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The Pathology of Privilege: The Economic Consequences of Government Favoritism
When Washington came to the rescue of wealthy and well-connected bankers, both progressives and libertarians objected to the inequity of favoring one industry over others. Beyond the philosophical objections, what happens when governments play favorites with businesses? What are the social and economic consequences of special privilege? In this essay, public-choice economist Matthew Mitchell surveys the various tools that governments use to favor one firm or industry over others, demonstrating that favoritism takes many forms. Well researched and tightly argued, this short essay demonstrates the extraordinarily destructive force of government-granted privilege. Citing both anecdotes and academic research, Mitchell makes a strong case that favoritism misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector. Taxpayers, business leaders, and policymakers will profit from a close study of this provocative work.
52 pages, Paperback
First published April 29, 2015
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Displaying 1 - 2 of 2 reviews
October 16, 2017
Matt Mitchell provides a succinct, informative explanation of the failures of government intrusion in the marketplace.
As he puts it, "This simple idea--that voluntary exchange is mutually beneficial--is at the heart of modern economics. Indeed, a national economy, with all its sophistication and complexity, is simply a very large number of mutually beneficial trades."
Mitchell then goes on to highlight the distortions that take place to break down these mutually beneficial exchanges by governments privileging certain groups through regulation, subsidies, taxes, and much more. I've like to call this form of government action "social engineering."
These are not the roles of any government as those actions are by politicians or bureaucrats with limited knowledge and no property rights that make them bound to fail and waste resources.
Mitchell concludes by noting the following: "Government-granted privileges are pathological. Privileges limit the prospects for mutually beneficial exchange--the very essence of economic progress."
By appropriately devising an institutional framework that includes free enterprise and limited roles for government, such as enforcing private property rights and assuring the rules of the game are the same for everyone, government privilege to certain groups can be eliminated. Unfortunately, there's a long way to go.
While this short book provides valuable reasons for privilege and its costs, there could be more solutions, which is why I gave it a 4. Read it for yourself!
As he puts it, "This simple idea--that voluntary exchange is mutually beneficial--is at the heart of modern economics. Indeed, a national economy, with all its sophistication and complexity, is simply a very large number of mutually beneficial trades."
Mitchell then goes on to highlight the distortions that take place to break down these mutually beneficial exchanges by governments privileging certain groups through regulation, subsidies, taxes, and much more. I've like to call this form of government action "social engineering."
These are not the roles of any government as those actions are by politicians or bureaucrats with limited knowledge and no property rights that make them bound to fail and waste resources.
Mitchell concludes by noting the following: "Government-granted privileges are pathological. Privileges limit the prospects for mutually beneficial exchange--the very essence of economic progress."
By appropriately devising an institutional framework that includes free enterprise and limited roles for government, such as enforcing private property rights and assuring the rules of the game are the same for everyone, government privilege to certain groups can be eliminated. Unfortunately, there's a long way to go.
While this short book provides valuable reasons for privilege and its costs, there could be more solutions, which is why I gave it a 4. Read it for yourself!
January 27, 2026
Really good overview into forms of government granted privilege. A perfect primer for anyone who's looking to get a view on the current landscape
Displaying 1 - 2 of 2 reviews