Friday :: Apr 29, 2011

Crony Capitalism


by Mary

William K Black has a powerful piece on the 40th anniversary of the Powell memo which has created the corrupt crony capitalism that is killing this country.

When cheaters prosper, market mechanisms become perverse and can drive the honest from the marketplace. The market becomes dominated by cheats because they obtain a competitive advantage. The most common reason that firms can cheat with impunity is that their CEOs are cronies of powerful politicians. The defining characteristics of crony capitalism are that the cronies receive subsidies, favors, and immunity from normal rules and laws. The cronies dominate the big corporations and provide reciprocal benefits to controlling politicians. Managerial incompetence and wealth flourishes under crony capitalism. Merit and efficiency suffer, income inequality surges, and class and who one knows become the primary determinants of economic and political success and power. The elites become pervasively corrupt.

The Powell memo nurtured and grew the Galtian overlords that answer to no one and rule all while laying waste to the world around us.

Mary :: 3:42 PM :: Comments (2) :: Digg It!