It may be impossible to organize a broad, deeply mobilized grassroots coalition against upward-redistributing rent seeking. But in most cases, equaling the manpower and resources of the rent-seekers isn’t necessary — just making sure that there is someone on the other side can make a big difference. Perhaps perversely, it may be that the only answer to the problem is for the wealthy themselves to bankroll organizations that would change the political calculus that makes acceding to the demands of rent-seekers logical for politicians.
Which is what the Koch brothers do. And I could also give a shout-out to the Tea Party members of Congress, who are much more reliably hostile to wealthy interest groups than are either the Democrats or the Republican establishment.
Knowing Teles, I don’t think that he had the Koch brothers or the Tea Party in mind as solutions to the problem of crony capitalism. But I they do fit his model.
Teles is a contributor to the Cato growth forum. Another contributor, Derek Khanna, writes
One could imagine a benefit to having emerging companies pay less in taxes to help foster creative destruction; instead, U.S. policy is the opposite. Big companies have enough loopholes and lobbyists to ensure that they rarely pay the actual corporate income tax rate. The only companies that pay our full corporate income tax rate, the highest corporate tax rate in the entire world, are new companies.
Both Teles and Khanna cite patent and copyright policy as skewed in favor of special interests.
The challenge is even tougher than simply facing off rent seekers. The interests the Tea Party and AFP, e.g., face off against are not just seeking rents, they are sitting on decades of rents, so they already have immense financial resources. The biggest and baddest of them all are the Public Sector Unions.
Has Khanna never heard of the capex deduction? Emerging companies don’t pay taxes.
Delusional? One can certainly play interests against each other, but how can anyone seriously believe the Kochs or Tea Party are out for anyone other than themselves? And not new companies which usually have no profits, but highly profitable ones. Rent seeking usually precedes anything remotely taxable as a profit since it is commonly the source of such profits.