The Project for the Study of American Capitalism

Free-market capitalism is an indelible part of the American identity, but is the U.S. economy completely—or even mostly—free?

No economy is completely free. Like other countries, the United States is a mixed system, a hybrid of capitalism and government involvement. As such, can Americans legitimately claim to have a mostly free economy?

In a free market, businesses compete on a level playing field. Those who earn success do so by providing the best goods or services for the best price. The government’s role is limited to that of a neutral umpire who establishes the rule of law and then polices against theft and fraud.

Increasingly, American businesses compete on an unevenplaying field. They court policymakers who in turn sway the umpire to call shots in favor of some companies and against their competitors. Under this system, success no longer hinges on providing the highest-quality goods at the lowest price; it depends on political favoritism.

What are the implications of this emerging character of the American economy? Does it make any difference to average Americans whether ours is a more or less free market? What is at stake for the standard of living in the United States? What about public perceptions of the legitimacy of government and business? What can policymakers do to ensure competition and to credibly commit to equality of opportunity?

The Mercatus Center at George Mason University will address these and related questions through our Project for the Study of American Capitalism. Drawing on hundreds of academics from around the world, this project aims to help scholars and policymakers investigate the nature of these problems and identify real and sustainable solutions.

Research

Do State Campaign Finance Reforms Reduce Public Corruption? Adriana Cordis, Jeff Milyo \| Apr 24, 2013 The Supreme Court has long held that campaign finance regulations are permissible for preventing corruption or the appearance of corruption. Yet the implied hypothesis that campaign finance reforms are effective tools for combating public corruption has gone essentially untested. We conduct the first systematic evaluation of the effects of campaign finance laws on actual corruption rates in the states. We examine the effects of state reforms on both convictions and filings in public corruption cases over the last 25 years.	Luigi Zingales, A Capitalism For the People Matthew Mitchell \| Feb 01, 2013 In the end, he endorses a “zero tolerance” approach to subsidies and tax loopholes while he is more comfortable with regulatory interventions. This is curious. The regulatory process is opaque and complex, arguably making the code of federal regu- lations an easier place to hide a targeted privilege than the federal budget or the tax code. But Zingales hasn’t enough time to dwell on such considerations; he has too many other interesting and creative ideas to consider.
A Trillion Little Subsidies: The Economic Impact of Tax Expenditures in the Federal Income Tax Code Jeremy Horpedahl, Brandon Pizzola \| Oct 25, 2012 This study documents the economic distortions and inefficiencies that result from a tax system filled with tax expenditures. We review each of the ten largest tax expenditures for individuals and corporations, focusing the following distortions of economic activity: spending on goods and services, capital allocation, the distribution of income, and lobbying and rent-seeking.	Crony Capitalism: By-Product of Big Government Randall G. Holcombe \| Oct 24, 2012 The ability to target those benefits is a result of the spending and regulatory power of government, so cronyism is caused by big government. One remedy often suggested for cronyism is more government regulation and oversight of the economy, but this remedy misunderstands the cause of cronyism. The economic literature on the components of crony capitalism shows that big government is the cause of crony capitalism, not the solution.
Gauging the Perception of Cronyism in the United States Daniel J. Smith, Daniel Sutter \| Oct 17, 2012 This paper surveys the research on cronyism and the available methods of measuring it—in particular, using surveys to measure the perception of cronyism. We also make suggestions for improving our measurements of cronyism.	Government Cronyism and the Erosion of the Public's Trust John Garen \| Oct 11, 2012 The academic literature indicates that, in addition to other negative effects, cronyism can cause public mistrust in government that limits the effectiveness of core government functions such as maintaining property rights and other individual rights.

More Research

Testimony & Comments

A Guarantee for Failure: Government Lending Under Sec. 1705 Veronique de Rugy \| Jul 18, 2012 The Department of Energy’s loan guarantee programs have been the focus of much public attention since energy companies Solyndra, Beacon Power, and Abound went bankrupt, leaving taxpayers to shoulder hundreds of mil- lions of dollars in loan guarantees. The evidence strongly suggests that these programs fall short of their stated goals of developing clean energy and creating jobs.	The Administration's Auto Bailouts and the Delphi Pension Decisions: Who Picked the Winners and Losers? Todd Zywicki \| Jul 10, 2012 Much of the government’s political intervention in the bankruptcy cases appears to have been motivated to benefit the UAW rather than the companies themselves over U.S. taxpayers, who put billions of dollars at risk to fund the bailouts.
Assessing the Department of Energy Loan Guarantee Program Veronique de Rugy \| Jun 19, 2012 For obvious reasons, more than any other recent events, the waste of taxpayers’ money due to Solyndra’s failure has attracted much attention. However, the problems with loan guarantees are much more fundamental than the cost of one or more failed projects.	Transparency, Transition, and Taxpayer Protection: More Steps to End the GSE Bailout Anthony B. Sanders \| May 25, 2011 Anthony Sanders testified before the House Committee on Financial Services about steps to end the GSE bailout.
Who's Watching the Watchmen? Todd Zywicki \| May 24, 2011 Todd Zywicki testified before the House Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs.	Roundtable to Examine Oversight of Credit Rating Agencies Lawrence J. White \| Apr 15, 2009 This statement for a roundtable of the U.S. Securities and Exchange Commission examines the changes in regulation that elevated the judgments of the credit rating agencies about the creditworthiness…

More Testimony & Comments

Speeches & Presentations

Cronyism: History, Costs, Case Studies and Solutions

Adam Thierer | Nov 09, 2012

Cronyism generally refers to an unnatural and unhealthy closeness between government and special interests. �…

Charts

The Cost of Rent-Seeking: Actual and Potential Economic Growth

Matthew Mitchell | Jul 23, 2012

One of the things holding productivity back and, along with it, compensation, is rent-seeking. When governments dispense privileges to particular firms, entrepreneurs spend their time asking politicians for those privileges instead of devising new ways to create value for customers. Economists call this activity rent-seeking, and research suggests that it depresses productivity growth.

More Charts

Experts

David R. Henderson

Associate Professor of Economics, Naval Postgraduate School in Monterey

David Henderson is an associate professor of economics at the Naval Postgraduate School in Monterey, California, research fellow at the Hoover Institute, and editor of The Fortune Encyclopedia of Economics, a compendium of essays from 141…

Adam Thierer

Senior Research Fellow

Adam Thierer is a senior research fellow at the Mercatus Center at George Mason University with the Technology Policy Program. His primary research interests are technology, media, Internet, and free speech policy issues, with a particular focus on online child safety and digital privacy policy issues.

Daniel J. Smith

Assistant Professor of Economics, Manuel H. Johnson Center for Political Economy, Troy University

Daniel J. Smith is an Assistant Professor of Economics at the Manuel H. Johnson Center for Political Economy at Troy University.

Daniel Sutter

Mercatus Center Affiliated Senior Scholar

Professor of Economics, Troy University

Daniel Sutter is an affiliated senior scholar at the Mercatus Center at George Mason University. His primary research interests include the economics of the weather.

Brandon Pizzola

MA Fellow

Brandon Pizzola is a second year MA student in the Department of Economics at George Mason University. Brandon is also a Mercatus Center MA Fellow.

Veronique de Rugy

Senior Research Fellow

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. Her primary research interests include the federal budget, homeland security, taxation, tax competition, and financial privacy issues.

Eileen Norcross

Senior Research Fellow

Eileen Norcross is a senior research fellow at the Mercatus Center at George Mason University. Her primary research interests include fiscal federalism and institutions, state and local governments, and economic development.

Matthew Mitchell

Senior Research Fellow

Adjunct Professor of Economics, George Mason University

Matthew Mitchell is a senior research fellow at the Mercatus Center at George Mason University and the lead scholar on the Project for the Study of American Capitalism. His primary research interests include economic freedom and economic growth, public choice economics, and the economics of government-granted privileges to businesses.

Videos

Antony Davies Discusses Big Business Working with Big Government on The Blaze

Antony Davies | January 29, 2013

Antony Davies Discusses Big Business Working with Big Government on The Blaze…

Podcasts

Hester Peirce Discusses Dodd Frank on Eye on Your Money

Hester Peirce | February 19, 2013

Hester Pierce discusses her book, which outlines the harmful effects of Dodd Frank regulations.

Download the MP3

Books

Liberalism and Cronyism: Two Rival Political and Economic Systems

Randall G. Holcombe, Andrea Castillo | Apr 23, 2013

By examining how real governments have operated, this book demonstrates why—despite their diverse designs—in practice all political and economic systems are variants of either liberalism or cronyism.

Do State Campaign Finance Reforms Reduce Public Corruption? Adriana Cordis, Jeff Milyo \| Apr 24, 2013 The Supreme Court has long held that campaign finance regulations are permissible for preventing corruption or the appearance of corruption. Yet the implied hypothesis that campaign finance reforms are effective tools for combating public corruption has gone essentially untested. We conduct the first systematic evaluation of the effects of campaign finance laws on actual corruption rates in the states. We examine the effects of state reforms on both convictions and filings in public corruption cases over the last 25 years.	Luigi Zingales, A Capitalism For the People Matthew Mitchell \| Feb 01, 2013 In the end, he endorses a “zero tolerance” approach to subsidies and tax loopholes while he is more comfortable with regulatory interventions. This is curious. The regulatory process is opaque and complex, arguably making the code of federal regu- lations an easier place to hide a targeted privilege than the federal budget or the tax code. But Zingales hasn’t enough time to dwell on such considerations; he has too many other interesting and creative ideas to consider.
A Trillion Little Subsidies: The Economic Impact of Tax Expenditures in the Federal Income Tax Code Jeremy Horpedahl, Brandon Pizzola \| Oct 25, 2012 This study documents the economic distortions and inefficiencies that result from a tax system filled with tax expenditures. We review each of the ten largest tax expenditures for individuals and corporations, focusing the following distortions of economic activity: spending on goods and services, capital allocation, the distribution of income, and lobbying and rent-seeking.	Crony Capitalism: By-Product of Big Government Randall G. Holcombe \| Oct 24, 2012 The ability to target those benefits is a result of the spending and regulatory power of government, so cronyism is caused by big government. One remedy often suggested for cronyism is more government regulation and oversight of the economy, but this remedy misunderstands the cause of cronyism. The economic literature on the components of crony capitalism shows that big government is the cause of crony capitalism, not the solution.
Gauging the Perception of Cronyism in the United States Daniel J. Smith, Daniel Sutter \| Oct 17, 2012 This paper surveys the research on cronyism and the available methods of measuring it—in particular, using surveys to measure the perception of cronyism. We also make suggestions for improving our measurements of cronyism.	Government Cronyism and the Erosion of the Public's Trust John Garen \| Oct 11, 2012 The academic literature indicates that, in addition to other negative effects, cronyism can cause public mistrust in government that limits the effectiveness of core government functions such as maintaining property rights and other individual rights.

A Guarantee for Failure: Government Lending Under Sec. 1705 Veronique de Rugy \| Jul 18, 2012 The Department of Energy’s loan guarantee programs have been the focus of much public attention since energy companies Solyndra, Beacon Power, and Abound went bankrupt, leaving taxpayers to shoulder hundreds of mil- lions of dollars in loan guarantees. The evidence strongly suggests that these programs fall short of their stated goals of developing clean energy and creating jobs.	The Administration's Auto Bailouts and the Delphi Pension Decisions: Who Picked the Winners and Losers? Todd Zywicki \| Jul 10, 2012 Much of the government’s political intervention in the bankruptcy cases appears to have been motivated to benefit the UAW rather than the companies themselves over U.S. taxpayers, who put billions of dollars at risk to fund the bailouts.
Assessing the Department of Energy Loan Guarantee Program Veronique de Rugy \| Jun 19, 2012 For obvious reasons, more than any other recent events, the waste of taxpayers’ money due to Solyndra’s failure has attracted much attention. However, the problems with loan guarantees are much more fundamental than the cost of one or more failed projects.	Transparency, Transition, and Taxpayer Protection: More Steps to End the GSE Bailout Anthony B. Sanders \| May 25, 2011 Anthony Sanders testified before the House Committee on Financial Services about steps to end the GSE bailout.
Who's Watching the Watchmen? Todd Zywicki \| May 24, 2011 Todd Zywicki testified before the House Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs.	Roundtable to Examine Oversight of Credit Rating Agencies Lawrence J. White \| Apr 15, 2009 This statement for a roundtable of the U.S. Securities and Exchange Commission examines the changes in regulation that elevated the judgments of the credit rating agencies about the creditworthiness…