Category: Crony Capitalism

Last week, President-elect Donald Trump along with Vice President-elect Mike Pence, who is the current governor of Indiana, struck a deal with United Technologies, the parent company of Carrier, in order to save over 1,000 jobs from being sent from Indiana to Mexico.  This deal will supposedly give Carrier over $7 million in tax break incentives and it has everyone across the political spectrum reacting in different ways.

People on the far-left such as the self-described democratic-socialist senator from Vermont, Bernie Sanders say “It is not good enough to save some of these jobs.”  According to Sanders, the President-elect should be doing more to intervene with the private market in order to save more jobs.

Republican Speaker of the House, Paul Ryan overlooked the fact that the government is meddling in private business in order to defend Trump’s actions by saying “I think it’s pretty darn good that people are keeping their jobs in Indiana instead of going to Mexico.”

On one hand you have a democratic socialist advocating for more intervention on the private market and on the other hand you have prominent leaders within the Republican Party (the party that many perceive as championing the principle of free enterprise) defending actions that resemble crony capitalism.  Even the VP-elect, someone who many thought of as a smart fiscal conservative, is giving up on the ideas of free enterprise.  He said this in a statement shortly after the Carrier deal “The free market has been sorting it out and America’s been losing.” (more…)

trump-carrierRecently, when asked if intervention by the White House into private enterprise was presidential, President-elect Trump responded, “I think it’s very presidential. And if it’s not presidential, that’s okay … because I actually like doing it.”

Writing for the Library of Law and Liberty, Greg Weiner asks, “On what authority is the President of the United States pressuring, which is to say intimidating, the leaders of private enterprise to determine where goods are made and sold? Answer: sheer personal will. ‘I actually like doing it.’” This is a serious threat to the Constitutional rule of law, notes Weiner:
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In a new article at The Christian Science Monitor titled “Can ‘economic nationalism’ keep more jobs in US?” Acton Director of Research Samuel Gregg is interviewed about President-elect Donald Trump’s stated goal of keeping jobs and businesses from leaving for foreign countries. In the analysis piece by reporter Patrik Jonsson, he cites Gregg as a critic of protectionism:

In short, the United States cannot step back from the world without losing out, critics say.

Trump’s plans are in the short-term “likely to have some benefits for some local communities, but in the long term no amount of protectionism is going to stop you from losing your competitive edge,” says Samuel Gregg, research director at the Acton Institute for the Study of Religion and Liberty in Grand Rapids, Mich. “At the moment, the pendulum has shifted toward fixing an immediate problem … but those programs will all have to be wound back precisely because they’ll cause inefficiencies.”

Acton Institute Director of Research - Samuel Gregg

Acton Institute Director of Research – Samuel Gregg

This is not a surprising position for Gregg.  He has been a consistent advocate for free trade and whenever possible has opposed the ideas of protectionism and crony capitalism.

The author closes out his article by quoting Trump’s adviser Stephen Moore, who says this: “Trade and immigration are unambiguously good for the country – but it will have to be done in ways that are supported by the American people, not shoved down our throats by the elites.”  While this is an appealing statement, it comes across in a way that portrays Trump’s economic populist ideas as willing to accept the harmful long-term effects for the short-term benefits.

You can read the full article at The Christian Science Monitor here.

epipen22Pharmaceutical company Mylan recently spurred a flurry of outrage after raising the price of their lifesaving EpiPen by 400%, leading many to decry “corporate greed” and point the finger at capitalism.

Unfortunately, such anger routinely fails to consider the systemic reasons as to why Mylan can charge such prices, resorting instead to knee-jerk calls for fresh tricks by the FDA and new layers of price-fixing tomfoolery from Washington.

Yet the problem, as detailed by Rep. Mick Mulvaney in a new video from FEE, begins with the very same interventions, back-room deals, and price manipulations that the critics now propose.

Why, we might ask, is Mylan able to wield this monopolistic power and exploit its consumers with little challenge? As Mulvaney demonstrates, the answer has far more to do with the FDA, Congress, President Obama, and the Affordable Care Act than a free market with free-flowing prices. (more…)

But was anyone listening?

That’s my question after attending the 2015 Nobel-prize-winning economist‘s talk last night in Rome at the Vatican-sponsored Cortile dei gentili (Court of Gentiles).

Like the other speakers, Deaton voiced his concerns about income inequality. Unlike the others, however, he said much of it is caused by crony capitalism, a term whose meaning seems to have been lost on the Italian interpreter and hence the audience. She described it as “a type of capitalism” and “negative capitalism” but never really made the connection to politics, which is unfortunate given the high number of Italian politicians in attendance.

Deaton added that countries become rich by escaping poverty, not by impoverishing others, that technological progress has undoubtedly made us richer, and that the world has greatly benefited from globalization even though too many people are still left behind. Government interference through taxes, regulation and corruption does more harm than good. The major problems with globalization are therefore political, not economic.

There were also a number of Italian cardinals and bishops in attendance. Here’s hoping that some of them relay Deaton’s clear-as-day message to Pope Francis, who really ought to be saying, “Crony capitalism kills!” instead of blaming the market economy in general. It is an obvious distinction to economists. In Italy, no one seems to know the difference.

Blog author: KHanby
Friday, September 9, 2016
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Sistine Hall.

The finances of the Catholic Church, and more specifically of the Vatican, are quite the mess. When Pope Francis was elected, he recognized this problem and appointed Australian Cardinal George Pell as the inaugural Prefect of the Secretariat of the Economy.  Cardinal Pell was given the authority and the task to clean up the finances of the Vatican, something that has been an issue since the mid-1970s.  But now reports are surfacing that Pell is losing his authority to make any moves toward resolving this problem.  Samuel Gregg recently wrote a piece for The Stream explaining what is at stake if the Vatican fails to fix its financial problems.  Gregg starts out by making the claim that this could really hurt the Pope’s image:

Whatever the cause, any serious obstruction or even termination of Pell’s efforts to make all the Vatican’s institutions fully financially transparent and subject to modern auditing requirements surely would be judged as a major failure of this papacy. Moreover, given the amount of time and words Pope Francis spends denouncing what he regards as various economic and financial injustices, that rhetoric will seem somewhat hollow if there’s any perception he couldn’t get his own house in order.

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Mike Rowe was recently criticized for his new partnership with Charles Koch, CEO of Koch Industries, whose philanthropy for conservative and libertarian causes routinely garners controversy, despite its tremendous fruits.

Rowe, himself an increasingly provocative figure, recently interviewed Koch on their core areas of collaboration, including work, the trades, cronyism, higher education, and criminal justice reform. 

Koch on the politicization of “work ethic”: (more…)