Crony Capitalism is Corporate Welfare

Crony Capitalism at work.

Crony Capitalism at work.


On our live show, Marty and I talk a lot about de-regulation to stimulate the economy.  It’s a great place to start trying to turn the economy around, but it’s not the only place.  Take a look at James Pethokoukis’ post at NRO.

Mr. Pethokoukis posits that regulations that decrease competition are at the heart of our slow recovery; regulations that decrease start-up businesses.  From the NRO article:

These findings suggest big problems at the heart of America’s version of entrepreneurial capitalism. Start-ups generate the “disruptive innovation” that creates new goods, services, and jobs. And they force established businesses to try to match them. Without competition from new companies, old ones will pursue only the sort of “efficiency innovation” that makes production cheaper, often by replacing people with machines. The U.S. still generates lots of innovation overall, but maybe too much is of the job-killing sort rather than job-creating kind that marks a dynamic economy.

I suggest that burdensome regulation and laws that protect established business do not solely come from the Federal government.  My fellow Alabamians know that all too well, as we are restricted by our own State Constitution, which stifles competition in the state, without any help from the Feds to do so.

My previous post dealt with foreign policy, and our perceived weakness abroad.  Crony Capitalism has done as much to hurt us abroad  by killing innovation and competition at home, forcing a broader dependence on foreign countries to obtain the components that drive our military innovation.  When we send our electronics manufacturing to China, we become weaker at home, and less able to build our own high-tech defenses in our own front yard.

Our economic situation is lousy, and more than one approach to solving the problems is needed.    Please read all of the NRO article at the source link.  It’s fairly straightforward, and short.  Mr. Pethokoukis is more articulate than I on the cause-and-effect of our situation.