What is crony capitalism?
Crony capitalism and genuine capitalism, if not opposites, are fundamentally opposed. Unfortunately the broader public, to date, is largely unaware of this.
Crony capitalism is the marriage of the state and private special interests. Some people have called it corporatism, mercantilism, fascism, or even Communism. (Socialism?)
We will call it crony capitalism.
By whatever name, it is phony “capitalism.”
Over the years the public has been taught that many of the problems it faces on a day to day basis such as the lack of jobs, rising prices, corruption in Congress, and so on are a result of capitalism.
If so, it is a perverted capitalism.
These unsavory realities are largely the result of government/private “partnerships.” Whether in banking, agriculture, housing, energy, transportation, manufacturing, or nearly any other facet of the economy, the “unsavory” parts are often the result of public/private collusion.
Why can’t you get any kind of return on your money in a CD, the traditional vehicle for retirees? Crony capitalism.
Why can Goldman Sachs, the largest investment bank, speculate in markets using newly printed government money that has been borrowed virtually for free? Crony Capitalism.
Why is Detroit a shadow, barely a shadow, of what it once was? Crony capitalism.
Why are there more farm regulators than farmers? Crony capitalism.
Why does Congress write laws that are longer than the Old Testament with obscure, impossible to understand language? Crony capitalism.
When the state and powerful private interests collude the result is a cocktail of market distortion.
Genuine capitalism in comparison, is quite simple. Capital is invested by individuals to further ideas and enterprises that the investor thinks will create a return on the money invested. If the enterprise in question is a good one, both investor and business owner win. If not- better luck next time.
It’s clear. It’s simple. It’s moral.
However, invariably once the state gets involved as investor, or “regulator”, things start to morph and twist. As sure as the sun rises, coercion and corruption rear their heads.
Crony capitalism can take many forms including regulatory capture ( regulated interests actually using government power to squelch competition), zoning, licensing, in some cases even copyright, and hundreds of other ways. The one thing all of these “tools” have in common, however, is that they are used by the politically connected few to extract money and power from the unconnected many.
Government gives a veil of legitimacy to actions taken by individuals and groups that would be considered unethical (at best) without government “permission.” More often government also uses its power to make everyone play along. If you break a law, you can go to jail.
What We Believe
We believe that special deals from government for politically connected individuals, businesses, and powerful political interests destroy the marketplace. These favors, though often sold to the public as “regulations” or “works programs”, are usually vehicles for some to take from the many.
When powerful interests are permitted to use the coercive power of the state for private ends, there is no end to the economic destruction that can be wrought.
From shady zoning regulations in a small town, to billion dollar bailouts for international banks, to billions of newly printed dollars flowing from government to Wall St at virtually free rates, crony capitalism takes many forms. We seek to identify it, and record its impact day to day.
In recent years, we have seen vast increases in cronyism. Though cronyism has always existed, and likely always will, the brazenness by which some in advantageous positions have used the state to further their ends in the last few years is unprecedented in the United States. It is even worse than the in the “Robber Baron” era after the Civil War.
In a country that prides itself on honesty, innovation, and embracing the entrepreneurial spirit, such a state of affairs can not be permitted to persist. If it does persist, we won’t have much of an economy left.
If the distinction between private enterprise and government is lost, if it’s all a blur, the average person will become poorer and poorer. The quality of life for the average American may never come back.
We believe that the increasing partnership between government, business, and other special interests such as unions and trial lawyers in recent years is anathema not only to a sound economy, but to a civically vibrant and free society.
We are for freedom, transparency, opportunity, and honest markets.
We are against crony capitalism.
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Baylen Linnekin on Crony Capitalism vs. American Food (reason.com)
Think Tanks Vs. Crony Capitalism (stateofglobe.com)
Fed President: Too Big Banks Are Just Crony Capitalists (stateofglobe.com)
David Stockman on Crony Capitalism (ritholtz.com)
Newsflash: Crony Capitalism is a Creature of the State (coordinationproblem.org)
The RNC’s Empty Rhetoric on Combating Crony Capitalism (thedailybeast.com)
Income Growth for Bottom 90% in America Since 1966 is…59 Dollars (sgtreport.com)
Fed President: Too Big Banks Are Just Crony Capitalists (washingtonsblog.com)
CAG will uncover crony capitalism: Rai (assamtribune.com)
Crony Capitalism and the Crisis of the West (palamas.info)