This page has been archived and commenting is disabled.
Crony Capitalism Is Kryptonite To Democracy And The Real Economy
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
When the machinery of governance is ruled by the highest bidders, democracy is dead.
Last week I described the sources of America's America's terminal political dysfunction. The engine of this terminal dysfunction is crony capitalism, the incestuous and oh-so-profitable marriage of the Central State and monied Elites.
Gordon T. Long and I continue our discussion of the perverse incentives and consequences of crony capitalism in a 25-minute video program.
Gordon argues that America's Crony Capitalism closely resembles the Roman Tribute System, an arrangement that skims wealth and concentrates it at the top of the power pyramid.
Vast financial crimes are met with fines. Guilty parties do not go to jail but rather the corporation pays a fine. Billion-dollar crimes are assessed million-dollar fines-- a percentage that closely mirrors a Tribute System. The government makes money through enforcement but not prevention. Corporations make illicit fortunes with the confidence that the government will settle for a small slice of the wealth stripmined from the people.
The fines for financial skimming operations act as a form of tribute to the Central State: the State and its corrupt elected officials and regulators turn a blind eye to the pillage of the citizenry via financialization schemes, and then skim a tribute via fines and campaign contributions.
Everybody in the inner circle wins: the finance perps collect their millions in bonuses, the legislators collect their millions in campaign contributions, and the regulators (who managed to do nothing in the way of prevention) get to declare a toothless victory in announcing wrist-slap fines.
I have covered this dynamic many times:
The Mafia State of Mind (February 6, 2014)
This cozy arrangement might seem benign, but it's actually deadly to democracy and the real economy. Let's call crony capitalism what it really is: Kryptonite to democracy and the real economy.
Concentrated wealth and State power form a self-reinforcing feedback loop that destroys democracy. The more profitable buying influence and the revolving door between corporations and regulators becomes, the more money the corporations have to spend on lobbying, which serves to further protect their profits. The more money political toadies collect, the more beholden they are to entrenched interests.
This feedback loop rewards crony capitalism and limits classical capitalism’s key features: transparent markets and competition. An economy dominated by crony capitalism stagnates as competition is suppressed and government enriches those who are “more equal than others” (to borrow a phrase from Orwell).
Money that might have once been invested in research and development is now devoted to bribing politicos, lawsuits defending corporate turf and wrist-slap fines/Tribute to the State that enables and protects crony skimming operations.
When the machinery of governance is ruled by the highest bidders, democracy is dead.
»
- 12469 reads
- Printer-friendly version
- Send to friend
- advertisements -
hank paulson and ben bernanke are fascists
that's an insult to all the fascists in the world.
It's amazing how CAPITALISM always gets the blame. Why not say "crony fascism" or crony zionism?
It's a bit like calling a prostitute a "crony virgin".
When the machinery of governance is ruled by the highest bidders, true democracy is dead...
Awkward instant as the 1st animal is jettisoned....
When the machinery of government exists, freedom is dead.
Danger to invdividual liberty, rather. So is most democracy, happy to loot at the drop of a hat itself, the masses also easy to manipulate by the cronies themselves.
^This
Well Said!
For sure, falcon, there is NO widely understood language to discuss what has been happening, as has been expressed by Cognitive Dissonance in these ways:
"Control the Language and You Control the Mind! ... It is the effective manipulation of our belief systems that enslaves us to the present day insanity. ... The absolute best controlled opposition is one that doesn't know they are controlled."
The American democratic republic was destroyed as the international bankers took control over the public "money" supply, and turned that inside-out and upside-down, so that the word "money" now means pretty well the opposite of what it used to mean! The American money supply was supposed to be backed by gold and silver, whose value was set by Congress. Indeed, the word "dollar" originally meant a particular amount of silver. However, the banksters were able to systematically apply the methods of organized crime, through bribery, intimidation, and assassination, in order to result in enough of the politicians becoming the banksters' puppets, while enough the people could be fooled enough of the time, in order to keep on replacing their representatives with one fresh crop of professional liars and immaculate hypocrites after another.
As usual on Zero Hedge, this article grossly underestimates and understates how serious the problems actually are!
Why not say traitors. That carries a bit more weight than crony anything.
Besides being traitors who should be hung for treason.
Max Keiser calls'em "financial terrorists". I wholeheartedly agree.
How many times does the guy say "and I'm sure he's a very honest guy" before you throw up? THEY ARE CROOKS!!
and they know it...
Long live the Republic!!!!
Do you ever have the feeling like the rest of the world has already put us on Double Secret Probation?
Perhaps, but the numpties in charge have egos as big as Baltimore, so they haven't noticed yet...
Was it over when the Germans bombed Pearl Harbor?! Hell no! And it ain't over until we say its over! Who's with me?!
"...the State and its corrupt elected officials and regulators turn a blind eye to the pillage of the citizenry via financialization schemes, and then skim a tribute via fines and campaign contributions."
Yes, the republic is dead. All hail the Kleptoligarchy, the New Rome! Don't forget your tribute this April.
Chinese insurance company just bought the Waldorf Astoria. Who said America wasn't for sale?
It's been for sale for quite some time; as are Americans. Sold and sold out.
Kryptonite is Crony Capitalism . . . for newspapers other than the Daily Planet
The auto industry in spades.
I doubt if they even crack the top 10, even with the (illegal) GM bailout. Put "banks" at the top of your list and work down from there.
Agreed.
Don't forget the MIC and all the companies that thrive off of EBT and SNAP.
It is beyond doubt that citizen democracy is dead in America. The Main Stream media investigates nothing of importance and if something unfavorable to corporate interests emerges from other sources, the Main Stream Media ignores it completely. A congress and President that accept money bribes in public, as part of the political process, with Supreme Court approval, is a sign of their arrogance. I just read a long study of Fracking Industry and US Foreign Policy. You literally have corporations and the State Department as virtual departments within each other, not sperate entities. Where Frackers seek to go, American tax payer money, the CIA, State Department and US Military lead the way. There is no revolving door, because corporate and government operate together with all actions "in house" as it were.
Obama health care law, this was written by Insurance Company lobbyists and present to congress by corporate health insurance companies to be passed in the interests of profits and nothing more.
The government and corporate contractors are one single entity when it comes to arms, war, spy agencies and the police state. Even people in America's gulag are often held by for profit guards who seek to make maximum profit by dealing with humans at the lowest level possible.
One could go on, Universities are money machines for their owners and top executives, not to mention sports interests and television.
Democracy is a cancer in itself. The founders were very much against Democracy and yet people forget that - as well they forget we pledged ourselves to the Republic! The Republic for which it stands...
In the ~5,800 words that make up the Declaration of Independence and the original US Constitution, the word "democracy" cannot be found once.
For good reason.
Democracy is, a multitude of people asking what can it do for me, not what they can do for it. Democracy is, an attitude toward law that is of this moment alone, not of every rule of law ever passed down through the ages that has brought you to this moment.
If the Republic is to die, let it be with the proper funeral pyre, along with the many who believe in the rule of the mob, that a Kim Kardashian's vote cancels out mine.
Its only fitting ;-)
Yes, the Republic! The Republic that recognised the "rights" of a slave-holder to his slaves and the "right" to murder the natives and take their lands! What a loss that such wonderful republic is now on the decline!
"Crony Capitalism"
Stupid, misleading phrase of Leftist propaganda.
It is simply Cronyism. Currently Crony Marxism.
The sheeple still hope that their courts and system will eventually work.
Trust and hope in the system are the pablum of the non-thinker.
From Humans of New York website:
"If they raise the subway fare one more time, I'm going to explode. I'm making nine dollars an hour. I walk home three hours from work every day to save that $2.50, because that's a half gallon of milk for me and my daughter. And every time they raise the fare, they have a 'hearing.' But they aren't hearing anything. It's a fucking joke. If you go to one of those 'hearings,' every single person stands up and says: 'Don't raise the fare.' Then they raise it anyway. Oh man, it burns me up. 'We need the money,' they say, 'America is hurting.' That's bullshit! If I see one more TV program bragging about multimillion dollar homes I'm gonna scream. How about a fucking TV program that shows me if there is anywhere in this city that I can fucking afford to live anymore. I'm sorry, but it's burning me up."
https://www.facebook.com/humansofnewyork?fref=nf
Move? Lol...
You need money to move. And the insecurity of moving is worse. People that are caught in that gerbil cage have it very tough. Especially if it is a single mom and a child...with the education etc. Moving is great if you can afford it...the months that it takes to get settled, to find a new job, to learn the new ropes...that costs money. People are caught in the web of their neighborhood and all their lives are tied to it
I moved so many times and never established a "home" for years...but now I have lived in one place for 37 years. I thank God that I can do so even though it is not the perfect place. But a perfext place is hard to find.
I'll bet it would make the writer feel better knowing that the typical MTA worker makes six figures.
Democracy is dead?
Good riddance.
Crony Capitalism can work exceedingly well if correctly used .
See the history of Venice .
A republic of crony capitalists , with sufficient social mobility .
See also http://andreswhy.blogspot.com/2009/05/rome-vs-carthage.html
The Roman Republic was also crony-capitalist , which tore it apart when they were too successful .
"The Lidless eye knows what to do about the Wizards of Enron" Apologies to Tolkien .
When the political process is for sale then the worst option in every area of life will eventually be chosen because the worst option will be the one that extracts the most money from the public for the people lobbying for that option.
Example, three options (in whatever area of public life):
option 1) honest option, beneficial to the public which would make $100 million profit a year
option 2) half a scam that would make the people pushing that option $200 million a year
option 3) complete scam that would make the people pushing that option $400 million a year
The people pushing the worst option have the most incentive to corrupt the decision making process (because no one would pick that option out of choice) and at the same time they can afford the biggest bribes as well so once your country's political process is corrupted, you're doomed. In the US I guess that came with TV and the need for massive campaign contributions to fight TV elections. Either way I'd guess it's campaign contributions that are/were the weak spot.
Free money destroys everything it touches. Weather it be people,Gov,health care or ind. I would not be suprized to find out it wiped out entire societies. They found a pyramid on Mars? Just sayin?
Saw this picture on another site and thought that it was apropos.
http://www.the-top-list.com/wp-content/uploads/2012/03/fat-lady-crushing-skinny-man.jpg
Winning. Right. And here I thought they'd stop if they only realized that they were going to die anyways and started worrying about their everlasting souls and stuff...
The title sounds like there were some good ole capitalism, sort of like those were debating good communism and bad communism in the 70s. Fuck you! Your good-ole capitalism was built on two huge human sufferings - genocide and slavery. Democracy? What democracy are you talking about? You mean democracy for slave owners and war criminals?
Those who look closely understand that it is not the 1% at the top stealing the icing off the cake, but the much smaller .1% or .01% that are skewing the numbers and overreaching.
I contend the biggest problem is the massive growth in crony capitalism and corruption in Washington. Much of this can be attributed to the ability of those in control "changing the rules" and positioning themselves to benefit at every corner. In our busy and complex world we have found it impossible to watch all the moving parts. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/05/how-empires-collapse.html
"But in some cases, we found evidence of more sinister and direct cronyism. For instance, during his tenure as governor of Maine, Angus King signed into law a bill requiring utilities to generate at least 30 percent of their electricity from "green" sources such as wind. After leaving office, he founded a wind-energy company, Independence Wind, whose first project, Record Hill Wind, received a $102 million loan guarantee from the Department of Energy, in relation to which King received a $407,000 "success" fee." Source: Realclearpolicy website.
I got mine. Screw everybody else.
Chuck,
The only way that capitalism and "democracy" can coexist is if we dumb down the conception of "democracy" to being the freedom to choose among the choices offered by the market. That is, in fact, exactly what Milton Friedman and other libertarian/propertarian propagandists successfully argued we should do. Whether the market is made of the cronies, by the cronies, and for the cronies is irrelevant because the market continues to offer choices.
So, don't you worry, our "democracy" is safe.
Competition is dead, though, thanks to the neoliberal (libertarian/propertarian) thought-collective. When finance is the king of capitalism, competition is bad for capitalism. That's just how it works, Chuck. If you check your assumptions, you might recognize that your "two minds" are very much in conflict with one another, cognitive dissonance writ large.
"Propertarian", I like that term.
If money is in the game there is no room for a free ride without. The money argument wins to give birth to a sensation if not.
If all put their hopes on money we have a scenery called competition. A competition is aimed to deliver a winner. The winner's sign it is to have to most of it.
If the winner takes place on the chair and starts giving orders we have to spot a self-reinforcing feedback loop.
Besides there is the altruism business. Pets, Lovers, charity, bad consciousness wipers.
Among those we find the topic democracy. A nice subject for hearings as long there is lasting a precariousness about who the winner will be.
Tell me the situation where sums were around saying no word while people were discussing serious matter. At all levels driven by the run for money in hope to escape the fear not to have it.
The believe in money is the believe in the dictatorship that this argument is able to deliver. Against your neighbors, the citizens around and over the borders entering the world.
If there are no tools in place to contradict efficiently a money order nothing can change.
Rauner in IL is a microcosm of this theory. The rich taking advantage of a depressed situation to ascend to power. I mean the guy is directly paying black communities in exchange for voter turnout to his favor, and does not even bother to conceal it any more. At least before Illinois corruption was below the radar and had to be sniffed out, now a wealthy likely new governor is paying people directly and openly to buy votes. And IL is the worst state financially in the USA at this time, so this may prove to have been a perfect storm to slip in a crony capitalism candidate and get elected. This guy is classic 1984, his face is plastered everywhere, he may well be the most famous non politician in llinois today. What is truly scary is that there are masterminds out there who look for these kind of lecherous opportunities to do exactly this. There is just so much evil around any more. I understand wanting change, but to change to a rich fiefdom does not seem to me to be solving problems any more, it is only expanding the footprint of the rich.
It is distressing to see supposed smart people misstate the form of our government.
"A REPUBLIC, if you can keep it"--- Ben Franklin
Democracy is Tyranny of the majority. In fact there is no "right to vote" in the US Constitution. The states could elect to appoint Presidential electors themselves. Democracy is the death of the Republic. Election of Senators was the start. The brainwashing in schools that the US is a "democracy" rather than a Republic, with a Suprema Lex Constitution has done its job when supposed "smart" people like Smith and Jim Quinn tout the US as a "Democracy". "Democracy implies that the law can be changed by the will of the people. They are just wrong from the beginning.
If Democracy is the death of the Republic, then free will is death of Man, the declaration of Independence a drunken man's rant, and women are not the bearers of human life, but its Nemesis.
We are all standing on our heads and the Oligarchy is right : Debt is Asset!
Have you read Ethics by Arsitotle ?
It was the reply of Son to father of philosophy : Plato--if you allow me to bypass Socrates who never left us a written word except as related by Plato in the Socratic dialogues--.
Plato advocated philsopher-king as model, the Republican elitist aeropage. Plato was anti-democratic but Arsitotle put that right by stating "pragmatism" meant that every man had to have his say and that Man's ethics required it to be so. Nobody could take away that minimal privilege of every man, his natural rights, however powerful or intelligent he be!
Aristotle advised the world to look at acts and facts; aka bottom up logic; not top down constructs built on ideals alone, like Plato did.
History has proven Aristotle right largely in this debate, as Science is based on fact not theory.
So should be politics UNTIL we hit a asymptote of value systems. At which point we need paradigm change.
Society then has to invent another algorithm to reconcile ideals to pragmatism : Plato to Aristotle.
So its only at tipping point moments that Plato and Aristotle are at loggerheads. And the solution is a new vision of society; aka change of means via science/technology to achieve perennial societal aims.
Most of the time, in business as usual mode, civilization prefers Aristotle's pragmatism ! To complete in its acts of the Republic the ideals of Plato and its/his constitutional/idealistic vision of society. Then that constitution is not "just a piece of paper" but a living, breathing thing!
One man-one vote is expression of that pragmatic state of Man's natural rights.
Voting is not "free will" (typical thought of relative, rather than absolute thinkers). Voting tends to degrade into team party retribution politics and getting free shit. Just remember 70% of the population are idiots.
what do you expect when the prez is an anti american, racist, divider, politically motivated, muslim, commie, light footed ballerina..???
and the legislative process is stopped/perverted by the senate leader, and the AG, IRS,and other agencies are criminals? and there is no rule of law..?? inversion is not only for tax purposes.. it's to get the fuck out of a place where 1/2 the people dont work, 1/2 are morons, and the government wants half or more of what you have to buy the votes to stay in power...... the white house bathhouse boy in chief has politicized the entire governmnet into an oppressor of the masses,, bypassed the constitution, shit in the face of the military and vets, supported and done more for the caliphate than bin laden and al queda... which was had suppressed until shit for brains ran the show...and gave away the victory and funded and weaponized isis...opened the borders to anyone to enter, imported ebola and sits with his thumb up his ass immobilized like a deer in the headlights....
Crony Capitalism seems like SOCIALISM