Charles Koch has written an op-ed in the Wall Street Journal in which he insists that he opposes crony capitalism. But the first example he offers to demonstrate his claim is actually a crony capitalist position.
“Far from trying to rig the system, I have spent decades opposing cronyism and all political favors, including mandates, subsidies and protective tariffs—even when we benefit from them. I believe that cronyism is nothing more than welfare for the rich and powerful, and should be abolished.
Koch Industries was the only major producer in the ethanol industry to argue for the demise of the ethanol tax credit in 2011. That government handout (which cost taxpayers billions) needlessly drove up food and fuel prices as well as other costs for consumers—many of whom were poor or otherwise disadvantaged.”
Koch characterizes a tax credit as a subsidy. If he had read and listened to his former ally Murray Rothbard more carefully (before turning on him and stealing his shares in the Cato Institute) he would know that tax credits and other loopholes are not subsidies, but simply salutary decreases (however selective) of the state’s depredations. As Ludwig von Mises said, capitalism breathes through loopholes.
It is taxation, and not tax relief, that drives up food and fuel prices, by hampering production, and thereby resulting in greater scarcity, which is reflected in higher real prices.
Repealing a tax credit is a tax hike. The tax hike Koch pushed for and got in 2011 probably hurt his competitors in the oil industry far more than his own empire, which is chiefly based on natural gas. This is a classic crony move that goes back to the Progressive Era: a market incumbent poses as an enlightened, public-minded businessman by “sacrificially” taking on burdens which just happen to burden competitors and potential upstarts even more.
Also published at Medium.com: