Cronyism is ugly. It hurts the economy, it’s unjust, and corrupts the core of democracy. “The damage that cronyism has inflicted on the economy is considerable,” Samuel Gregg writes in a new piece for Public Discourse. “[C]ronyism also creates significant political challenges that, thus far, Western democracies are struggling to overcome.”
The crony capitalism seen from the Trump presidential campaign and many others is not something that’s new to America or Western civilization. As long as there have been governments, there have been powerful people seeking special favors from them. From the 17th to 18th centuries, mercantilism “dominated the West,” which involved powerful guilds working closely with their government officials to limit trade and stifle innovation. Gregg explains the cronyism that’s common today:
Today’s crony capitalism is not outright corruption, though it often verges on or morphs into illegal activity. The expression itself first emerged in 1980 to describe how the Philippines’ economy functioned under the Marcos regime. It became prominent in explanations of the 1997–1998 Asian financial crisis, especially the role played in that crisis by government decisions that favored business “cronies” (many of whom were relatives) of political leaders, such as Indonesia’s then-President Suharto.