The Pathology of Privilege: The Economic Consequences of Government Favoritism

The Pathology of Privilege: The Economic Consequences of Government Favoritism

Matthew Mitchell | Jul 08, 2012

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When Washington came to the rescue of wealthy and well-connected bankers, both progressives and libertarians objected to the inequity of favoring one industry over others. Beyond the philosophical objections, what happens when governments play favorites with businesses? What are the social and economic consequences of special privilege?

In this essay, public choice economist Matthew Mitchell surveys the various tools that governments use to favor one firm or industry over others, demonstrating that favoritism takes many forms. Well researched and tightly argued, this short essay demonstrates the “extraordinarily destructive force” of government-granted privilege. Citing both anecdotes and academic research, Mitchell makes a strong case that favoritism “misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector.” Taxpayers, business leaders, and policymakers will profit from a close study of this provocative work.

About the Author

Matthew Mitchell is a senior research fellow at the Mercatus Center at George Mason University, where he is the program director for the Project for the Study of American Capitalism. He is also an adjunct professor of economics at Mason. In his writing and research, he specializes in economic freedom and economic growth, public-choice economics, and the economics of government favoritism toward particular businesses.

Mitchell has testified before the US Congress, and his articles have been featured in numerous national media outlets, including the New York Times, the Wall Street Journal, the Washington Post, US News and World Report, National Public Radio, and C-SPAN. He blogs about economics and economic policy at Neighborhood Effects and served from August 2010 to June 2014 on the Joint Advisory Board of Economists for the Commonwealth of Virginia, helping to formulate revenue expectations.

Mitchell received his PhD and MA in economics from George Mason University and his BA in political science and BS in economics from Arizona State University.

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