Here is a very funny viral video about the buying of favor in Washington.
Cronyism is widespread. For some background on the difference between free market capitalism and crony capitalism I found this piece from Intellectual Takeout.
Free market capitalism can be defined as “a system wherein individuals are free to pursue their own interests, make voluntary exchanges, and hold private property rights in goods and services.” Allowing consumers and producers to trade at mutually agreed upon prices, free market capitalism is a system characterized by voluntary rather than coercive exchange. In such a system, the role of government is limited: protecting individuals’ basic rights to life, liberty, property, and association; providing a legal system for the enforcement of contracts; and defending individuals against internal and external threats of physical force.
By contrast, whether referred to as cronyism, corporatism, mercantilism, liberal fascism, or venture socialism, crony capitalism is simply the cooperation of government and business. While this cooperation benefits the involved business and politician(s), it generally hurts the politically and corporately unconnected. Furthermore, the power and benefits of crony capitalism can often lead to corruption, a fact which James Madison recognized when he stated, “Wherever there is an interest and power to do wrong, wrong will generally be done, and not less readily by a powerful & interested party than by a powerful and interested prince.”
This is an issue which crosses both political polar extremes.
Paul Krugman is being too gentle with David Stockman, whose recent New York Times ‘rant’ glorifies the gold standard and denigrates government for standing in the way of putting “free markets and genuine wealth creation back into capitalism.”
Like so many in his camp, Mr. Stockman misunderstands the meaning of rising debt,” writes Krugman. “Unemployment, not excessive money printing, is what ails us now — and policy should be doing more, not less.
In fact, Stockman would return us to an earlier era of crony capitalism, before any form of financial regulation, such as by the Federal Reserve. The result then as now is huge income and wealth inequalities that have been the main cause of the Great Depression and major recessions — the last five since 1980 during administrations that advocated deregulation and a similar opposition to financial regulation.
This is one issue where the Tea Party and Occupy Wall Street movement have common ground. The difference in their views is centered on who gets the blame, the corporations or Washington.
What are your thoughts?
(top photo via DonkeyHotey )