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.

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.

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.

The more power the government has over the economy, the more allocation of resources will depend on political connections. The way to eliminate cronyism is to have free markets and little government control. As we shall see, cronyism has been around for a long time and is a bipartisan problem that has thrived under Democratic and Republican presidents and congresses. Cronyism not only picks winners based on political connections rather than on the extent to which they serve consumers, but also is destructive of wealth, sometimes highly so.