Leaders of gov't-favored firms are more likely to agree with sometimes contradictory ideas like markets should be generally free, but at present, the US market is too free, & competition is unfair

Matthew D. Mitchell, with Scott Eastman and Tamara Winter. “A Culture of Favoritism: Corporate Privilege and Beliefs about Markets and Government.” Mercatus Special Study, Mercatus Center at George Mason University, Arlington, VA, March 27 2019. https://www.mercatus.org/publications/corporate-welfare/culture-favoritism

Abstract: This paper discusses a national survey of business leaders that sought to determine how government favoritism toward particular firms correlates with attitudes about government, the market, and selectively favorable economic policy. Findings indicate that those individuals who believe they work for favored firms are more likely to approve of free markets in the abstract but also more likely to say the US market is currently too free. These individuals are more skeptical of competition and more inclined to approve of government intervention in markets. They also are more likely to approve of government favoritism and to believe that favoritism is compatible with a free market. Those who have direct experience with economic favoritism or are more attuned to such favoritism are more likely to have distorted perceptions of free- market capitalism and are more comfortable with further favoritism.

Keywords: favoritism, culture, corporate welfare, privilege, rent-seeking, cronyism, crony capitalism


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From the summary: Compared with other business leaders, the leaders of favored firms are more likely to agree with the following— sometimes contradictory—statements:

How Favored Firms Think about Markets
*  Markets should be generally free (at least in the abstract), and a freer market serves the general public.
*  But at present, the US market is too free, and competition is unfair to business.

How Favored Firms Think about Government
*  Government should more heavily regulate markets.
*  Regulations benefit consumers.
*  Regulations benefit the economy.
*  Competition is limited by government (they may view this as a good thing, given their belief that competition is unfair to business).

How Favored Firms Think about Favoritism
*  Government should favor specific businesses and industries.
*  Markets should be free, and government should favor particular firms (a contradictory set of beliefs).
*  Government assistance has a positive effect on the economy.
*  Customer focus and a unique business model are not the most important factors in business success.
*  The most important factors in business success are either knowledge of influential policymakers or government assistance.

Consequences of Favoritism

In some quarters of the business world a culture exists that legitimizes government favoritism. It encourages business leaders to seek government privileges and policymakers to offer them. Not only is this culture of favoritism expensive to taxpayers and consumers, it may also undermine the public’s faith in markets and economic freedom. If such attitudes persist or expand, then free, open, and competitive markets may be in peril. We risk stunted economic growth, wasted resources, and higher levels of corruption as a result.