This excerpt originally appeared in Real Clear Markets on July 12, 2012.

In a fabulous paper published this week by the Mercatus Center at George Mason University, Dr. Matthew Mitchell traces the history of cronyism in America back to the tax breaks given to the East India Company. While that particular instance of cronyism was not well received by Americans, more recent instances have so far not led to widespread protest. The Pathology of Privilege: The Economic Consequences of Government Favoritism provides numerous examples of cronyism, from the $181 billion of subsidies to agriculture - of which 74 per cent goes to just 10 per cent of farms - to the arbitrary sequence of bailouts following the financial crisis in 2008.