Tag Archives: Crony Capitalism

The Twitter lesson: Workers and Management

Posted on by
Twitter Lesson

There’s a Twitter lesson to learned and it involves both workers and management. A lot of my friends find delight in the apparent demise of Twitter and I can’t say I blame them. I find it an interesting opportunity to examine the relationship of workers and management to the success of a business endeavor.

It seems to me; most people are not learning the correct Twitter lesson. A large group of people blame Musk for the ongoing situation. A second group blames lazy workers not willing to put forth enormous effort to save the company. What’s the reality? Let this Libertarian answer all your questions.

Twitter’s Problems

In order to determine the appropriate Twitter lesson, we need to fully understand the difficulties the company faces. Twitter was never immensely profitable. It had a couple of good years where income exceeded expenses but it largely lost money. Now, add the enormous loans new owner Elon Musk must pay back and it doesn’t take a genius to figure out the company is in deep trouble.

This being the case, the simplest solution in these situations is always to cut payroll. That means firing people. So many people the platform is barreling toward destruction. This solution means Musk must hope his remaining employees will do the jobs of two or more people while still earning their current salary.

I wrote about when this sort of expectation can work in an article about Reciprocity if you’d like to read that. I’m not going to discuss it further here.

What is the Twitter Lesson?

With one side calling workers lazy and the other blaming Musk for his business decision it seems like one of those two things must be the Twitter lesson, right? Wrong.

So many people want to blame lazy workers and so many people want to blame bad management. It’s the same when a business succeeds. Half the people want to give the credit to management for financing the operation, hiring the people, creating the business. A second group of people claim it is the workers who achieve the success. It is their efforts that build value.

The problem is both groups are right and wrong at the same time. The business owner who comes up with an idea, hires people, takes out loans, and builds a company should be lauded for this effort. It’s dangerous from a financial point of view and she or he should be praised. Meanwhile, the workers who buy into the vision and perform the day-to-day tasks are absolutely vital to success. Without them there is nothing.

This seems very obvious to me and I think most people, after reading this, will agree. Yet, before reading this, people eagerly and vocally assign all the credit to the owner or to the workers, ignoring the cooperation between the two groups required.

That’s the Twitter lesson. It’s workers and management that lead to success and to failure. Sure, in this case, Musk badly overvalued Twitter and took out a big enough loan that success became a near-impossible task.

Crony Capitalism

The entire situation is further complicated by the fact politicians now pass laws and extend financial aid to favor one company or attack another. This Crony Capitalism is something I’ve talked about elsewhere but it is part of the equation.

The reality is Musk’s previous ventures were largely financed by taxpayers. Government agencies gave him direct money and tax breaks. That fact plays no small part in what is happening today but is, perhaps, a topic for another day.

Conclusion

My conclusion is pretty simple. A business does not succeed or fail solely because of workers or management. Good managers and good executives value their employees’ contributions. Good employees recognize that management and executives want the business to succeed and often have to make difficult decisions.

Tom Liberman

The Unwanted Shake Shack Government Loan

Posted on by
Shake Shack Government Loan

What does it tell you a Shake Shack Government Loan was returned? For a lot of people, it’s a gesture of goodwill by Shake Shack to the other small businesses that need the money more. That’s not the way this anti-government Libertarian sees it. The Shake Shack Government Loan was simply a way to make the company obligated to the government, the owners didn’t seek it, didn’t want it, didn’t ask for it, but got it anyway. Forcing them to return it.

I’m proud to say the Shake Shack founder is St. Louis hometown hero Danny Meyer. Yet another illustrious graduate of John Burroughs, a fine school my lack of academic prowess disqualified me from attending. That is not the point of today’s article.

Why would anyone get a loan they didn’t want or need? That’s a question you must ask yourself. Why would any entity be given a check they didn’t ask to receive? One of the main reasons is the United States Government is big on giving out loans, our entire financial system is largely based on giving out taxpayer money as loans, this money generally having to be repaid with interest that goes to friends of politicians.

The government is certainly using Covid-19 as an excuse to further entangle the interests of its patrons into every aspect of citizens life. This unwanted intrusion didn’t start with Covid-19. President Trump created a Welfarm State with ridiculous tariffs, the Post Office was intentionally bankrupted, the Airline Industry has been a government subsidy since its inception and resulted in the planned destruction of the highly successful passenger rail system, the entire horse meat industry was destroyed. This is how government operates in a Republic.

In a Republic there are limits to what government officials can do. There are Checks and Balances. This being the case, government officials must wile their insidious evil in different ways. One of the ways they do this is to make people and businesses their unwitting partners. The government is happy to loan you money, purchase your products at inflated prices, because they then become a partner in your enterprise. You owe them.

The Shake Shack government loan is just another in a long line of takeover attempts that have reduced the United States to a system of Crony Capitalism. At least Shake Shack saw through the subterfuge although many others do not.

We no longer have a capitalistic system here in the United States and I suspect we won’t have a Republic for much longer either.

Tom Liberman

Does Joe Wickline Call the Plays? It shouldn’t Matter!

Posted on by

joe wicklineI just found out about a situation that’s been brewing in NCAA football for a while now. For once it’s not about screwing over the players, everyone’s favorite whipping boys. This time it’s about a coach.

A fellow by the name of Joe Wickline worked for Oklahoma State as an offensive coach. In that capacity he advised the head coach and the offensive coordinator on what plays to run but did not make the final call. The nonsensical question the court faces is whether Wickline is calling plays for his new school, the University of Texas. Why is this such a crucial question? Because of insane employer contracts.

You see, Wickline was only allowed to leave Oklahoma State without paying a $600,000 penalty if he took a promotion at his new school. If the move was lateral, or technically a demotion, then he would be forced to pay the penalty. Insanity. I will never understand how a business can penalize an employee in the United States of America for taking another job. It’s our right to work where want and when we want as long as an employer is willing to pay us. No one should have any say about that except me and the person who wants to hire me. If I steal company ideas or clients that’s another matter but if I simply want to move from one company to another it’s completely and totally my decision.

You might wonder the point of the clause in the contact. I’ll tell you. It’s a nasty, and in my opinion clearly illegal, way to make other schools pay when they hire someone who works for the first school. In the article I’ve linked the lawyers for Oklahoma State lament the fact that Texas is not paying the fee because everyone does it! Madness. It puts a huge chill on the ability of any employee to actively sell their services. If a potential employer has two candidates but one comes with a half a million dollar fee associated with him or her that clearly effects hiring practices. How this is not illegal mystifies me.

Shame on the anyone who writes such a contract. Shame on any judge who upholds it. Capitalism depends on people being able to sell their services to the highest bidder. It’s not just about making an environment where competition thrives and government doesn’t stifle it. It’s not just for the company, it’s all about the employee as well. Contracts like this stifle capitalism and the free market.

In the immortal words of Mr. Mackey, “m’kay?”

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Black Sphere
Next Release: The Girl in Glass I: Apparition

PAC Money – Chris Hansen and Corruption

Posted on by

Chris HansenWhen the Supreme Court ruled that Political Action Committees could collect unlimited amounts of money from anyone to support political campaigns most people thought it corrupted politics. The same thing is destroying business in the United States turning us, some would say has already turned us, away from capitalism and onto Crony Capitalism. Perhaps even past Crony Capitalism to what’s called commercial bribery.

In a recent case a fellow named Chris Hansen attempted to purchase the Sacramento Kings NBA team and move them to Seattle. This deal did not succeed for a number of reasons but that’s not the point of my blog today.

The Sacramento Kings were instead sold to another bidder but there was a timetable laid out by the NBA that the Kings had to have a new arena in time for the 2016 season. The new owners immediately began to seek funding for this new stadium. There were some opposed to building this stadium and Hansen realized that if they succeeded in blocking funding he might again have a chance to purchase the team.

His interest in the stadium case is clearly a conflict of interest. Hansen stands to gain by stopping the stadium purchase. Therefore he should stay out of contact with those parties. This would be fair business practice. This is something honorable business owners did quite regularly in the past.

Hansen knew that it was a conflict of interest and so gave money to a third-party who then donated it to the PAC responsible for spending money to try to stop the stadium. The state of California has strict rules about disclosure when it comes to a PAC. Those organizations must reveal donor names. In this case the time frame for disclosure passed and his name was not revealed.

A watchdog group insisted on seeing the records and Hansen’s role was revealed. Only after this did he suddenly regret his decision and apologize. His third-party donation could be illegal and the courts will eventually determine that, but my point is that this sort of thing goes on all the time.

This is the way a business succeeds in the modern-day United States. If you don’t sabotage your competition through commercial bribery or crony capitalistic government intervention they will destroy you first. A business succeed not by providing a better product but by being better at destroying rivals through underhanded methods.

Thus the company that is most unscrupulous wins. That’s not a good formula for consumers and it’s dangerous to our freedom. This trickles up to politicians and community leaders who side with the “winning” business in order to maintain their own position.

We live in the information age. Donations to a PAC can be almost instantly revealed via something as simple as a tweet. I’m not saying people don’t have the right to give to a cause of their choice I’m just saying this donation must be transparent and that conflict of interest laws must be enforced.

Do you think Hansen would have made that “mistake” if the law mandated that the amount and origin of money received must be posted immediately to some online forum?

These sorts of laws don’t erode our freedom, they enhance it. If a politician succeeds because of ideas, if a business succeeds because it is properly run, then we all win.

Tom Liberman
Sword and Sorcery Fantasy with a Libertarian Ideology
Current Release: The Sword of Water ($2.99 at Amazon)
Upcoming Release: The Spear of the Hunt

Wages Paid via Fee Ridden Cards

Posted on by

It's My MoneyAn increasingly large number of Americans do not have bank accounts. This number has grown by about ten percent in the last four years and is expected to climb. This presents what some view as a dilemma and others view as an opportunity.

In this internet age it is more expensive for an employer to print out checks and much cheaper to use direct deposit. This being the case, more and more employers are dropping the check option. Whether or not this effects you is dependent upon where you live as there are different rules in each state. It is a growing trend and one that will certainly continue to rise.

The problem end of the issue is how to pay employees who don’t have bank accounts of any sort and cannot accept direct deposits. To solve this issue banks began to allow employers to pay their employees onto what are called payroll cards. At this point all seems well and good. If people choose not to have a bank account that’s certainly their option. If companies choose to save money by using direct deposit that is also within their legal right, depending upon the state.

Banks incur some expenses in issuing these payroll cards and the plan was to recoup this amount through charges on the cards. There is a charge to deposit money on the card, a charge to withdraw money with the card, a charge to inquire on the balance of the card, a charge to receive a statement for the card, a charge to replace the card, and even an inactivity charge if you don’t use the card!

I think you can guess that the banking industry quickly realized that this service they were providing offered an opportunity to make a lot of money. They started to push the idea to the companies, some even give kick backs … er … rewards, to businesses that have their employees use payroll cards.

Companies enjoy these rewards and started to make it easier for employees to get the payroll cards and more difficult for them to use direct deposits. A woman sued because a McDonald’s refused to direct deposit into her Credit Union. That was, of course, illegal and they’ve agreed to start offering direct deposit to their employees now.

Other companies are simply making it very difficult to use direct deposits because banks are offering them major rewards for every employee then can get on the payroll card.

I’m not totally against the banks here. They are providing a service to people who choose not to have bank accounts and that service needs to be paid for with fees. However, it is clear that the banking industry sees this as not a way to provide a service but a way to steal money from people. Yes, I said steal. If the banks were charging some minimal fee and making a small profit on the cards I wouldn’t call it stealing but when they colluded with companies to provide no other option and charge far more than it costs to provide the service they are engaged in anti-trust practices.

This practice affects the poorest people the most as they are generally the ones without bank accounts and without other recourse. They need that minimum wage job and can’t easily go somewhere else. As the check payment method continues to decline their options will become even more limited.

What’s the solution? It’s not easy. The government could start to regulate these payroll cards for excessive fees like they do banks for other services but such efforts often end up with unintended consequences.

What I would love to see is a return to real competition. A group of people sees an opportunity to offer cards with lower fees and starts a Credit Union or Bank. This forces the existing banks to lower their fees until a competitive and fair level is reached. Right now the we don’t live in a capitalistic country anymore. We live in a country where if you tried to do that you’d be legislated out of business by the crony capitalist in your community, your state, and in Washington D.C. Anti-trust practices are ignored. The business that pays for the elections gets legislation passed that ensure their success and rival’s failure.

This system is so dangerous that it could potentially destroy our great nation. It is not the threat Ayn Rand warned us about in the communist dominated era when she wrote her novels but the effects are the same.

Rand warns us of the dangers of giving not what is earned but what is needed; communism.

If she was alive today I think she would have warned us that it is just as dangerous to allow success not to be derived through hard work, fair prices, and good ideas but instead through political connections; crony capitalism.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Sword of Water ($2.99 is a fair price for 300+ pages of my hard work, if you disagree, don’t buy it!)
Next Release: The Spear of the Hunt

The Way Government Works

Posted on by

Government BullyIt wasn’t too long ago that I wrote about the wild horse problem that is plaguing western states. That particular situation has brought to light something that I’m well aware happens but still rankles me to no end.

First some background. Wild horses are accumulating in record numbers in the western states and there are now 50,000 of them held in pens and about 32,000 roaming free. Every year thousands of them are rounded up in often brutal chases and forced to spend the remainder of their lives penned up. Not such a great life for an animal used to running free.

I suggested that instead of penning up these animals we instead slaughter them and use their meat. There are a number of countries in the world that eat horse meat and currently the United States ships about 130,000 animals to foreign countries for slaughter.

The federal government refuses to allow horses gathered in western roundups to be part of those sold. The reason the federal government refuses to allow it is because a great number of people love horses. Horses are more than a domesticated animal, they are more akin to dogs. They are companions, friends.

Now, all of this is really just a prelude to the real point of my argument. The federal government has no business telling us what we can and cannot eat.

It might be argued that they should protect us from food that will poison us. Horse meat doesn’t fall into this category. Those against eating horse meat say that the animals are given certain medications banned for livestock and there is a modicum of truth to this argument, but it would be quite simple to apply the same rules to horses as to cattle.

Now to the thing that makes me angry. In 2006 the government decided that they didn’t want people eating horses. There was no actual ban on horse meat, there was no legislation to outlaw eating horses, this because such legislation would be far beyond what the Constitution allows the government to do.

Here’s how they did it. The U.S. government requires that all meat undergo a federal inspection before being distributed as food. The real purpose of this law is to prevent small farmers from slaughtering their own meat and sending money into the hands of feed-lot owners, but again, I’m drifting. What the government did to effect this anti-horse meat ban was pass a budget that had $0 for inspecting horse meat plants. Instantly it was illegal to produce horse meat despite the fact that no one actually made it illegal. Anyone in the domestic horse meat business went bankrupt. Destroyed by the government. Even if they were doing a thriving business providing horse meat to those who wanted it. Destroyed by a single line-item in a vast budget. Those who ran such operations tried to squawk I’m sure but they were in the minority.

This is the way the government operates today. They create legislation that pours money to those that help get them elected. All under the ruse that it is for our well-being!

I think the horse meat issue is an interesting topic but the point I’m trying to make is that our government is now in the business of picking who succeeds and who fails at the swipe of a pen. One tiny line of a budget, hardly noticed, and an industry is destroyed. This happens all the time. Business does not succeed because of hard-work, good ideas, being smarter than the other guy. It succeeds because someone paid of the government to wipe out the competition. Because someone in the government didn’t think we should eat horse meat, despite the fact that it’s none of their business.

That’s not good for this country and it’s not good for you, regardless of your opinion on eating horse meat.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Sword of Water ($2.99 for 300+ pages!)
Next Release: The Spear of the Hunt

Passion and Hard Work

Posted on by

Hard work and PassionWhile my legion of loyal followers knows me as a prolific blogger and author of stupendous Sword and Sorcery novels I’m not ashamed to admit that neither one of those endeavors pays the bills. I’d like for my novels to become best-sellers and box-office blockbusters but, as of this moment, what allows me to live comfortably is my job at Acumen Consulting as a Technical Trainer and Website Developer.

One of our former employees likewise has a real passion outside of her daytime job and that is massage therapy. She invited me to come and talk to a group that she and a few of her fellow therapists created called the Bloom Connection. The association is designed to give massage therapists a resource to help grow their business. I was to spend a few minutes talking about Search Engine Optimization which is one of my specialties in the web development industry.

After my presentation the next fellow up was Nick Dunne who works as a the social media director for SCOSAG. They are a non-profit organization that helps children learn about art in the St. Louis area. After we both finished our lecture we answered questions. People wanted to know from Nick how important it was to have a Facebook presence, a Twitter presence, a LinkedIn presence, a Pinterest presence, etc. He suggested that the more things you do the better off you are but all this blogging, website building, and tweeting was intimidating to the group. They just wanted to use their hands (and feet) to make people feel better. That’s when something emerged from the murky recesses of my brain.

I blurted out, If you’re passionate about what you do and work hard, you’re likely to succeed.

If that isn’t the United States of America then I don’t know what is. That’s why people from around the world flock to the United States. They are passionate about something in their lives. They want to work hard. Be they from Mexico or Iraq. Be they Jews, Sikhs, Muslims, Christian, Atheists, or anything else.

In other places in this world working hard isn’t nearly as important as is paying off the powers that be. In other places in this world working hard is no substitute for having friends in government. In other places in this world if your skin is the wrong color or you religion is frowned upon you cannot succeed, no matter your passion or your work ethic. In other places in the world your passion will end up sending you to prison or the gallows.

And that’s the message of this blog. Let’s not stifle hard work. Let’s not promote graft and crony capitalism. Let’s not mindlessly support laziness from people of our race, religion, or political affiliation. Let’s purchase products and services from passionate people who care about their community, who care about what they do, who work hard at a job they love. It doesn’t matter if they are Republicans, Democrats, Libertarians, Jews, Christians, Muslims, Atheists, Mexicans, Lebanese, or anything else.

By golly, let’s be more like America and less like those other places.

Tom Liberman
Sword and Sorcery novels with a Libertarian Twist
Current Release: The Sword of Water (passionately written at the great price of $2.99)
Next Release: The Spear of the Hunt

Crony Capitalism and the Abrams Tank

Posted on by

M1 AbramsThere was a story this morning on Yahoo about how Congress was pushing purchases for more of the United State’s main battle tank, the M1 Abrams. When I got back from the gym today I had a difficult time finding the story which means it didn’t garner much interest from the clicking audience. The reason: Republicans have no trouble with wasteful spending if it is on the military. Democrats have no trouble with wasteful spending.

The tank’s service life is winding down and the Army Chief of Staff and others do not want to spend any more money on upgrades or new tanks. They are on record as saying they have enough, they want to spend money elsewhere. Can you guess why Congress is quickly moving to force the army to spend $437 million on new tanks? Crony Capitalism of course.

The tanks are built primarily in Ohio but in other places around the country as well. If that production stops then jobs are lost. I’m not particularly mad at Congressman Jim Jordan who represents the district where the tanks are built. It’s his job to do the best he can for his district. It’s all the other Congressmen who support this that rouse my ire although I expect nothing less.

Crony Capitalism has the word capitalism in it but it is the furthest thing from true capitalism you can imagine. It is simply the government picking which business they want to survive and funding it. It doesn’t matter that this happens to be defense related; it’s just that nearly half a billion dollars is a good amount of money and draws the eye. This isn’t an isolated case. This sort of behavior is extremely dangerous to our freedom.

The reason this is so dangerous to our nation is because the very heart of capitalism is that well-run businesses succeed while poorly run businesses fail. A company that makes a product that no one wants must fail. If it does not the nature of capitalism is undermined. Men and women who strive to succeed and build a strong company, employ good workers at a fair wage, contribute to their community, and otherwise further the ends of the people must be allowed to succeed. When people like that see others who do not run good companies succeed, at their expense, they stop trying. That’s one of the central messages of Ayn Rand’s Atlas Shrugged and the Fountainhead.

We’ve seen time and time again that moneyed interests bribe our politician into rewarding failure. Each time we do this we encourage someone else to fail and discourage those who want to succeed. Failure must be allowed just as success must be rewarded, otherwise capitalism is undermined.

The real point of my post today is that the government far too often is the final decider in the success or failure of a business. Congress has decided, against the will of men and women in charge of the army, that a bunch of businesses in Ohio and other places will not fail. Congress alone has made that decision, not the market. We are the worse for that decision and many others just like it.

This Congressional intervention, this Crony Capitalism, subverts the system so badly that good businesses are destroyed while bad ones thrive. Today, the best way to succeed is to contribute to Congressional elections and running a business properly is less important. The year after year repercussion of this is inferior products made by inferior people. That’s not how the United States became the greatest country in the world and it is in no small way the explanation of our recent decline.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Sword of Water (a story of fear and how a scared little girl learns to overcome it)
Next Release: The Spear of the Hunt

P.S. I just returned from Atlanta, Georgia from my sister’s wedding. To the people of Atlanta: Your road signage is outstanding. Well marked, large, visible, repeated regularly. Excellent job. A big tip of the hat from this St. Louis Cardinal’s fan.

PokerStars vs the US Casino Trade Group

Posted on by

GamblingThere is an interesting situation developing in regards to gambling in the United States that in some ways epitomizes one of the things that Crony Capitalism does to destroy true capitalism. It’s a complex situation and I’m certain that I don’t fully understand all the legal technicalities but I thought it was a story worth exploring.

What is happening is that the state of New Jersey, and several other states, have legalized online gambling. A company called PokerStars is hoping to leap back into that market. Yes, back into that market. For a number of years online gambling was legal and then in 2006 Congress passed a law making it illegal. PokerStars was one of two companies that were market leaders in the industry. Congress passed that law largely not to keep American citizens safe from the awful scourge of making a bet of their own free will but because the gambling industry wanted Americans to only be allowed to make such wagers in their casinos. Crony Capitalism at its finest.

If, horror or horrors, someone comes up with a business model that beats my business model, I can always bribe Congress to pass a law putting my rival out of business. Hooray for the American entrepreneurial spirit. In this case PokerStars created out of country sites and continued to take bets from U.S. citizens. This of course led the gaming industry to convince Congress in 2011 to seize the assets of these companies (essentially stealing money from gamblers who had made wagers but not yet collected their winnings).

This drove PokerStars main rival out of business and PokerStars stayed around by agreeing to pay a $771 million bribe … er settlement to the U.S. government so as to avoid further prosecution. Capitalism as it is now practiced in the United States in full bloom.

So, back to now. With New Jersey and other states legalizing what the U.S. government made illegal in 2006; companies like PokerStars are now ready to resume their former operations. The gambling industry is represented by the American Gaming Association. This group wants to institute their own online gambling business in New Jersey and the other states. They have now asked the state governments to ban PokerStars from being allowed to participate because of their supposed past crimes; continuing to take bets offshore after it was made illegal to bet in the U.S.

Basically it comes down to the idea that a company bribes government officials into passing laws that make it difficult, impossible, or illegal for their rivals to do business. This is what capitalism has come to mean in the United States. This is not an isolated case. Large businesses routinely bribe, I mean contribute to elections hoping to get laws passed that favor them. This sort of crony capitalism is destroying small business, it has essentially eliminated what used to be called the family farm. It is skewing the wealth of this country towards an increasingly unfavorable distribution with a steadily declining middle class.

This sort of unfair business field in which people with good ideas, energy, and drive are prevented from succeeding not only destroys true capitalism but it deprives the citizens of this country great products at a reasonable price.

Anyone remember Tanya Harding hiring a thug to kneecap Nancy Kerrigan? Was that right? That is a microcosm of new capitalism in the United States. We are becoming Tanya Harding. So afraid of losing that we beat up our opponents rather than working hard to make a better product. Nice.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Sword of Water (It’s awesome! Buy it now!)
Next Release: The Spear of the Hunt

Crony Capitalism

Crony Capitalism

Posted on by

Crony CapitalismThe topic for today is something called crony capitalism which is destroying free enterprise. The basic idea of capitalism is that free markets provide the best economic model for the growth of a nation. There are a lot variables within capitalism but at its most fundamental it is an idea that includes private ownership and production, wages for workers, free competition, and accumulation of capital for profit.

The ideas of capitalism are probably good fodder for another blog. What I want to discuss today is how crony capitalism is destroying the free market and with it our libertarian ideals. While crony capitalism has the word capitalism within it, it is actually a form of socialism, or government control of industry. Socialism is another badly misunderstood word and I should take that up in another blog. The ideas keep rolling in!

What is largely meant by this term is not capitalism at all. The United States government has become overly involved in the success of business. It is through government involvement that a particular product or service now succeeds. This has spawned an entire industry of lobbyist who spend their days trying to convince government officials to pass laws, regulations, and make actual purchases that favor their employer.

Most people see this problem with the U.S. military and decisions on which system to purchase are often decided by factors other than the actual effectiveness of the product.

However, this crony capitalism extends much deeper into society than most people realize. Go ask your employer if you have any government contracts. Ask them how much of the company money is spent on trying to get government agents to give them advantages.

There are a lot of reasons to fear this subversion of true capitalism but I think the main idea goes back to what Ayn Rand suggests in her writing. That the individual achiever must be allowed to succeed or society as a whole will eventually fail. The problem with crony capitalism, from my perspective at least, is that companies and individuals achieve not on the merit of their work but upon their ability to bribe government officials into altering the playing field so that they succeed. This eventually means companies that are good at bribery and backstabbing succeed while companies that just want to make a good product, employ hard workers, pay them a good salary, and make some money are defeated.

Again, we arrive at the point where I’ve complained all day long and not offered any solutions to the problem.

This is an extremely difficult problem but at its heart it comes down to fairness of government regulation. I’m a relatively moderate Libertarian in that I believe government regulation is necessary to prevent anti-trust situations but these regulations need to be broad and aimed at creating a fair playing field for all businesses.

It’s not easy to come up with legislation of this sort but I’ll take on food labeling as an example of my ideas. There are currently a bevy of regulations on how to display the nutritional contents of food. The problem is in defining what percent of a particular nutrient applies to a wide variety of people and what defines a serving size. It seems clear to me that nothing is going to be applicable to someone of my size, 5 foot 7 inches (1.7 meters) 165 lbs (74.8 kg) of twisted steel, and say, the left tackle of the St. Louis Rams. Go Rams!

So, why not simply put in the actual nutritional value of the entire package on the label. I can figure out how much of the package I eat, I can easily find out the daily allowances for someone of my size. It’s not the governments job to lead me to  the water and hold my hand while I drink.

Another example might be the animal husbandry industry. Simply make the producer put a webcam on their livestock and slaughtering pens and make it publicly available. If I know how the animal is treated then it is up to me if I want to save a little money or purchase the more expensive, but better treated, animal.

I’m a believer that government needs to regulate but the purpose is to create a fair playing field so that the best business can succeed, which is a winning formula for you and me.

Tom Liberman

Teaser – Crony Capitalism

Posted on by

Crony CapitalismTomorrow I’m going to talk about a phenomenon called Crony Capitalism. I’ve long understood the dangers of this business model but I didn’t know what to call it until recently. Happily this Twitter feed liked one of my posts and I’m now up to date on the proper terminology. Join me tomorrow to find out more!

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist