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Capitalism vs Cronyism

Discussion in 'Current Events' started by Nakosis, Jan 21, 2022.

  1. Nakosis

    Nakosis Time Efficient Lollygagger
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    It makes no sense to say “crony capitalism.”

    Cronyism takes many forms, but ultimately the effect is the government picking winners and losers, such as through subsidies to prop up a government-favored industry (e.g., for electric vehicles) or regulations that create barriers to entry for new competitors in an industry (such as state occupational licensing laws).
    Those actions are taken at the expense of competition and innovation. Even worse, by their very nature, they don’t account for the overall public interest. Instead, they benefit a small, favored interest at the expense of everyone else, from taxpayers and consumers to other businesses.
    Why Cronyism Is Antithetical to Capitalism and Free Enterprise
     
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  2. epronovost

    epronovost Well-Known Member

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    I disagree. The distinction between cronyism and crony capitalism is that in cronyism, the government rigs the free market in favor of their special interests, friends and family. In crony capitalism, the capitalists rig the election and the democratic system so that their friends sit in institution of power to serve their interests down the line. One is a authoritarian government asserting its authority in the context of a market economy and the other is a bunch of oligarch and corporate interests neutering and taking over democratic institutions for their economical benefits. This is an important distinction in my opinion. Industrialists, bankers and other wealthy investors are often no less authoritarian and self-centered than dictators.
     
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  3. Kooky

    Kooky Freedom from Sanity

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    Cronyism is capitalism working as intended. The ultimate incentive of any market capitalist is to displace all other competitors in their chosen market and extract the maximum value from it. Their influence on the government, in that context, is just another asset to transfer into a lasting advantage over the competition.

    "Free enterprise" will always have to contend with the issue that competition in a property-based economy will be fundamentally unequal and fundamentally skewed in favor of those with the greatest amount of capital at their disposal.
     
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  4. exchemist

    exchemist Veteran Member

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    Depends whose "intention".

    In the modern free market economy there is a host of regulations to arrest the tendency of capitalism towards monopoly. The Sherman Act in the US and the provisions of the EU Treaty of Rome enshrine in law rules to stop companies from developing anti-competitive practices that work against the interests of consumers. Anyone who has had a middle management job in a large Western corporation will have had repeated (and eventually rather tedious) mandatory training in what has to be avoided. Large fines are handed out for transgressions.
     
  5. exchemist

    exchemist Veteran Member

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    This looks like the usual oversimplified special pleading from free enterprise zealots trying to avoid government oversight. (Why might that be, one wonders?;))

    The argument is being presented backwards, probably deliberately. Sure, cronyism leads to a corrupt government favouring the cronies. But that does not mean that government "picking winners and losers" automatically amounts to cronyism, cartoons of stereotypical fat cats in top hats notwithstanding. Plenty of countries have found there are advantages government getting involved in strategic industries. In fact almost all government do so, whether they admit it or not.(In the US it is often disguised in the form of the award of military contracts to favoured companies.)
     
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  6. sun rise

    sun rise "This is the Hour of God"
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    Yes. The military sucks down ever increasing sums because of the "Military Industrial Complex" President Eisenhower noted back in the stone age. The result is that resources that could fix infrastructure, provide for the "least" and reduce taxes are sucked up by military spending including on weapons the military does not even want.
     
  7. Revoltingest

    Revoltingest Abnormal before it was fashionable
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  8. Kooky

    Kooky Freedom from Sanity

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    It really doesn't. Profit seeking is a motivation intrinsic to the capitalist system.

    And we can see everywhere how well these laws work in practice at preventing corporate monopolies and abusive business practices. The nature of all such laws hinges on how they are being applied and executed.
     
  9. Kooky

    Kooky Freedom from Sanity

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    It's literally impossible to run a government without some kind of "favoritism". All governments need the services of private industries, and picking one supplier over the other is the very definition of "picking winners and losers".
    The only way for a government to not interfere in markets, is to have neither government nor markets.
     
  10. exchemist

    exchemist Veteran Member

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    Well obviously businesses seek to make a profit. There's nothing wrong in that. Your local baker and plumber do just the same.

    In fact these laws do work, by and large, though clearly one can always find some examples which have escaped attention. Just look at the trouble the US Big Tech corporations are in with the EU Commissioner for Competition: Margrethe Vestager - Wikipedia
     
  11. Kooky

    Kooky Freedom from Sanity

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    There is absolutely everything wrong with that. Businesses should exist for the purpose of providing a service to the community, not enrich their owners at everybody's expense. Their enrichment should, at best, be a pleasant side effect of doing a good job providing these services, not be the entire, all-overriding goal of their endeavours.

    Very little?
     
  12. exchemist

    exchemist Veteran Member

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    That, I am afraid, is utterly unrealistic. Your plumber or your baker needs to earn a living: they need to make a profit from their business. And from such beginning bigger businesses grow. You will never stop people trying to do better for themselves financially.

    I notice you now suggest that profit is the sole objective of business. That's naïve. Most businesses take pride in what they do, and want to operate honestly, treat their staff fairly and to be respected by society.
     
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  13. Kooky

    Kooky Freedom from Sanity

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    These two issues do not follow from one another. In fact, many plumbers and bakers make no profit at all from the businesses they work for - being in the employ of a business owner!
    You completely fail to adress my argument here (that businesses should have a purpose other than making profits) and instead attack an argument I never made (people should not be allowed to earn money, or expand a business beyond its initial size). I would argue that these two are not even particularly related.

    I would like to see any source that made you think this is how the majority of businesses operate; nevertheless, even your clause acknowledges that not all businesses operate that way, let alone the most financially successful and politically powerful ones. Indeed, by all accounts the largest businesses on this planet tend to be horrible places that mistreat or outright abuse people all across the globe, be they employees, customers, or product, bar a relatively small fraction of stockholders, managers and employees situated at the very top of their hierarchy.
     
  14. exchemist

    exchemist Veteran Member

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    I meant the plumber or baker that runs his own small business, as so many of them do.

    But I welcome the nuance you are now introducing that there should be a purpose apart from profit. There usually is, as I have explained. (This is from personal experience.) Business are run by people and people have a variety of motives, including many noble ones.
     
  15. Kooky

    Kooky Freedom from Sanity

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    Many plumbers and bakers don't run their own business - in fact, a large number of bakeries specifically are part of large chains with individual shop employees having very little input in the overall management of the business operation. The value of any of these businesses should not lie in what proft they generate for the owners (who may or may not even be involved in the running of the business at all), but the benefits they can provide for a society - to that consideration, profits are largely irrelevant (or should be).

    I am not "not introducing" that argument, this was the original claim that you objected to in the first place:

    (my bold)
     
  16. exchemist

    exchemist Veteran Member

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    Ah but you were saying there that making a profit should be merely an incidental side effect. Which obviously it won't be and can't be.
     
  17. Kooky

    Kooky Freedom from Sanity

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    To answer your first statement - yes. And the second statement is why I am opposed to capitalism.
     
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