Sarah Palin’s Declaration of War on Crony Capitalism

by Michael Kaplan

Sarah Palin speaking at the Tea Party of America Rally, Indianola, Iowa, September 3, 2011

On September 3, 2011, at Indianola, Iowa, former Governor Sarah Palin of Alaska issued a declaration of war on crony capitalism. At this point it’s unlikely that Palin will throw her hat into the 2012 Republican presidential race. Dan Riehl and Robert Stacy McCain (“The Other McCain”), however, have suggested that Palin might still jump in if she decides that Rick Perry isn’t up to carrying the Jacksonian conservative banner. Palin, like Michele Bachmann, may actually believe that Perry is part of the problem of crony capitalism. I happen to like Perry, who is a strong Jacksonian in his own right with a solid record of achievement as governor of Texas. But whatever the fate of her presidential ambitions, Palin has shown once again that she is the most powerful and charismatic champion for Jacksonian America and its traditional conservative values of liberty and opportunity on the stump today.

Elite liberal progressives love to dismiss Palin as an ignorant hick who lacks the intellectual firepower of a true leader like . . . Barack Obama. Yet it is Palin who has articulated more forcefully and effectively than any other public figure the danger that most threatens American liberty today: crony capitalism. This is the unholy collusion between the elites of big government, big business, and big finance, who enrich and empower themselves at the expense of America’s broad middle class. Crony capitalism can also be a step on the road to socialism. Palin delivered this message in a true firebrand of a speech at the “Restoring America” Tea Party of America Rally. Here is the video. (Also here and here and here.)




Jacksonian America has long seen crony capitalism, also called corporatism, as a grave threat to both economic and political liberty. As Lexington Green (Michael J. Lotus) at Chicago Boyz points out, the acts of King George III and the British Parliament in the 1760s and 1770s were essentially an attempt to impose a London-based crony capitalist economic monopoly on the American colonies. Both left and right are wrong in seeing big government and big business as enemies rather than natural collaborators. The blue model progressive regulatory state, Green argues, was captured long ago by the industries it was supposed to regulate. “The government has turned into an amalgamation of iron triangles—regulators, legislators (or actually their staffs) and industries that are regulated. These work in tandem to their mutual advantage at the expense of the taxpayer and of truly entrepreneurial and innovative businesses.” Andrew Jackson himself offered the classic statement on the dangers of crony capitalism in his Bank Veto Message of July 1832:

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society—the farmers, mechanics, and laborers—who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.

Old Hickory was not a demagogue out to confiscate the property of the Bank’s wealthy shareholders and redistribute it. Like the Founding Fathers, Jackson accepted that natural inequality—that people had differing talents and abilities and would achieve different outcomes in life—was part of human nature. Jacksonian populism, unlike its European counterparts, was never about despoiling the haves and giving to the have nots. But Jackson was absolutely opposed to artificial inequality; or as we would say today, to the government using its power to pick winners and losers in the economy and in life. Jackson understood that American democracy rested on an independent, prosperous middle class. Government’s proper role was to provide the framework of law and security necessary for ordered liberty, enabling American families of modest means the opportunity to pursue happiness.

Historian Daniel Walker Howe recently wrote that “Jacksonian Democracy was not the precursor of FDR and the New Deal, but of Sarah Palin and the Tea Party movement.” In this central passage from Palin’s Iowa address one can hear the voice of Old Hickory coming through loud and clear:

Yeah, the permanent political class–they’re doing just fine. Ever notice how so many of them arrive in Washington, D.C. of modest means and then miraculously throughout the years they end up becoming very, very wealthy? Well, it’s because they derive power and their wealth from their access to our money–to taxpayer dollars.  They use it to bail out their friends on Wall Street and their corporate cronies, and to reward campaign contributors, and to buy votes via earmarks. There is so much waste. And there is a name for this: It’s called corporate crony capitalism. This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk. No, this is the capitalism of connections and government bailouts and handouts, of waste and influence peddling and corporate welfare. This is the crony capitalism that destroyed Europe’s economies. It’s the collusion of big government and big business and big finance to the detriment of all the rest–to the little guys. It’s a slap in the face to our small business owners–the true entrepreneurs, the job creators accounting for 70% of the jobs in America, it’s you who own these small businesses, you’re the economic engine, but you don’t grease the wheels of government power.

Palin has long butted heads with crony capitalists. As governor of Alaska she took on Big Oil and their corrupt lackeys—the good ol’ boys—in Alaska’s government. And she paid the price in being slandered by those whose power she challenged. This, Palin warned, is the danger faced by the Tea Party and other reformers: those who would challenge the entrenched power of the regulatory state-industrial complex will be demonized by its allies in the media as ignorant and dangerous know-nothings, yahoos, and even racists. But calling on those mythopoetic themes of patriotism and American history beloved by Jacksonians, Palin urged Tea Partiers not to lose heart. They followed in the grand and noble tradition of the Sons of Liberty, the Abolitionists, and the Civil Rights Movement. The Tea Party was nothing less than an awakening of the American spirit of liberty, brought about by ordinary Americans: “it’s you who grow our food; you run our small businesses; you teach our children; you fight our wars. We are always proud of America. We love our country in good times and in bad, and we never apologize for America.”

The hollowing out of the middle class—the Jacksonian folk community that Sarah Palin champions—is at the root of America’s current social and political malaise. Re-inventing the American dream, the dream of economic opportunity, independence and dignity for Americans of modest means, the dream which led the first British Dissenter colonists to cross the Atlantic in the seventeenth century, is the greatest challenge facing the nation in the twenty-first century. Don Peck, writing in The Atlantic, observes that the rise of the super elite and the decline of the middle class “is a natural outcome of widening markets and technological revolution, which are creating much bigger winners much faster than ever before—a result that’s not even close to being fully played out, and one reinforced strongly by the political influence that great wealth brings.” The hollowing out of the middle class enables the rise of crony capitalism which leads to a further decline of middle-class prospects. The middle decades of the twentieth century—the heyday of the blue social model—were very good to the middle class. This can be attributed to strong economic growth, more people getting more and better education, limited competition abroad, and perhaps, though conservatives would dispute this, a more progressive tax policy. These factors no longer prevail. As Peck describes it:

America’s classes are separating and changing. A tiny elite continues to float up and away from everyone else. Below it, suspended, sits what might be thought of as the professional middle class—unexceptional college graduates for whom the arrow of fortune points mostly sideways, and an upper tier of college graduates and postgraduates for whom it points progressively upward, but not spectacularly so. The professional middle class has grown anxious since the crash, and not without reason. Yet these anxieties should not distract us from a second, more important, cleavage in American society—the one between college graduates and everyone else.

Economists now posit that the middle class is no longer needed to keep the global economy going. That America and the rest of global capitalist world are heading toward what economist Ajay Kapur and his colleagues at Citigroup are calling plutonomy, the Siamese twin of crony capitalism. In a plutonomy, Kapur and his associates wrote in 2005 “economic growth is powered by and largely consumed by the wealthy few.” In effect, American society has divided into the rich—the top 1 percent of households who now drive the economy—and the rest. Plutonomies, which often arise during periods of rapid economic transformation and modernization, are driven by “Disruptive technology-driven productivity gains, creative financial innovation, capitalist- friendly cooperative governments, an international dimension of immigrants and overseas conquests invigorating wealth creation, the rule of law, and patenting inventions.” The wealthy, the well-educated, and the well-connected are usually in the best position to exploit the new complex modes of technology, business organization, and economic opportunity. Middle-class producers and consumers, who have a harder time adapting to these new economic realities, become increasingly irrelevant to economic growth and development, and are thrown under the bus. For better or worse the Citigroup analysts argure, “The earth is being held up by the muscular arms of its entrepreneur-plutocrats, like it, or not.”

Sixteenth-century Spain of the conquistadors was a plutonomy, as was the Netherlands in its seventeenth-century golden age. The United States went through a period of plutonomy from the Gilded Age through the Roaring Twenties. The Jacksonian Populist movement of the 1890s and its champion, William Jennings Bryan, challenged the plutonomy and crony capitalists of the Gilded Age, ushering in reform of the new industrial order. The Jacksonian Tea Party movement of the 2010s and its champion, Sarah Palin, challenge the plutonomy and crony capitalists of today. Will the Tea Party likewise be the harbinger for reform of the new order of global capitalism and high technology, reining in plutonomy and restoring the American dream for the twenty-first century?

Sarah Palin may never run for president. But she has sounded the Jacksonian clarion call to preserve liberty from the threat of crony capitalism and plutonomy, which, more than socialism, is the real danger America faces today. And she will remain an inspirational and indispensible leader for Jacksonian America as it fights to preserve American exceptionalism, the dream of a nation of independent, self-governing small property owners, subservient to none, devoted to life, liberty, and the pursuit of happiness.

© 2011 Michael Kaplan