Cronyism, in the treatment given it across The Bob Zadek Show, is the use of government power to confer benefits on particular private interests — tax breaks, protective regulation, bailouts and subsidized loans — at the expense of everyone else. Guests and host alike describe it as a hidden, structural feature of big government rather than an occasional abuse, and several episodes present it as a threat to capitalism’s public standing.
The corporate income tax as a home for cronyism
Bob Zadek, introducing a discussion of the corporate income tax, described it as a job-killing statute that economist Laurence Kotlikoff of Boston University had proposed eliminating in a New York Times op-ed responding to poor employment numbers. Zadek argued that corporations cannot pay taxes: they write checks, but the cost is built into the sales price of the product, into how much wages they can afford to pay workers, and into dividends paid to owners — so a decision to tax a corporation is a decision to tax owners, workers, suppliers and creditors, all of them ultimately humans How the Free Market Will Save the Planet (2014).
Zadek then asked why the tax persists. His answer was that businesses go to Congress seeking tax breaks and special tax bills, making the corporate income tax yet another home for cronyism — a private deal between the corporation and the legislature, and a hidden benefit that voters rarely know about and have no way to find out about. He called it cronyism and per se unhealthy, bad for everyone. He also invoked the economics of concentrated benefits and dispersed costs: a corporation realizing a $10 million benefit from a special tax break imposes a cost of four cents each on the public, so no one storms the Bastille over four cents while the corporation lobbies hard for the benefit. To this he added the principle that an old tax is a good tax — inertia makes change unlikely even when change would be very good How the Free Market Will Save the Planet (2014).
Antitrust as cronyism
Ryan Young, asked by Zadek whether antitrust regulation would exist in his perfect world, said he would repeal the whole kit and caboodle. He argued that many objections to concentrated power are best dealt with through other means, and that the AT&T monopoly was propped up by government: until the late ’60s, attaching a separate non-AT&T or non-Western Electric-made answering machine to your phone line could bring lawyers down on you, which no market monopoly could have gotten away with. Markets do not put up with that sort of thing, but government can enforce it. Antitrust, Young said, is in fact itself cronyism, because companies can game rules Why Trustbusting Big Tech is a Bad Idea (2020).
Young dated the Sherman Act to 1890 and noted that in the preceding decade 19 states had passed their own state-level antitrust laws. Those laws, he said, followed two new technologies — a maturing national railroad network and refrigeration — which for the first time allowed very large farm producers to ship meat and grain long distances quickly and cheaply. Consumers chose those producers over smaller ones that lacked the cost advantages, and the hurt smaller farmers lobbied legislatures to tear down the new businesses rather than build up their own. The Sherman Act, in his account, was essentially a national version of that: cronyism all the way down, and whatever its intentions, its results are cronyism Why Trustbusting Big Tech is a Bad Idea (2020).
Wealth, subsidies and the source of inequality
Chris Edwards, asked whether the American system exacerbates income and wealth inequality, cautioned that government data on wealth is not very good, since income is collected through annual tax returns but the government has no real solid data on wealth. He distinguished wealth gained through subsidies and cronyism from wealth created by entrepreneurs making things consumers want. Countries with the highest measured wealth inequality, such as Russia, owe much of it to cronyism, which he attributed to big government and politicians with their octopus tentacles in every part of the economy. America, he said, is still mainly a market economy with way too much cronyism, and the great majority of the Forbes 400 are entrepreneurs who created companies benefiting everyone. Cronyism is bad, market-generated wealth is good and benefits all of us Debt & Taxes (2021).
Zadek drew the moral: wealth per se is just a calculation and irrelevant to society so long as it was obtained through socially acceptable, beneficial means — competition, providing consumers what they want at a price they will pay. It is never the wealth per se, it is how you got it; if you got it through rent-seeking through the government, that is the problem Debt & Taxes (2021).
Bailouts, moral hazard and the political economy of rescue
Veronique de Rugy, discussing the airline bailout, said the money is bad in part because the government does not have it and borrowed it, with interest rates going up and $31 trillion in debt. But the biggest problem, in her view, is the moral hazard: airlines have learned that forever and ever the government will step in, individuals have learned that next emergency they will get a check in the mail no questions asked, and non-airline companies have learned they can borrow at very low cost or have the money forgiven. Airlines can tell shareholders and investors to invest because they will never have to shoulder the cost during the next emergency. She called this corrupting of corporate morals, and said it is one of the reasons people are upset about capitalism: when people don’t like cronyism they blame companies for being greedy rather than the government, which is the source of the bailout. Corporate welfare, cronyism, however you want to call it, is the biggest threat Shining a Spotlight on the Stealth Airline Bailouts (2023).
Zadek framed the asymmetry with farming: whenever farmers suffer losses from a natural disaster the government is there with a farm bailout because it is an essential industry, yet when wheat prices are high because of Ukraine and farmers are raking in the money, no one proposes taking the excess profits. It is a ratchet, which is only one way. He noted the airline industry had come off a decade of monumental profits and was loaded with money; rather than buy insurance or put money away, they did not see the need because of the hope realized by the bailout. He asked whether the country is worse off by more than the $54 billion the federal government no longer has Shining a Spotlight on the Stealth Airline Bailouts (2023).
De Rugy extended the point to government lending generally. Asked whether she would be happier if the money were lent rather than granted, she said any government involvement means moral hazard no matter what form it takes, citing government loan guarantee programs in which a bank lends but taxpayers pay if the company defaults. She named the Export-Import Bank and the SBA as examples, and said the effect is that banks become much less careful about lending and the government picks winners and losers. She contrasted the alarm over roughly 30,000 airline employees facing furlough with the far larger number of movie theater employees being fired, about which no one cared, and attributed the difference to the airlines’ relationship with politicians: the government decides which companies live and die, for political reasons, so a company must have a lobbying branch and keep pleasing politicians Shining a Spotlight on the Stealth Airline Bailouts (2023).
In the following episode, de Rugy described the broader cost of government intervention: it distorts the price signal that tells people whether something is risky, safe, worth investing in, consuming, building or hiring. The government interferes everywhere, including in the labor market and wages, and thereby distorts the essential signal that allows a complex economy of exporters, importers, consumers, producers, investors and stock owners to function. She also described a bad system maintained in perpetuity, in which no politician dares let irresponsible homeowners face the consequences of being in a flawed zone The True Cost of Airline Bailouts (2023).
Across episodes: the same argument, extended
The topic recurs across four episodes without a change in the underlying claim. The 2014 episode treats cronyism as a hidden tax-break transaction between corporations and the legislature; the 2020 episode extends the same diagnosis to antitrust, with Ryan Young calling it cronyism all the way down; the 2021 episode applies it to wealth inequality, with Chris Edwards distinguishing cronyist from market-generated wealth; and the two 2023 episodes apply it to bailouts and government lending, with Veronique de Rugy adding moral hazard and the political selection of winners and losers. What develops is the domain of application, not the definition: each later guest restates the same mechanism — private interests using state power — in a new setting, and the host’s framing remains constant.
What the sources do not cover
The excerpts do not define cronyism formally or distinguish it from related terms such as rent-seeking beyond Zadek’s passing use of that phrase. They do not quantify the cost of cronyism, nor do they present any defense of the corporate income tax, antitrust enforcement or bailouts from an opposing guest. The excerpts also do not describe the legislative mechanics of any specific tax break, bailout or loan guarantee program, and the 2020 excerpt breaks off mid-sentence before Zadek’s next question.