Tag Archives: cronyism

The American Dream: Socialism for the Rich Or Capitalism For All?

You know that something’s up when the Wall Street Journal begins running op-ed columns that question capitalism. Has even the WSJ now realized that American capitalism thrives by two sets of rules: one for the rich socialists, the crony capitalists who manipulate markets (and politics), invent loopholes, skirt regulation, and place enormous bets with others’ wealth; the other, for the poor capitalists, who innovate, work hard and create tangible value.

Now even Bill Gates — the world’s richest citizen — tells us that only socialism can address climate change! It’s clear that the continued appeal of Bernie Sanders to those on the political left, and the likes of Ben Carson and that-other-guy-with-the-strange-hair-and-big-mouth-and-even-bigger-ego to those on the right, highlights significant public distaste for our societal inequality and political morass. At times I feel as if I’ve been transported to a parallel universe, a la 1Q84, where the 99 percent will rise and finally realize meaningful change through social and economic justice. Can it really happen?

Nah! It’ll never happen. The tentacles that connect politicians and their donors are too intertwined; the pathways that connect the billionaires, oligarchs, plutocrats and corporations to lobbyists to regulators to lawmakers are too well-protected, too ingrained. Until these links are broken the rich will continue to get richer and the poor will continue to dream. So, for the time being remember: the rich are just too big to fail.

From the WSJ:

If you want to find people who still believe in “the American dream”—the magnetic idea that anyone can build a better life for themselves and their families, regardless of circumstance—you might be best advised to travel to Mumbai. Half of the Indians in a recent poll agreed that “the next generation will probably be richer, safer and healthier than the last.”

The Indians are the most sanguine of the more than 1,000 adults in each of seven nations surveyed in early September by the market-research firm YouGov for the London-based Legatum Institute (with which I am affiliated). The percentage of optimists drops to 42 in Thailand, 39 in Indonesia, 29 in Brazil, 19 in the U.K. and 15 in Germany. But it isn’t old-world Britain or Germany that is gloomiest about the future. It is new-world America, where only 14% of those surveyed think that life will be better for their children, and 52% disagree.

The trajectory of the world doesn’t justify this pessimism. People are living longer on every continent. They’re doing less arduous, backbreaking work. Natural disasters are killing fewer people. Fewer crops are failing. Some 100,000 people are being lifted out of poverty every day, according to World Bank data.

Life is also getting better in the U.S., on multiple measures, but the survey found that 55% of Americans think the “rich get richer” and the “poor get poorer” under capitalism. Sixty-five percent agree that most big businesses have “dodged taxes, damaged the environment or bought special favors from politicians,” and 58% want restrictions on the import of manufactured goods.

Friends of capitalism cannot be complacent, however. The findings of the survey underline the extent to which people think that wealth creation is a dirty business. When big majorities in so many major nations think that big corporations behave unethically and even illegally, it is a system that is always vulnerable to attack from populist politicians.

John Mackey, the CEO of Whole Foods, has long worried about the sustainability of the free enterprise system if large numbers of voters come to think of businesses as “basically a bunch of psychopaths running around trying to line their own pockets.” If the public doesn’t think business is fundamentally good, he has argued, then business is inviting destructive regulation. If, by contrast, business shows responsibility to all its stakeholders—customers, employees, investors, suppliers and the wider community—“the impulse to regulate and control would be lessened.”

Read the entire column here.

Crony Capitalism Rules

The self-righteous preachers of on all sides of the political aisle in the U.S are constantly decrying corruption across the globe; one day the target may be a central African nation, the next it’s China, then a country in Latin America. Of course, this wouldn’t be so ****ing hypocritical if those in positions of power opened their eyes — and closed their wallets — to the rampant cash-fueled cronyism in their own backyards.


The threat to this democracy from those with hoards of money is greater than any real or imagined hostility from terrorism. Money greases and fuels the well-oiled machine in Washington D.C; it catalyses those who peddle influence; it brokers power and it curries favor. The influence of money is insidious and pervasive, and it is eating away the promise of democracy for all.

Our politicians pay homage to the bundlers; they crave endorsement from the millionaires; and, increasingly, they need anointment from the billionaires. And Rome burns. Then, when our so-called representatives have had their turn in the public limelight and in power, they retreat to the shadows, where as lobbyists and brokers they wield even greater power for the moneyed few. And Rome continues to burn.

So you know things must be rather dire if even huge swathes of capitalist corporate America want some form of significant campaign finance reform. You can read for yourself what the Committee for Economic Development of the Conference Board has to say in its scathing report, Crony Capitalism: Unhealthy Relations Between Business and Government.

From the Guardian:

Political corruption is eating our democracy out from the inside. Most Americans know that. But democratic and economic health can’t be easily disentangled. As it diminishes our public sphere and drowns out the myriad of citizen voices, it also sucks the energy and vitality from our economy. This causes pain to business owners.

According to a recent report from the Committee on Economic Development, an old, white-shoe non-partisan organization that came out of the aftermath of World War II (and was a booster for the Marshall Plan), the United States economy is increasingly represented by crony capitalism, not competitive capitalism.

Lobbyists and privately funded elections have, according to the CED: “exerted an important toll on the US economy”. They propose banning registered lobbyists from raising money for federal candidates and officeholders, and implementing strict revolving door policies.

Crony capitalism, the report details, leads to “rent-seeking through subsidies or taxes that benefit vested interests at the expense of others, rather than the pursuit of profit through socially and economically productive behavior”.

What is most striking about the report is who is behind it. The CEO of CED is former Romney supporter Steve Odland. A former top lobbyist for PepsiCo, a republican called Larry Thompson – someone I never thought I’d agree with – is endorsing the single most important structural reform in America: publicly financed elections.

Thompson is the Co-Chair of CED’s Sustainable Capitalism Subcommittee, a driver in the release of the report. Paul Atkins, another member of the CED board (and the sustainable capitalism subcommittee) was a Bush-appointed SEC Commissioner who opposed rules constraining hedge funds.

“Campaign finance reform could free elected officials from their dependence on private campaign funding. Such funding is seen as an important reason why elected officials might bend their views on policy issues away from the public interest” the report said.

I disagree with a big part of the report. I don’t think we should reduce the corporate tax rate. But the crony capitalism argument is right on point, and the most striking thing about the report is its full-throated endorsement of a public financing model. And, the report persuasively shows how our current model reduces competitiveness of the economy “by favoring insiders over outsiders” and “continues to sap vitality” out of our economic life.

We haven’t always had this problem. Until the 1980s, candidates spent a fraction of their time talking to donors; just a few weeks a year, a little more right before an election. True, they’d fund raise from the wealthy interests, as they do now, but it was a minuscule part of their job: policy and constituent services were the heart of the work.

 Read the entire story here.

Video: Money, money, money. ABBA. Courtesy of AbbaEVEO.