imperial Rome, so it is today in the Capitol district---'Et tanto tanto magis non maneat eadem quæ mutare.'

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  11. Professor Cochrane, in defense of Senator Cruz, I think you have overlooked one of the great truths of the contemporary political scene, namely that while many Republicans are conservative (for somewhat varying meanings of the term) and many conservatives (ditto) are Republicans, there is not an isomorphic relationship.

    Cruz himself is a product of the Tea Party movement and thus largely a Republican of convenience. I have long argued among my conservative friends that WE are the RINOs, as we are conservatives first and Republicans second. Those we disparage as RINOs are, in fact, the "true" Republicans--establishmentarian to the core, and largely representing the interests of Big Business.

    Indeed I first began thinking seriously about this after the 1994 elections, when Newt Gingrich was criticized for not bringing about the conservative revolution we'd all dreamed of. His response was that, as conservatives, we were "a majority of the majority," but not an actual, overall majority.

    When Cruz makes the observations he does, I do not read that as implied support for the antecedent crimes. Rather, I read it as frustration with the inability to translate a truly conservative sensibility into a set of policies that all Republicans would be willing to support.

    And the message he is sending is not, "We enabled you in the past, Big Business, and that's over" so much as "I've been fighting this battle from a minority position but now you are annoying your Congressional enablers who ordinarily would have looked the other way, and (hopefully) there will be consequences."

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  12. John, I don't understand your take. Are you accusing Cruz/Reps of hypocrisy because they've taken corporate PAC contributions? He's declaring he'll take none from now on, whether woke or not (Hawley has followed). Seems a potentially seismic shift.

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  13. John, I don't understand your comments, are you accusing hypocrisy? Cruz has been followed by Hawley in declaring they'll no longer accept corporate PAC donations of any kind, woke or otherwise. That's some gauntlet to throw down, potentially seismic.

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  14. Ted, while admitting accepting (and likely personally benefiting from) past cronyism, now wants us to believe he's changed to the moral/fiscal high ground Both Democrats, and Republicans will continue financially raping future generations (who won't care whether their sky high tax bill and collapsing economy came from lavish social justice or military spending) because it guarantees political power from willing voters.

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  15. https://www.opensecrets.org/news/2021/03/for-the-people-act-gop-block/

    "Republican senators are prepared to vigorously block H.R. 1 from becoming law. Senate GOP leader Mitch McConnell (R-Ky.) has lambasted the bill, saying it would help Democrats win elections and deter political speech by revealing donors to politically active nonprofits. The American Action Network, a conservative dark money group, launched an ad campaign this week opposing the measure."

    Simple question for Ted Cruz, will he cast a vote in favor of House Bill HR 1?

    "Among its numerous changes to election and ethics laws, H.R. 1 would overhaul the nation’s campaign finance system to limit the influence of wealthy donors. It would implement a 6-to-1 match for small-dollar donations, restructure the Federal Election Commission, strengthen the prohibition against super PAC-candidate coordination, create new rules for online political ads and attempt to end dark money in U.S. elections. "

    "Republican senators are prepared to vigorously block H.R. 1 from becoming law. Senate GOP leader Mitch McConnell (R-Ky.) has lambasted the bill, saying it would help Democrats win elections and deter political speech by revealing donors to politically active nonprofits."

    https://www.esquire.com/news-politics/politics/a35928367/ted-cruz-hr-1-for-the-people-act-republicans/

    Enough said about Ted Cruz. As Mick Jagger would say "You can't always get want you want, but if you try sometimes, you just might find, you get what you need."

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    1. HR-1 would also end gerrymandering by both parties.

      What's not to like?

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  16. So Cruz "looked the other way" by (somehow?) influencing the U.S. Tax Court to find AGAINST Coca-Cola back in November? Or is he "looking the other way" now by... allowing Coca-Cola to pursue its constitutionally guaranteed right to appeal the ruling in a higher court before paying? Or maybe Cruz will be "looking the other way" in the future by (somehow?) influencing the executive branch competent authority process once the case has finished up in the U.S. courts? Or maybe he "looked the other way" in the past, by not enacting new legislation that precisely states the proper transfer pricing methodology for soft drink concentrates (if such a thing were even possible)?

    Or MAYBE there is zero reality to any of this, and several of you have been drawn into a bit of silly political theatre :)

    It's a mistake to take things politicians like Cruz (or Warren, his mirror image in the left) say seriously, because they are not serious people. The reality is that Cruz knows zilch about Coke's tax situation beyond that (a) the amount Coke disclosed as being at stake on an earnings call was $12B, and (b) Coke said some unrelated stuff he doesn't like. The other two examples from the op-ed are the same.

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