Friday, April 23, 2010

What is Crony Capitalism?

Crony capitalism is a pejorative term
describing an allegedly capitalist economy in which success in business
depends on close relationships between businesspeople
and government officials.
.
It may be exhibited by favoritism in the distribution of legal permits,
government grants, special tax breaks, and so forth.

Crony capitalism is believed to arise
when political cronyism spills over into the business world;
self-serving friendships and family ties
between businessmen and the government influence the economy and society
to the extent that it corrupts public-serving economic and political ideals.

In its lightest form, crony capitalism consists of collusion among market players.
.
While perhaps lightly competing against each other,
they will present a unified front to the government
in requesting subsidies or aid.

…it is not uncommon for current industry players
to gain control of the “watchdog” and use it against competitors.
.
This phenomenon is known as regulatory capture.
A famous early example in the United States
would be the Interstate Commerce Commission,
which was established in 1887 to regulate the railroad “robber barons;”
instead, it quickly became controlled by the railroads,
which set up a permit system that was used to deny access to new entrants.

Crony Capitalism

If Greensboro and Guilford County are infected with Crony Capitalism,
how can we fix our political system
to offer businesses looking to expand or relocate a level playing field?

No comments:

NEWSBUSTED at NEWSBUSTERS.ORG 5-16-2014