Rep. Budd: The Political Market vs. the Private Market

In the United States, we’ve long had a free market system, but that system is not what it once was. Total government spending–state, federal, and local–has grown in real terms by more than 400 percent since 1965. Government spending is now one-third of the economy. As the private economy retreats, the importance of a new marketplace grows: the political marketplace. Products and services are no longer judged according to their usefulness to the economy at large–they’re judged according to whether or not they are politically useful or connected.
The political marketplace is the marketplace of crony capitalism. Its supply and demand are lobbying expenditures and the resulting federal program or carve out. Its actors are not firms, but the political class and the politicians they influence. This won’t be anything new to people who have been following Washington over the years, but I do want to talk about a textbook case of this–it’s called the Durbin Price Control and it affects regular Americans every day, whether they realize it or not. The Durbin Price Control is a price control on the fees retailers pay to banks whenever a consumer uses a debit card.

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