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The Yankee Institute for Public Policy, Inc. is a nonpartisan educational and research organization founded more than two decades ago. Today, the Yankee Institute's mission is to "promote economic opportunity through lower taxes and new ideas for better government in Connecticut." The Yankee Institute for Public Policy, Inc. is classified by the IRS as a 501 (c) (3) public charity. Contributions are deductible to the extent allowed by law.

Growing CT's Economy

by D. Dowd Muska

Growing Connecticut’s Economy

Corporatism vs. Capitalism
Connecticut’s economy has serious structural problems. Median household income is falling. Lowpaying jobs are replacing high-paying jobs. The cost of living in the Nutmeg State is high and rising. And young adults flee Connecticut at a rapid rate. The economic-development initiatives pursued by government at the state and local levels are clearly ineffective. This failure is due to a fundamental misunderstanding of the sources of economic growth. Connecticut’s decisionmakers need to understand that corporatism can’t work in theory, doesn’t work in practice, and better economic-development policies exist.


 Corporatism Can’t Work In Theory

Capitalism is founded on the principle that entrepreneurs and workers should be free to pursue their selfinterest with minimal interference from government. The public sector, capitalists believe, exists to secure individual rights, not redistribute income and “create jobs.” Corporatism -- sometimes called “corporate welfare,” “crony capitalism,” and “industrial policy” -- is founded on the misguided belief that private enterprise, union officials, and government officials must be “partners” in creating economic prosperity. Few reputable economists and publicpolicy analysts believe that a corporatist-style approach can be an efficient tool to produce prosperity.


Corporatism Doesn’t Work In Practice

Both internationally and within the United States, economic planning has a very poor record. Independent analyses of state- and localgovernment programs designed to boost employment and personal income have consistently found that corporatism does not deliver on its promises, imposes unintended consequences, hides a significant cost of government from taxpayers, and invites political corruption. Many examples of these negative effects exist in Connecticut, a state where politicians have fully embraced
corporatism.


Pro-Growth Alternatives Exist

Research has demonstrated a strong linkage between economic freedom and economic growth. Connecticut
should abandon its failed corporatist policies and embrace an economicdevelopment strategy founded on freedom.

Corporatism is not the answer to Connecticut’s economic woes. Only a lower tax burden, less (and smarter) government spending, education choice, and regulatory
relief will provide a brighter future for workers, families, and businesses in the Nutmeg State.

D. Dowd Muska is the Yankee Institute's Philip Gressel Fellow for Tax and Budget Policy.

Print Report (PDF)

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The Yankee Institute for Public Policy, Inc. is a nonpartisan educational and research organization founded more than two decades ago. Today, the Yankee Institute's mission is to "promote economic opportunity through lower taxes and new ideas for better government in Connecticut." The Yankee Institute for Public Policy, Inc. is classified by the IRS as a 501 (c) (3) public charity. Contributions are deductible to the extent allowed by law.