Editor Note: Three years ago, Randall Holcombe, the DeVoe Moore Professor of Economics at Florida State University, published an important essay in the Cato Journal, “Political Capitalism.” MasterResource is pleased to republish his summary as Part I of our four-part series. The lineup is political capitalism (today), contra-capitalism (tomorrow), and business-history scholarship (Wednesday and Thursday). Professor Holcombe’s contribution is also timely given the recent rent-seeking-friendly $1.3 billion, Republican/Democrat, 2,322-page Consolidated Appropriations Act of 2018.

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“While political capitalism as an economic system has barely been recognized, the building blocks that form a theoretical foundation for political capitalism are firmly in place and well-accepted. In political science and sociology, the ideas of elite domination and biased pluralism are mainstream concepts that are a fundamental part of political capitalism.”

“[I]t is both pleasing and strange to see Joe Romm don a free market, pro-consumer, pro-taxpayer hat when it comes to nuclear. His (post-modernistic) dream is that wind power, solar power, and negawatts can usher in a post-fossil-fuel era. In reality, however, fossil fuels will replace nuclear to a large degree.”

“Perry Just Made Taxpayers Invest in a $25-billion Nuclear ‘Financial Quagmire.’” So read the headline of a recent post by Joe Romm (Center for American Progress). His subtitle: “Nuclear plants are money losers, but Perry is loaning billions more to the last new one being built.”

It is strange. Nuclear is the only scalable CO2-free electrical generation source known to man. Although it is the most expensive way to boil water (and hopelessly uneconomic compared to natural gas- and even coal-fired power), a stubborn, quasi-religious segment of the Climate Malthusians refuses to bulge.…

“Toshiba’s nuclear business has been hemorrhaging money at its U.S. construction projects in Georgia and South Carolina…. The four units are in states with regulated markets and provisions for nuclear projects to receive a return on their capital investments during construction, through consumer electric rate increases.”

The social value of nuclear power may provoke wide debate. But as a business proposition, in countries with market-based economies, nuclear is failing. New construction is particularly disappointing: a new generation of technology widely expected to get costs and construction times down simply has not done so.

Problems at Toshiba

The latest evidence comes Toshiba, a giant Japanese conglomerate and parent of the U.S. nuclear reactor designer and vendor, Westinghouse Electric. Westinghouse’s ruinous investment in nuclear construction behemoth CB&I Stone & Webster has crippled Toshiba’s finances.…

“You must separate out being pro free enterprise from being pro business. The two greatest enemies of the free enterprise system, in my opinion, have been, on the one hand, my fellow intellectuals, and, on the other hand, the big businessmen.” (Milton Friedman)

“Utility regulation is the unholy union of vested privilege and authoritarian ideology that produces the Rosemary’s baby of flagrant cronyism.” (below)

When an economic libertarian criticizes Georgia Power and Atlanta Gas Light (the utilities in my service area), it doesn’t mean that big corporations or business in general is bad. Quite the contrary, business operating in a free market is morally legitimate and has a sound public policy purpose.

What is opposed is the use of government power to enrich an enterprise instead of winning consumers through superior performance in a competitive market.…