Category: Crony Capitalism

Yes, there really is a headstone cartel, at least in New Jersey. The Monument Builders Association of New Jersey are the only ones who can sell, carve, deliver and install headstones.

One might think this is all right (after all, headstones aren’t that creative] but there is at least one church cemetery that would like the right to sell their own headstones to the patrons of their cemeteries. So the Archbishop of Newark took the headstone cartel to court. Liberty & Law explains the issue:

U.S. Rep. Justin Amash, in an article for www.mlive.com, discussed the recent charter expiration of the Export-Import Bank (Ex-Im) and how that is a good first-step toward reducing the corporate welfare and crony capitalism that has infected American politics and economics:

If a man swipes your wallet, he’s a thief. We don’t ask whether the pickpocket ultimately spent the cash on a worthy cause. Yet, supporters of corporate welfare would have you believe that as long as the companies receiving welfare prosper, you shouldn’t care that the government snatched your money to make it happen.

The moral implications of cronyism are abundant. As public/private partnerships expand, the market system slowly transforms from free enterprise and competition driven by market forces to government control of who succeeds and fails based on loans or bailouts to favored groups and corporations. In an interview with the Acton Institute’s Religion & Liberty, Peter Schweizer discussed how cronyism is creating a moral crisis and how it is affecting the poor:

Our poverty programs get distorted by crony corporations. Just look at how the food stamp program has expanded over the years. Initially, it was a safety net to provide basic provisions, and most people agree basic safety nets are needed. The problem is that when the government started throwing around billions of dollars, the snack food and soft drink industry saw dollar signs. So they lobbied and got the regulations changed so that snack food and sodas are now covered by government assistance. It’s now a $10 billion industry for soft drink companies. Then it got expanded to include convenience stores, and now you’ve got the fast food industry lobbying lawmakers to let people use EBT cards at fast food establishments.

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pope plant“Laudato si, mi’ Signore!” Both the title and first line of the most recent papal encyclical come from St. Francis’ canticle which looks at nature as a great gift, but you all know that. Every news source worth its salt made that clear before the encyclical was released (either time); yet, we as Christians are called to be salt of the Earth. This entails more than a brief glance at the word on the street about the ecological pronouncement. What is at stake here is the central call of humanity: to till and keep the gifted garden (Genesis 2:15). The first human was placed in this role of cultivation of the earth even before being told to not eat from the tree of knowledge of good and evil. There was a promise to act and a law to keep. The Bible is divided into two halves: law in the Old Testament and promise in the New Testament. The call to be salt of the earth is about the Christian life fulfilling that promise. Note that the law followed the promise in the order of our creation. Core to human being was first the love of the life of the world–the greatest commandment as Christ said. So, then why is the reactionary focus of the encyclical even before it was released surrounded upon the policy, the law, that it would inspire and not the call to promise?

Surely within the encyclical there is language that leads to law being created. What Pope Francis has seen in the world directly articulates the life he leads–one unaccepting of a “globalization of indifference” for any child of God’s in need. (more…)

bail bondsYou may think that if you’re a law-abiding citizen, the concept of “bail” may be irrelevant. Well, maybe you forgot to pay your car insurance. Or maybe your license lapsed. You get pulled over because your tail light is out. It’s not a violent crime – a lapse in judgement, or a lack of money, perhaps.

And suddenly you need bail. $1000, the judge tells you, or you have to go to Rikers Island, New York’s main prison complex. You and 140,000 criminals. And someone like Robert Durst, accused of murder in Texas, is able to cough up a quarter million and walk away free.

America’s for-profit bail system is a $14 million a year industry, and the U.S. is one of only two countries that allows a for-profit system. According to a 2012 Justice Policy Institute report:

For-profit bail bonding costs taxpayers through increased jail and other justice expenses. In addition, it impacts people from low income communities – generally the loved ones of the accused person – who must pay nonrefundable fees for the bond regardless of case outcome and who, through contracts with the bondsmen, bear the real monetary risk of paying the full bail amount in the event of a court no-show.

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Great and powerful Oz

Great and powerful Oz

According to Merriam-Webster, “cronyism” is ” the unfair practice by a powerful person (such as a politician) of giving jobs and other favors to friends.” For instance, former Detroit mayor, Kwame Kilpatrick, surrounded himself with friends and family members while in office, as he cheerfully plundered the city’s coffers, sharing the wealth with his entourage.

It’s easy to think that cronyism is like Oz: far, far away. Yes, there are tricky creatures there, but heavens, we here in Kansas won’t be affected by shiny streets and glowing horses.

Not true. The economy shapes the culture. What happens in Oz, if you will, is felt in Kansas. And not only felt in Kansas, but eventually begins to seep into the Kansas culture. Why shouldn’t I have an army of flying monkeys to protect my farm? Why shouldn’t I sidle up to the Wicked Witch and make sure she’s on my side? You never know. Michael A. Needham and Ryan T. Anderson state,

While cronyism is most recognizable when it generates economic windfalls for the favored few, conservatives would do well to explain that it also operates in other realms. Indeed, for decades, the Left has been seeking special advantages from government in its effort to reshape the character of American society. So, if you’re against the government arbitrarily picking winners and losers in the economy, you need to be against it doing the same in the culture. If Solyndra and the Export-Import Bank are a problem, so too is government funding for Planned Parenthood and government discrimination against Catholic Charities.

We call this sort of government special-interest-seeking “cultural cronyism.”

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technology-lobbyingIn America we have a form of government in which power resides in a cadre of elected (and unelected) individuals who represent the interests of the citizens. Because of this structure, it is natural and necessary for people and groups to attempt to influence decisions made by government officials. After all, if we don’t tell our representatives what our interest are, how will they be able to represent our views?

This process, known as “lobbying”, is an organic function of our political way of life. But our representatives are human, and thus share the limitations common to all of us. Our representatives don’t have the time and attention to meet with and listen to each of us individually, so we form groups that lobby on our behalf. In this way we can pool our resources and leverage our individual power and influence at a relatively low cost to us.

The problem with this system is that it allows relatively small groups with adequate resources to lobby on behalf of their very narrow interest in a way that can be detrimental to the broader community. Large corporations, for example, once lobbied to reduce the regulatory burden on their industries. But many corporation realized they could gain a competitive advantage by lobbying for specific regulations that benefit their firm and hamstring their competitors.

That is why many corporations spend the GDP of a small nation on lobbying efforts. Since 2009, General Electric spent around $134 million on lobbying activities while AT&T spent $91.2 million and Boeing spent $90.3 million. Would for-profit corporations spend so much on influencing the goverment if it didn’t help their bottom line?

Surprisingly, this state of affairs is a relatively new phenomenon. Lee Drutman has a superb, in-depth examination of why business came to love lobbying and regulation and how it affects us all:
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military-spendingWhen it comes to spending on national defense the political debate is often presented as a simplistic, binary contest between those who want to spend more and more (often conservatives, who want a strong military) and those who want to spend less and less (often liberals, who want to use the money for social welfare purposes). While those discussions are important, they are also incomplete. Conservatives, in particular, should be more cognizant of the way cronyism can undercut military readiness.

In an article today at The Stream, I argue that we need a broad-based agreement about the most effective ways to spend defense funds based on the true needs of the military:
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Fail-Debtors-Prison-Poor-TaxWhile payday loans can help some people out of a financial jam, they tend to prey on the poor and create a usury situation. Now that same predatory financial monster is moving into a new territory: bonds, courts fees and fines.

Take the case of Kevin Thompson, a 19-year-old who was fined for speeding and failure to renew his license. Although he had a job, he could not afford to pay the $810 fine the court handed down. What happens next sounds Kafka-esque: (more…)

detroitDetroit home owners are being put out of their homes, but it’s not because of bankers. Then by who?

It’s the Detroit city government seeking to collect back real estate taxes. There are always tax foreclosures, but foreclosures are growing from 20,000 in 2012 to an expected 62,000 in 2015. Who is putting poor people on the streets in Detroit? The government.

There is a twist here based on the fact that Detroit homes have an old (and therefore way too high) assessed valuation that the taxes are based on. So for the homeowners, it’s easier to let the property go into a tax foreclosure and then buy it back at a tax sale than it is to pay the overdue taxes based on assessed property values that have fallen 70% in recent years. People follow incentives.

We have a narrative in America stating that all financial evils come from the banks. Even Scott Burns used his space to hammer the banks for the 2008 collapse. His proof: The fines that large banks have paid to the government. (more…)

Blog author: jcouretas
Monday, January 26, 2015
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It gets really interesting now in the wake of Syriza’s stunning victory in yesterday’s Greek elections, widely interpreted as a populist rejection of austerity programs that could spread to other indebted European Union basket cases. All eyes on are Alexis Tsipras, the newly-sworn in prime minister (in a highly unusual secular ceremony), with a lot of unanswered questions about how his party will govern. (Syriza is the transliterated Greek acronym for Coalition of the Radical Left). I’ve been following this story – indeed the long gut-wrenching meltdown of the Greek economy – in recent years with more than casual interest. I grew up in a Greek immigrant household and have retraced my grandparents’ steps back to the family villages (I’m what real Greeks refer to as a “two week Greek”).

On the Forbes site, Charles Calomiris paints a picture of what is in store for Greeks if Tsipras follows through on his promises to magically wish away debt (176 percent of GDP), go after “the rich” (Greek shipowners) and give away more free stuff (electrical power, health care, higher minimum wage, etc.) paid for with other people’s money:

… the likely consequences for Greece of Sunday’s election are a chaotic future of bank runs, devaluation, capital flight, and even more worrying, new radical leftist policies to respond to the economic collapse produced by the crisis (e.g., huge expansions of government spending, and nationalizations). Nothing can be ruled out when someone like Mr. Tsipras is in charge – a European version of Hugo Chavez.

Calomiris concludes by observing that “although it is likely that Mr. Tsipras’s victory will soon be regarded as a major electoral error by Greeks, it could be a helpful wake up call for the rest of Europe.” (more…)