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Luigi Zingales
How Romney Can Win « Back to Story

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OK, you make it sound easy: Mitt Romney and the GOP elites need head transplants. The GOP tossed out the only candidate with serious free-market credentials, not by accident, but because the GOP loves big-government crony capitalism. What do you think military-industrial corporate wealthfare is all about? It is no accident that Mitt Romney and Barack Obama share many of the same Wall Street donors.
"...and independent voters fear a Bush repeat."
Bingo. I cannot bring myself to vote 'for' Obama but, without a viable third candidate, as of July 2012 I find that I can vote 'against' Romney. As with W., this apple fell too far from his father's tree.

@NIck wrote:
"Most Americans are too stupid to understand the pros and cons of a free market economy."
Wow! You weren't the person waiting in line for Romney's Hamptons fund raiser last weekend that gave that 'money quote' to the LA Times, were you?!"

I disagree *very* strongly with you and have more of the late William F. Buckley's opinion of the average American -- you know, the guys that actually build things, fight the fires, arrest the criminals, fight the wars...
Crony capitalism is not capitalism. On the
contrary, it is the opposite! In a free
market system, the bank and broker CEOs
who got that $787 billion TARP which they
paid themselves bonuses should have been
allowed to have gone under! Instead, they
were rewarded by being given those monies
and they paid themselves bonuses for losing
tens of billions of dollars? Actually, crony
capitalism is anti-business because a select
few are rewarded just for being politically
connected and nothing else!
Romney made his money by sucking his private equity funded companies dry. This is a parasitic mutation of capitalism, which destroys instead of creating industries.
Benjamin Hemric July 09, 2012 at 6:47 PM
Luigi Zingales wrote (in "An Economic Agenda for the GOP," "City Journal," Autumn 2009) [added emphasis is mine -- BH]:

"THE REPUBLICAN PARTY . . . HAS TO MOVE FROM A PRO-BUSINESS STRAGETY THAT DEFENDS THE INTERESTS OF EXISTING COMPANIES TO A PRO-MARKET STRATEGY THAT FOSTERS OPEN COMPETITION AND FREEDOM OF ENTRY. While the two agendas sometimes coincide . . . they are often at odds. Established firms are threatened by competition and frequently use their political muscle to restrict new entries into their industry, strengthening their positions but putting their customers at a disadvantage.

A pro-market strategy aims to encourage the best conditions for doing business, for EVERYONE . . . A pro-MARKET strategy rejects subsidies not only because they’re a waste of taxpayers’ money but also because they prop up inefficient firms, delaying the entry of new and more efficient competitors . . . . A genuinely pro-MARKET party would have resisted more vigorously the Wall Street bailouts, in line with popular sentiment.

And a pro-MARKET approach holds companies financially accountable for their mistakes . . . A pro-MARKET party will fight tirelessly against letting firms become so big that they cannot be allowed to fail . . .

Luigi Zingales wrote (in the current article):

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.

Benjamin Hemric writes:

The failure of establishment Republicans to distinguish (in thought and in action) between being "pro-business" (particularly pro-BIG-business) and being "pro-market" has always made me somewhat leery about the Republican Party in general, and it now makes me somewhat leery about Mitt Romney in particular. It seems to me that it often makes the policies of Republicans as bad for the economy as those of Democrats.

Not being an economist, though, my feelings have been vague and "voiceless." So thank you for these well-thought out, well-researched and nicely articulated essays! (The first one has been a favorite "City Journal" article of mine for years -- along with Nicole Gelinas' various "too-big-to-fail" articles.) I hope they make an impression on the Republican party in general and on team Romney in particular!

I think much of the Bain Capital "issue" (e.g., "job creation" or "vulture capitalism") actually revolves around this very distinction. So if Mitt Romney were to demonstrate that he TRULY understood and accepted the arguments that you make (irrespective of whether or not he has always seen it quite this way in the past), I think he would indeed be the right president to lead us out of our current economic mess.

Benjamin Hemric
Monday, July 9, 2012, 6:45 p.m.
The Republican base is thus far uninspired, and independent voters fear a Bush repeat. Romney must differentiate himself from both Bush and Obama, rallying the Republican base while also attracting independents. Pledging a better future for America by defending the American free-market system against a Southern European–style crony capitalism is the perfect way to do it.


Otherwise folks will look at RomneyCare and ObamaCare and wonder, why switch to a new devil?
An apropos story
Democrats also ally themselves with the Teachers’ Union, the UAW and Fast Buck taxpayer loan hustlers like bankrupt Soylndra Corporation. Are these constituencies considered markets or are they businesses? Americans want basic financial security, they want it now and they will readily vote for the candidate who makes the most plausible sounding promises to deliver that selfsame security. Obama has a record of perfect failures and one Romney should attack with simple ads pointing out those failures constantly and at every feasible opportunity.

Keep it simple, keep it on point and keep it coming. Clinton had it right, “it’s the economy, stupid” – the market or business dichotomy is merely an exercise in theoretical navel gazing. If adults are in charge of Romney’s campaign, the strategy is obvious: Remind Americans they are out of work, their 401-K’s are on life support and their economic future is pre-ordained under 4 more years of Obama. If that message can’t be understood and acted upon, then the Democrats deserve to win.
"Yet the Republicans’ presidential candidate, Mitt Romney, is not a member of the GOP establishment."

He was merely endorsed by just about every member of the GOP establishment. But no connection. Nope. None at all.
Interesting point, tough to explain in a sound bite.

How about focusing on encouraging (or just getting out of the way of) productive employment multipliers versus too-big to fail billion dollar businesses? Drive through the back roads of fly over-country and every small town has the same story: the plant shut down and the cash advance stores moved in, boarded up businesses left and right.

What if Romney promised a 25 year moratorium on Corporate Taxes for manufacturing? It would not "cost" anything, GE and Boeing already pay nothing. Just about everything else scooted to China to save a little on labor. Whack off 30% of the cost of making it here, and it will be made here. Everything. Obama won't bite at a tax break. But Romney could call it the "put America back to work act" or something like that. Murder the trade deficit, get people off welfare, go to full employement, bring in so much more income tax it would boost total tax revenue. Simple to understand. Benefits the small company as much as the big one. Even big companies use mom and pop tool and die shops, etc.
If Romney were to run against Big Government, Government Unions, and Crony Capitalism he would win in a landslide.
The author of this article, like most pundits, have missed the main point of this election. There is no way obama can win, especially when Black Christians who put him in office, won't vote for the pro-homosexual and pro-murder by abortion usurper. A few abortion commercials and the hispanics won't vote for him either, not to mention the libertarians and other Christians. Romney will win by minimum 4pts.
wrong on all accounts. He will do nothing and yes he will further his wealth. He has already.
South European -style crony capitalism what country do you live in sir you have a very vivid imagination.Your so called American free market system almost wipe this country out in 2008 and you want to bring it back again with the so call Wall St crowd.
Mitt Romney needs to tell the American people what his economic plan is, in detail instead of waiting for the economy to get bad.
I respect George Bush move than this guy.
How could the former head of Bain Capital credibly say that he was for free markets and against big business? He made his sizable fortune from buying and selling big businesses, but now he's supposed to act like he caught the populism virus and favors small business? No sale.
It will take more than Mitt and the RNC talking about eco. stats. Sorry , but so many lemmings do not understand them. He needs to deal with energy, borders, Obama lies, scandals, failed policies from Stimulus to foreign policy Then the GOP has to unite Indies, Teas, Libertarians, Reagan Dems to beat the uninformed dependent base of the DNC and Bama. If Mitt sticks to just the economy, he will lose because the lemmings are not hurting with food stamps, welfare, checks. They need to see that America is being unraveled and transformed by an alien philosophy that the Dems have foisted on us.
"Ideologically, the Republican establishment doesn’t appreciate the difference between being pro-market and being pro-business...competition." That's demonstrably false; this understanding is basic Republican ideology, as I understand it, and I'm a Republican. The Republican establishment has to get behind competition and free markets, however, and I'm not sure how they can spin it without really getting behind a free-market message. A pro-market advocate defends freedom of entry in all cases.

This is a huge problem in perception, because it appears to me that the electorate is quite ready to throw out the baby with the bathwater, i.e. go socialist because the game is too rigged in favor of *Big* business.

Big business came from small business, and in history, most big businesses, by number, have actually gone to the wall, either failing or being bought by competitors or conglomerates, because at the end of the day, their setup couldn't adapt, compete etc.

There has to always be room for better competitors. Once government takes over, this becomes impossible.

Can it be sold? Get busy!
what a horrible article. i was hoping for some real insight but all i got was talking points. also following in gwb's footsteps (at least in how to run a campaign) wouldn't be a bad thing for republicans as gwb did win 2 elections. but romney isn't following gwb's elections strategy at all (aside from his fundraising prowess). i will not be reading this author again.
Totally disagree. Most Americans are too stupid to understand the pros and cons of a free market economy. The ONLY thing Romney should be talking about is jobs, period. His main argument should be "do you want higher taxes on the rich, universal healthcare and green energy OR do you want a job?" Take your pick people. Very simple argument that everyone can understand.
Remember the movie "White men can't jump"?
How about adding "Republicans can't SPIN"?

This is just one example where the Republicans can't come up with an effective response to an issue ... this is NOT GOOD.
Exactly! This is the true opportunity for tri-angulation in this year's political marketplace!
Spot on.....I hope Governor Romney has a chance to read your article,,
Liberalism along with crony capitalism are destroying our country. Nobody in his/her right mind would be for either of those. "Liberalism is a sickness of the soul".
I distinctly remember Sarah Palin making this argument about a year ago (at least). Perhaps Romney could secure a public endorsement from Ms. Palin framing it in the terms of Mitt's support of the free market,large and small businesses, etc. versus Obama's culture of crony capitalism and big bailouts for the big guys.
Michael McDonald July 09, 2012 at 10:12 AM
Excellent analysis; I completely agree.
Someone, get this article to Mitt and his campaign leaders, quickly!
Your analysis is exactly right, but the terminology doesn't quite work. The distinction between being pro-market and pro-business is too subtle for most people to grasp. But the difference between free markets and crony-capitalism rings loud and clear. The latter corrupts both business and politics. You might even say that it's the bane of the American way of life.
Enlightening column, especially when one also reads Bill Scher's column....Hope someone in the Romney campaign reads it!
You are very much on point when you say that Republicans get confused between pro-business and pro-market, but you put all your eggs in Romney's private sector basket. You're forgetting his term as governor, when he passed MA's version of the Affordable Care Act. I have been under no illusions that Romney is averse to crony capitalism.
Mr. Gonzales is right: and this would cut against the propaganda that the Democrats are "against corporate cronyism and for the Little Fella." This evening, for example, a gaggle of the Usual Suspects (generously covered by the evening "news") was outside Charles Koch's Hamptons estate, protesting a Romney fundraiser with anti-fat-cat signs.

These same people were nowhere when a much more lavish do was held in Greenwich Village at Sarah Jessica Parker's place for a bunch of Democrat millionaires.

What sort of fix is in that the pharmaceutical companies, the insurance companies, and the AMA all sided with obama on socializing medicine, when they fought Hillarycare so hard? (Remember that campaign?) Their silence this time around is total. And very sinister.
As Obama proved, anyone can win...but, can they govern? Romney can make the case to the American people...but, they don't pass laws or overturn laws. For that, there is the Senate and the House and as the Music Man said...'that spells trouble'. To better understand the inane process in which we now find ourselves, read Spoiled Rotten by Jay Cost. You'll know a whole lot more than you know now...and, you won't be happy. How do we get a congress to work on the public good when each member owes his election to specific special interest groups? No easy answer.
Gilbert W. Chapman July 08, 2012 at 8:42 PM
One of Romney's first acts as president-elect will be to choose his cabinet.

If he chooses someone like Geithner for Secretary of Treasury, we will know he wants to perpetuate crony capitalism, just as Bush and Obama did.

Here's hoping he names someone like Fisher, now at the Dallas Fed, as his treasury secretary, and continues on that road with his other department heads.
Donald Gotshalk July 08, 2012 at 8:21 PM
just sat down to negotiate the purchase of a new auto.
The salesman informed me he was selling autos because he lost his 38 year job working with a corporate air craft company. After Obama gave his inspiring message concerning the fat cats in the corporate world who fly their own corporate aircraft, the industry went into a tailspin.
Corporations all across the country were put on notice that the fat cats running their companies that they invest in were over the top in transporting themselves in their own aircraft. Thousands of jobs have been lost since that inspiring message.
Governor Romney's dad, when he was running for president, basically said any moron could come up with a years worth of returns and make it say anything they wanted. So he went all unprecedented and released 10 years worth.

Mr Romney doesn't seem to have learned a lot from his dad integrity wise, but maybe he is actually listening to that advice by NOT releasing more than 1 year?

I also know George warned about the growing military industrial complex, and lost the vote much because he said he had been brainwashed by the Generals in control of nam, and he was wrong and we simply had to get out.

George Romney also walked out of the 1964 Republican National Convention to protest the Republican platform plank against civil rights legislation.

It seems Governor Romney learned everything from his dad what not to do to win an election, but ditched the whole 'integrity' lesson along the way.