Political debate has a remarkable capacity to produce mirror-image errors. Thinkers on opposite ends of the spectrum, convinced they have nothing in common with their opponents, often reach for the same flawed reasoning to make their case. One of the most durable examples is the fallacy of guilt by association: the move from “some members of group X do Y” to “X causes Y.” Applied consistently, this fallacy does real damage to public argument. Applied selectively — invoked against one’s opponents while invisible in one’s own reasoning — it reveals something more troubling about how ideology shapes what we are willing to see.

Two cases illustrate this with unusual clarity. The left has long argued that capitalism produces corruption, pointing to the cozy relationships between business and government as evidence that free markets and cronyism go hand in hand. The right, particularly in its populist wing, has long argued that immigration raises crime, pointing to crimes committed by foreign nationals as evidence that open borders and public safety are fundamentally in tension. Both arguments follow the same logical structure. And both are mistaken for the same reason.

The left-wing critique of capitalism often begins with a real phenomenon. Regulatory capture, corporate lobbying, preferential tax treatment, government bailouts of politically connected firms — these are genuine features of contemporary economies, and they do cause real harm. Concentrated interests secure favorable treatment at the expense of dispersed majorities. Public resources flow toward private beneficiaries. The playing field tilts. None of this is imaginary.

Troubling facts are then followed by a logical leap. Because these pathologies occur within economies that call themselves capitalist, the argument runs, capitalism is the source. Crony capitalism, in this framing, is simply capitalism in its mature or revealed form — not an aberration but the natural destination of market systems left to their own devices. The word “crony” becomes decorative, and “capitalism” carries the full weight of the indictment.

But this is precisely the guilt-by-association move. Cronyism — the substitution of political connections for market competition — is not a product of free markets. It is their negation. It flourishes where government has the discretionary power to pick winners: to grant licenses, award contracts, set tariffs, and regulate entry. The more such power exists, the larger the prize for capturing it. What the left describes as capitalism’s dark fruit is, on closer inspection, a consequence of the state power that markets properly understood are supposed to constrain.

The evidence bears this out. There is no positive correlation between the Fraser Institute’s Economic Freedom of the World index and perceived corruption. Additionally, countries with more genuine market freedom — where political discretion over economic outcomes is limited — tend to score better on transparency and rule of law. Countries where the government pervasively intervenes tend to be more corrupt. This is not a coincidence. When governments have more to hand out, there is more to be gained from influencing them.

The implication is straightforward: if one’s concern is genuinely with cronyism, the solution is less discretionary state power, not less capitalism. To blame capitalism for cronyism is to identify the wrong cause and, almost inevitably, to prescribe interventions that worsen the underlying problem.

The right-wing critique of immigration often begins with a real phenomenon, too. Some immigrants commit crimes. In some localities, specific crimes have been linked to individuals who entered illegally. Cases are real, victims are real, and grief is real. None of this is in dispute.

The logical leap, again, comes next. Because some immigrants commit crimes, immigration itself becomes the problem. The crime is treated not as the act of an individual who happens to be foreign-born, but as evidence of something inherent to immigration as such — a vector through which violence enters communities that would otherwise be safer. The crime is nationalized, and the nationality becomes the explanation.

This is the same fallacy. Crime is a behavior committed by individuals, not a property of demographic categories. What makes someone a criminal is not their country of origin but their choices and circumstances. To treat immigration as the causal variable is to commit precisely the associative error that one would readily identify in any other context. One would not argue, for instance, that car ownership causes drunk driving, simply because drunk drivers own cars.

Here, too, the evidence cuts against the argument. Research consistently finds that immigrants — including undocumented immigrants — commit crimes at lower rates than native-born citizens. This has been documented across multiple studies using different methodologies and data sources, including nonpublic data from Immigration and Customs Enforcement (ICE) leaked to the Cato Institute.

The implication is equally straightforward: if one’s concern is genuinely with crime, the focus should be on criminal behavior and the conditions that produce it, not on national origin. To blame immigration for crime is, again, to identify the wrong cause — and to direct enforcement resources toward a characteristic rather than a conduct.

The structure of the error

Both arguments share a common form. A genuinely bad thing exists — corruption, crime. That bad thing is observed in proximity to a broader category — markets, immigration. The broader category is then blamed for the bad thing. The association does the work that evidence and argument cannot.

There is also something worth noting about the selectivity with which this fallacy is deployed. Left critics who would immediately recognize guilt by association in arguments about, say, welfare recipients and fraud are often less quick to apply the same scrutiny to arguments about markets and corruption. Right critics who would immediately recognize the fallacy in arguments about gun owners and mass shootings are often less quick to apply it to arguments about immigrants and crime. The error is visible when it is used against one’s preferred group; it becomes invisible when it serves one’s preferred narrative.

This asymmetry is not a minor rhetorical failing. It is an epistemic one. If the standard of argument one applies depends on the conclusion one prefers, then one is not really reasoning about evidence — one is selectively deploying the appearance of reasoning to conclusions already reached by other means.

This post was written with the assistance of Claude (Anthropic).
Originally published here: https://economicorder.substack.com/p/cronyism-isnt-capitalism-crime-isnt