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Be Pro-Market

12:59 PM, Jul 10, 2012 • By DANIEL HALPER
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Free advice for the Romney campaign from Luigi Zingales, writing in City Journal:

A recent New York Times op-ed by Bill Scher, “How Liberals Win,” must be commended for its honesty. Scher presents a compelling historical narrative of how Democrats are happy to ally themselves with big business in a Faustian pact to foster anti-market policies. From Franklin Roosevelt’s National Recovery Act, which promoted the cartelization of industry, to President Barack Obama’s Affordable Care Act, which bought off big pharmaceutical companies by suppressing free trade in the drug market, Scher describes how Democrats have promoted crony capitalism to foster their liberal agenda. They are pro-business—at least certain businesses—but fundamentally anti-market.

This is exactly the opposite of what most Americans want. According to a survey conducted as part of the Financial Trust Index, which I codirect, only 19 percent of Americans reject the free-market system. But 51 percent are suspicious of the excessive power of big business. In other words, they are pro-market, but not necessarily pro-business, especially when business is large and politically powerful.

In fact, by inverting Scher’s argument, one can see that a pro-market, but not pro-big-business, platform would be a winner for Republicans. From Tea Party supporters to Republican-leaning independents, a vast majority of potential Republican voters already hold these positions. The party establishment lags behind, partly for ideological reasons and partly for financial ones.

Ideologically, the Republican establishment doesn’t appreciate the difference between being pro-market and being pro-business. Many businesspeople want free markets only when they’re trying to enter a new market; when they’re already in a market, they lobby for barriers to entry and protection from competition. A pro-market advocate defends freedom of entry in all cases. Failure to understand this distinction makes the Republican establishment too timid in criticizing business when it undermines free markets.

Whole thing here.

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