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Crony capitalism

By Chris Clancy
web posted February 11, 2013

Traditionally and legally speaking, there are three main ways of becoming very rich: You can earn it, inherit it, or do it the old fashioned way and marry it. Of course these three ways, or a combination thereof, still exist.

But now we can add a fourth.

Eisenhower warned of its onset in 1961 as, "… the military/industrial complex". Ted Heath, in the early 1970s, famously referred to it as, "… the unacceptable face of capitalism". Nowadays we simply call it, "crony capitalism".

Investopedia. defines it as:

"A description of capitalist society as being based on the close relationships between businessmen and the state. Instead of success being determined by a free market and the rule of law, the success of a business is dependent on the favoritism that is shown to it by the ruling government in the form of tax breaks, government grants and other incentives."

Or better still – from BusinessDictionary.com:

"An economy that is nominally free-market, but allows for preferential regulation and other favorable government intervention based on personal relationships. In such a system, the false appearance of "pure" capitalism is publicly maintained to preserve the exclusive influence of well-connected individuals."

If free-market capitalism is roundly misunderstood and despised by so many people, then here is the main reason.

Those involved, career politicians and big business executives, couldn't give a damn about the damage they cause to the economy, the country or its people. Their focus is to keep their snouts in the trough and to hell with anyone or anything that gets in their way.

They seem to act with impunity – using a legal system which appears to operate on two different levels – depending on who and how well connected you are.

Whatever happened to the notion we were all equal under the law?

David Galland lays it out well here. He argues that the level of corruption, and that's what it is, has got to the point where it's no longer fightable.

We, the people, are actually powerless to do anything about it.

And it must be said that in spite of what Obama preaches, under his watch this unholy alliance between those in Washington, DC and these rent-seekers, carpet-baggers, "bundlers" and "special interests", is probably at its strongest, its worst and its most brazen than ever before.

As his second term begins so it continues. Only now it's moved up a level with the formation, last month, of "Organizing for Action" - a body which in all but name replaces "Obama for America" – his re-election campaign organization. The mainstream media has allowed this one to fly under the radar.

This is crony capitalism – as big and bad as ever – only this time trying to hide behind an "acceptable" face.

To wit:

"[A] crony capitalist conduit has been established. If your corporation wants to influence the direction of policy, this is the place to do it, anonymously. If you want to be a part of the President's effort, just drop a check into this designated box. Tax free of course." AgainstCronyCapitalism.Org.

Politico, here, quotes Fred Wertheimer, head of the money-in-politics watchdog group Democracy 21, who expressed his concern as follows:

"This is the worst possible way for President Obama to start his second term in office," … [Wertheimer] urged Obama to "immediately" shut down Organizing for Action, calling its creation "an inexplicable action by the president that directly contradicts the message President Obama has been taking to the country for years about the dangerous role played by corporate and special interest money in influencing the way business is done in Washington."

Yes indeed, and what a contradiction - from the man who once railed against crony capitalism and promised to deliver transparency in government. ESR

Chris Clancy lived in China for seven years. Most of this time was spent as associate professor of financial accounting at Zhongnan University of Economics and Law in Wuhan City, Hubei Province. He now lives in Thailand where he spends his time reading, writing, lecturing and, whenever he gets the chance, doing his level best to spread Austrian economics.

 

 

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