Schumer Can't Resist Crony Capitalism's High

Crony capitalism happens when the government picks winners and losers in the market by implementing certain policies. Whether it’s through preferential awards, laws, or just selective enforcement, a crony capitalist government pushes one company or industry out of the way so a preferred one can prosper.

In the interest of transparency to combat the practice, The Economist does an annual crony capitalism index for all the countries of the world.

America is never at the top of the list — that usually goes to Russia — but we still need to combat it here.

At home, crony capitalism is usually pretty easy to spot — a classic example is cronyism in the sugar industry. A Harvard University study titled Crony Capitalism American Style: What Are We Talking About Here? found, that “domestic sugar producers have long received generous federal support and protection in response to massive lobbying and large-scale campaign contributions” resulting in a 2008 farm bill with “increased price supports for sugar producers while reducing supports for producers of all other crops.”

The law guaranteed a profit and a price point for raw and refined sugar, restricted the Department of Agriculture from loosening import quotas, and diverted surplus sugar to ethanol production.

But sometimes the crony capitalism sleight of hand is a little sneakier.

For example, Senate Majority Leader Chuck Schumer, D-N.Y.,  has called on the U.S. Food and Drug Administration (FDA) to investigate a vaping company called IMiracle, which manufactures ELFBAR vaping products. He alleges that even though the company doesn’t advertise, it is skirting American law through targeted teenagers via social media and selling “colorful” products. Schumer claims ELFBAR may be even worse than products made by popular e-cigarette maker Juul, a company which has already paid more than half a billion dollars to settle lawsuits related to youth marketing.

But because Schumer can’t ban the product himself, he’s demanding that the autocrats in the Biden administration do it through selective enforcement.

The result, just a few weeks after Schumer’s middle-school anti-ELFBAR tour, the FDA ordered its import inspectors to detain shipments of ELFBAR and Esco Bar disposable vapes sent to U.S. ports from China and Korea. The products have been added to an “import red list” that allows detention of the products at U.S. ports of entry “without physical examination.”

But let’s put this in context. China has an economy that has a GDP growing at 5.2% this year and 5.1% next while the U.S. is staring at under 1% growth for those same years. Military tensions have increased between the U.S. and China over the past year. Other countries are abandoning the dollar for the yuan. But the problem our government is focusing on … is e-cigarettes.

But this can’t be crony capitalism, can it? Schumer isn’t squashing Elf Bar to help another vaping company — surely he’s protecting American kids from an evil Chinese company.

Well, not exactly.

Schumer isn’t in the pocket of another vaping company, but he is a cosponsor of the Cannabis Administration and Opportunity Act. Among other things, the bill would end federal cannabis prohibition by removing it from the Controlled Substances Act so states can create their own cannabis laws, What the Democrats are doing here is helping what in business parlance is called an indirect competitor.

Smoking cigarettes is at an all-time low, but the desire for replacement drugs isn’t. Schumer wants to kill e-cigarettes to help marijuana. If people reach for nicotine vapes, they will probably do so instead of reaching for marijuana.

And that’s part of the plan. The marijuana industry itself targets children with psychoactive tasty gummy treats and other edible products, including brownies, in order to hook life-long customers while Schumer feigns outrage over any flavored nicotine. It should be no surprise that use of marijuana among young adults is at an all-time high meanwhile youth nicotine vaping-use has dropped to 2014 levels.

This is all in spite of Schumer’s accusation that vaping companies are using social media to lure America’s youth into the habit. Indeed, if there’s an addiction that America’s youth needs to be protected from it’s social media itself, but don’t expect Schumer to move on that because his daughter works for Facebook.

Sometimes crony capitalism is sneaky. Sometimes it’s just clumsy and obvious. With Schumer, it’s not hard to tell.