Political Economy, Banking, and Capitalism

A determinist model for senators and representatives (the targets of lobbying) also suggests a determinist model for the executive branch, doesn't it?

Also, if we accept that the real damage of Gramm-Leach-Bliley was to encourage focused lobbying, then we should really acknowledge that lobbying is a permanent feature of all sufficiently large corporations and interest groups. Asserting the universality of regulatory capture just means that future government action is endogenous, so present power should be focused on limiting the ability of large groups to unify in influencing future legislation.

But I doubt libertarians will ever line up to support breaking up large business conglomerates (or NGOs). And the reality of the current American political arena - that libertarians are tolerated only to lend respectability to a neoconservative pro-business effort, and the libertarian willingness to be exploited as such - means that libertarians who do appreciate the distinction between "pro-business" and "pro-market" will never be influential among the intelligentsia, never mind politics.

Of course, if David's cynicism is justified and pro-market reforms are hopeless, then we are facing a pro-business vs. pro-socialist struggle, and libertarians should be glad to give their souls to stave off genuine collectivists, especially when run by an intelligentsia that expects to remain the aristocracy no matter how radical the revolution.

@ajb Populist rage is a constant, I venture. The problem here is a government channeling populist rage towards measures that benefit some chosen business. How do you deal with pro-business socialism?

Also - to be pro-market, you don't have to be libertarian, just pro-market. A hypothetical massively independent government that crushes any competing civil institutions and politically-active corporations as soon as they form can also enforce market supremacy (this is Bryan Caplan's cue to start talking about Singapore!). This isn't libertarian.

Such a government can also enforce anything else it wants, however horrifying, so this is just a hypothetical extreme (tiny Singapore is constrained by international competition. A hypothetical authoritarian America, not so much). Nonetheless the point here is that, accepting Zingale's account, there is a tradeoff between inter-industrial corporation size and economic liberty for everyone else.

So economic liberty has to be subdivided, and some things sacrificed. Do you prefer your large corporations crushed by big government, or large corporations controlling big government? Because there is no third option: small constitutionally-limited government just gets lobbied towards big government.

Overall, a decent article.

At the same time, I do not like Zingales's constant assertion that anti-trust is a pro-market policy. It is not.

We don't have to let the economy be dependent on big banks. I have no money on deposit in one. I do have loans from 2 of them. I'm paying one off this year--10 years yearly.

Excellent distinction between pro-business and pro-market! One shifts deadweight loss to consumers, the other reduces deadweight loss... great consideration for introductory economics students.