In a world of bailouts and crony capitalism – which is to say, in the world we live in today – a rational businessperson has to compare the return on investment between improving a product or service, or lobbying the government for goodies.
Frequently, the latter looks better: If you spend $1 million on lobbying, and get a $1 billion subsidy from the government, that’s a thousand-fold return on your money.
It’s hard to do one-hundredth as well through actual capitalism. So why bother to improve your products at all? Just hire more lobbyists.
Of course, the government can provide such rewards only because it has vast resources of coercive power, and vast stocks of other people’s money.