Luigi Zingales of Chicago Booth School writes this nice article on the same.
He says it is a boon for US that Donald Trump’s announcement that he will not run in the Republican presidential primaries.
The only thing more frightening than Trump’s running for president would be Trump’s getting elected president. From a party perspective, while losing an election is bad, winning one with the wrong candidate for the party and for the country is worse. I know something about this: I come from Italy, a country that has elected as prime minister the Trumplike Silvio Berlusconi.
He says despite being a businessman, Berlusconi policies were real bad for economy. Why?
Because “pro-business” doesn’t necessarily mean “pro-market.” While the two agendas sometimes coincide—as in the case of protecting property rights—they’re often at odds. Market competition threatens established firms, which often use their political muscle to restrict new entries into their industry, strengthening their positions but putting customers at a disadvantage. A pro-market strategy, by contrast, aims to encourage the best business conditions for everyone. That’s in fact the opposite of what a real-estate tycoon wants: to keep competitors out and enhance the value of his own properties. By capturing (or more precisely, purchasing) the free-market flag in the same way one might acquire a business brand, Berlusconi likely has destroyed the appeal of the free-market ideal in Italy for a generation.
He won elections protecting businesses:
How, then, did Berlusconi get elected and reelected? He created an unlikely coalition between the business elite, which supports him for fear of the alternative, and the poor, who identify with him because he appeals to their aspirations. In a country where corruption and lack of meritocracy has all but killed the hope of intra-generational mobility, citizens chose to escape from reality and find consolation in dreams. Berlusconi adeptly fosters the illusion that he can turn everyone else into billionaires. His political career is something like Trump’s Apprentice program, only on a national scale.
However, despite Trump opting out, US has declined and Trump would have increased that downfall:
Unfortunately, some of the same factors that sparked Berlusconi’s success in Italy have begun to show up in the United States. Social mobility has dropped. Income for 95 percent of the population has stagnated. The financial crisis has uncovered a dangerous connection between government and the financial establishment. Losing hope that they can rise from rags to riches the old-fashioned way, Americans are taking refuge in fantasy, from American Idol to The Apprentice. In such a climate, Donald Trump, whose own career has exemplified crony capitalism—from government subsidies for his developments to abuse of eminent domain—could have potentially won not just the GOP nomination, but even the presidency. That would have been a catastrophe for the Republican Party, for free-market capitalism, and for America.
Superb stuff. Especially this distinction between pro-market and pro-business.
You see the same in India as well. Most politicians are now businessmen as well and hence you see corruption all around. Why same people keep winning elections as well? Same reasons like Italy’s apply here as well.