Tag Archives: Cronyism vs. Capitalism

Classic Cato: Corporations versus the Market; or, Whip Conflation Now

In this 2008 Cato essay, Roderick T. Long discusses the difference between free-markets and corporatism. Many groups of people are to blame — libertarians, conservatives, businesses, and liberals are all culpable. Give your brain an early Valentine’s Day present and read this excellent essay:

No and yes. Emphatically no—because corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare. But also, in all too many cases, yes—because although liberty and plutocracy cannot coexist, simultaneous advocacy of both is all too possible.

Calculating the Real Cost of Corporate Welfare

In this post for The Federalist, Scott Lincicome responds to a post by Common Dreams on calculating the true cost of corporate welfare. Lincicome says it’s important to not let your ideology interfere when calculating these costs. Don’t let “anti-capitalist” beliefs bleed over into “anti-cronyist” arithmetic:

There’s plenty to like in this article, and its general theme – hardworking American taxpayers forced by Big Government to line the pockets of large, well-connected corporations – certainly warrants more bipartisan attention (and criticism).

Versailles on the Potomac Just Keeps Getting Brighter

In a free market, you get rewarded for creating value in society. However, in much of our economy you get rewarded for being associated with cronies in power. When was the last time you heard of DC creating something of value? Exactly. Yet, DC continues its run of appearing on lists of wealthiest cities in America. Take note, it’s also, by far, the largest city on this list:

The nation’s seat of power is topped with a plump cash cushion. The D.C. area is home to the greatest number of millionaire households on this list and ranks fourth overall behind New York, Los Angeles and Chicago.

Video: Crony Capitalists vs. Value Makers

Reason Magazine, through Reason TV has recently lunched this interview with Max Borders. Borders is the director of content at the Foundation for Economic Education (FEE) and editor of its flagship publication, The Freeman. In this interview with Nick Gillespie, Borders says that focusing on the gap between rich and poor has become a “fetish” in which people are consumed with the idea that America is no longer an economically mobile society.

Crony Capsule 6: The Disease of Cronyism

CWPoisonIn the last Crony Capsule we saw the different way cronyism manifests itself at the local level; relationships with state politicians and regional tax exemptions are a few examples of how local states “benefit” local industries. Now we are focusing on the global economic and social consequences of corporate welfare and cronyism.

Cronyism has been growing like a disease inside our competitive capitalist system. Instead of having an economy based on performance, quality and innovation, cronyism has lead to special connections and lobbying.

The following articles provide us with an overview concerning how cronyism undermines our society and our capitalist system:

1. In this comprehensive article, James V. DeLong the author of the book Ending ‘Big SIS’ (The Special Interest State) and renewing the American Republic; summarizes the major subjects concerning his book and stresses the problem we face today in keeping special interest groups away from receiving corporate welfare from the government.

“Some commentators are under the illusion that the current national crisis will sober up the special interests. But that is not how it works, because a crisis makes special interests less, not more, responsible. The situation becomes, in the language of game theorists, a “last-period problem.” As a game approaches an end, the players have no need to cooperate for the sake of protecting long-term relationships. Their incentive is to grab as much as possible before the game ends, or, to translate to the real world, before the society collapses. Do not look for crisis to bring out a sense of responsibility in the advocates for the interests.”

2. The following article focuses strictly on the current identity crisis that American Capitalism is suffering. Our capitalist system that was once primarily based on hard-work, competitive and innovative companies, and entrepreneurship has degraded into clientelism, favoritism and special political connections.

3. In this column, we see the way in which society currently perceive our new form of “crony-capitalism”. It is easy to understand people’s anger against our current system, where political connections often mean more than value creation.

“As we witness the riotous dissolution of corrupted capitalism, we need not wait for the history books to identify the mile markers of self-destruction. If we are to rebuild capitalism, even as it is tearing itself down, then we will need to become street-smart detectives in analyzing the current economic murder-suicide in progress.”

4. The last article deals with the immorality of corporate welfare. This general overview seeks to demonstrate the negative potential that cronyism possess to undermine our system of meritocracy.

“When you think about the thousands and thousands of lobbyists in our nation’s capital who become “cronies” with members of Congress, the insider deals they make, and what it is costing the American taxpayer, you can see the evil of it. To have good government, we must have transparency, often promised but seldom received. As voters, we must hold all those elected to office to a higher standard. “We The People” must take our nation back and vote people out of office when they are guilty of “cronyism,” as this will send a powerful message. It has always been true: “Righteousness exalts a nation but sin is a reproach to any people.”

Whole Foods’ Co-Founder Pushes For “Conscious” Not “Crony” Capitalism

Lauren Lyster at Yahoo’s Daily Ticker writes about Whole Foods CEO John Mackey’s new push for “conscious capitalism,” and an end to cronyism and corporate welfare:

“What we have in the U.S. today has moved far away from free enterprise capitalism,” Mackey argues. “It’s really a type of crony capitalism, where you have the government and big business frequently collaborating together in ways that may not result in the greatest common good.”

The book cites the government bailouts of “too big to fail” members of the financial sector during the meltdown of 2008 as prime examples of “crony capitalism”.

“Pro-Business” or “Pro-Market”? And What’s the Difference?

Re-posted from the Economic Freedom blog.

Surprising as it may seem, “Pro-business” does not necessarily mean “pro-market.” In fact, many who call themselves “pro-business” actually work against the market and restrict the economic freedom upon which our prosperity depends.

Consider the following . . .

Because businesses provide jobs and make other positive contributions to communities, both “sides” agree that government should promote business. Where they differ is over how. Pro-business advocates believe the government should directly assist specific businesses or industries through subsidies, tax breaks, or other advantages. Pro-market supporters reject this.  They argue that government should simply ensure a level playing field for competition.

The truth is that intervention in the marketplace harms everyone—except those directly receiving the benefits, of course. When the consumer is no longer the deciding factor in whether a business succeeds or fails, businesses direct more and more of their resources toward securing government favors and less and less on pleasing customers. Corruption and cronyism often result. And it’s always the taxpayers who end up having to pay for it all.

So, now you know—“pro-business” is not “pro-market.”One allows government officials to choose which businesses and industries get an advantage over others; one supports a fair marketplace in which all compete equally.

But in case you’re still not sure about the difference between the two, here are five ways to tell.

You know you’re “pro-business” rather than “pro-market” if you believe . . .

  • government should make special tax provisions for specific industries
    (pro-market position: equal tax rates for all)
  • government should give out grants to individual businesses
    (pro-market position: government shows no preference to individual businesses)
  • government should use eminent domain to make way for private development
    (pro-market position: eminent domain should never be used for private interests)
  • government should make loans to businesses that can’t secure them in the private sector
    (pro-market position: government should not be making loans to businesses at all)
  • government should impose tariffs to protect domestic industries from global competition
    (pro-market position: tariffs increase prices for consumers)

When the government supports certain companies or industries over others, the special interests unfairly benefit. Economic freedom is what can bring prosperity and opportunity to all. That’s why we must make sure we are not just “supporting business” but always upholding the virtues of the market.

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