We agree that the system isn’t working as it should and unfairly rewards some segments over others.
Anyone who knows me knows I abhor the anti-capitalist, anti-market, socialist and populist elements of R-CALF and Occupy Wall Street. Not only are these positions fundamentally wrong but go against the values that made America great and are essential to keeping it strong.
So it may be a little surprising to hear that I think they’re right on a few things. In fact, I actually agree with their premise that the system isn’t working as it should and unfairly rewards some segments over others.
Of course, I disagree with their assessment of why the marketplace isn’t functioning. And I’d argue that their proposed solutions would actually exacerbate the problems.
I do agree, however, that the system benefits the wealthy and that much of it is designed for the rich to get richer at the expense of the average American. Just look at corporate boards, which are packed with government insiders, and for good reason – there is no greater return on one’s investment than the money one spends lobbying and supporting political candidates.
Consider the government’s TARP program, where tens of billions of dollars in taxpayer money was given to large corporations based on their support of political parties and politicians. There was no transparency, nor was it based on any sort of merit; they were simply handouts. Billionaires like Warren Buffett and George Soros have made billions off the support they’ve provided to the political elite.
But, the problem extends well beyond Congress and the executive branch doling out billions of dollars to ensure reelection and enrich their own pocketbooks using the power of government to legally accomplish their goals. Crony capitalism has always been with us, but it’s reached epidemic stages today.
And the problem extends well beyond the latest stimulus handouts that have been proven not only to have failed in creating any significant number of new jobs but were a great means to reward those who contributed to the Obama campaign. This is by no means a partisan thing. While the Obama administration has taken cronyism to a whole new level, both parties are guilty, and the trend has been accelerating regardless of who’s been in power.
The District of Columbia is where wealth is now created. The government has become so intertwined in so many industries that it now picks the winners or losers in most markets.
Among those who understand this is General Electric, which has been one of the greatest recipients of taxpayer dollars through bailouts and other sources. GE’s CEO Jeffrey Immelt is one who understood the sea change. In 2009, he said, “The global economy, and capitalism, will be ‘reset’ in several important ways. The interaction between government and business will change forever. In a reset economy, the government will be a regulator: and also an industry champion, a financier, and a key partner.”
It may be one of the last myths to die relative to the political parties, but there is no such thing as the party of the rich anymore. The reason Obama was able to outspend McCain by over 3:1 was because the rich can now benefit no matter who is in power and which direction the economy is moving
The capitalistic system is being toppled – profits are made in Washington – among insiders – much more readily than on the open market. It’s not about policy – crony capitalism can make money regardless of the policy; it’s just a matter of leveraging our tax dollars over to the rich and powerful.
What happens every day in the halls of Congress would land private-sector people in jail. It’s important to understand that our D.C. denizens aren’t breaking any laws, however, as the federal government is exempted from insider trading rules, protecting whistle blowers, and all of the conflict-of-interest laws that constrain the private sector and local governments.
Where I actually agree with the radical left is that the Washington game continues while our national debt soars, the economy crumbles, and our long-term prospects are diminished. We have the permanent political class and the wealthy practicing a crony capitalism where they have downside protection and guaranteed upside protection, while the rest of us aren’t allowed to play by their rules.
The marketplace is supposed to be a place of competition. But under crony capitalism, it’s no longer about the better product, the better idea, the better business model, or the better strategy; it’s about better access. Crony capitalism is a threat to our entire system, because under capitalism a rising tide raises all boats; under crony capitalism, it becomes a zero sum game.
The largest implication of all this is that, as voters, we have the capability to hold the executive and legislative branches accountable. We can put an end to crony capitalism by making them police themselves and sending a message through the ballot box that these activities won’t be tolerated. If we don’t have a system based on competition, one where the consumer is the final arbiter, we as a nation will continue to suffer.
From an industry and from an individual standpoint, agriculture was always supposed to be one of the purest forms of competition. But the system has even transformed us. Today, the customer that matters most is the government, and that means political connections and access to those who hold the levers of power.
It is said that we all know that the most successful farm operations aren’t necessarily those who are the best farmers but those who are the best at farming the latest farm bill. Until recently, the various segments of agriculture largely worked together against the non-ag interests in regard to Washington policy. But that has changed as well.
Ethanol is a primary example – it added tens of billions of dollars to grain farmers and removed billions from the livestock industries. With nothing more than a stroke of the pen, it set off a whole set of ramifications within the U.S. beef industry that will not only lead to the lowest per-capita consumption of beef in recent times but also the smallest cowherd and a dramatically smaller cattle industry.
The message is twofold:
First, we must step forward and put an end to crony capitalism or we will soon be in the same boat as European countries, and the USSR before them. We must put an end to crony capitalism where government picks the winners and losers; it shifts the power and leads to wealth distribution from the middle and lower classes to the super-rich.
It is sad, but today you can get early access to market information; you can receive government grants, loans or subsidies; or you can create regulation roadblocks for your competitors all by working in D.C. It has become a more cost-effective way of creating wealth than developing a better product or service.
Secondly, we must recognize what the super-rich, and the opponents of agriculture already understand. The winners and losers will be decided inside the Washington Beltway. That means we must have as effective as presence as possible to safeguard our interests.