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Friday, July 11, 2014
Crony CapitalismPosted Saturday, January 28, 2012, at 1:18 PM
In a perfect world, everyone would provide to their neighbors, or for the common good, what they are able to spare and everyone in need would be able to receive whatever they need. Or would that be a perfect world? What I just described is the driving philosophy behind communism. While it may sound good in theory, there is not a single example in all of human history where this philosophy did not lead to tyranny, collapse, or both.
According to one of the financial articles I recently read, a joke on the streets of Moscow these days goes something like this: "Everything the Communists told us about communism was a complete and utter lie. Unfortunately, everything the Communists told us about capitalism turned out to be true."
Is water a liquid, solid, or gas? Such a fundamental compound can be hard to define. Similarly, capitalism can be difficult to define. The principal elements of capitalism include the private ownership of property, the creation of goods or services for profit, and voluntary exchanges where price is left to the participants to define.
Anyone who believes that nature should be left undisturbed should be a proponent for capitalism. In nature, the strong survive and the weak perish. In different periods, certain species flourish while others become extinct. Of all the species that ever existed, 99.9999 percent have become extinct. Yet we see a natural harmony and balance in nature. The same happens with capitalism.
Crony capitalism, a new term in the popular vernacular, describes an economic system in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth. Think General Electric, General Motors, and "green energy."
With crony capitalism, members of the government determine winners and losers; who flourishes and who becomes extinct. Evolution is thwarted. Innovation is stifled.
Fascism is an inflammatory word if there ever was one. Images of Nazis jump to mind. Incidentally, the word NAZI is an acronym which stands for The National Socialist Worker's Party. Because of the Nazis, the word fascism is inextricably linked with nationalism, war, and eugenics.
The economic term fascism is generally considered to be a system of corporatism. A political system in which the economy is managed by the government, employers, and unions. It is an economic philosophy between capitalism and communism; a species of socialism.
Looking at these economic definitions, it seems to me like the way that business presently operates in the good ole' U.S. of A. is crony capitalism; another name for fascism.
According to news reports, its now officially official; we are now in the worst economic "recovery" since analytical economic records have been kept. Why?
A number of sick and dying economic trees are being kept alive shading out so many young healthy saplings and underbrush that would otherwise thrive in the open space. The same government who, once they take over your health care, will ease you into the grave rather than pay for your life support, is artificially keeping alive industries which have slumped into a semi-vegetative state. (Pun intended.)
You never hear about the depression of 1920-21. The nation had a 38 percent decline in industrial activity and a 32 percent decline in economic activity generally. The Great Depression, by comparison, had an economic decline 27 percent. Why is the deeper depression forgotten and the more shallow known as the Great Depression?
In 1920 the government stubbornly refused to aid industry and regulate the economy. Instead, Congress removed most of the World War I regulations and cut taxes. In 18 months, it was over. However, both President Hoover and President Roosevelt believed that when economic problems presented themselves, they could regulate the economy back to health. As a result, this depression dragged on for five years becoming the Great Depression.
If our leaders were smart, they would know that no one can outsmart nature. No one can be smart enough to regulate an economy to health. If they truly cared more about our prosperity than accumulating political power, they would get out of the way, end the cronyism, and allow Darwinian capitalism to come back, clear out the unhealthy and dead, and allow the vigorous to thrive.