Monday, September 28, 2015

Crony Capitalism the Cause of Society’s Problems

Richard Ebeling emails:

Dear Bob,

I have a new article on the news and commentary website, “EpicTimes,” on, “Crony Capitalism the Cause of Society’s Problems.”

Critics of capitalism constantly insist on the “failure” of the free market, from the news pundits to the leftist leaders of political parties. Yet, in fact, the asserted “failures” of capitalism are really the inevitable results of the interventionist-welfare state, and the close relationships between government and special interest groups popularly called “crony capitalism.”

On the one hand, the burden of government on business is indicated by the over 80,000 pages of Federal regulations and their estimated $2 trillion compliance costs on private enterprises.

But on the other hand, business and ideological interest groups spend billions of dollars on lobbying expenses to influence legislation in their respective preferred directions, and in 2014 this amounted to $3.25 billion. At the same time, during the 2013-2014 congressional election cycle, such special interest groups spent $1.6 billion on 1,671 Senate and House candidates.

The symbiotic relationship between business and government has also been shown in the recent Volkswagen scandal, under which Volkswagen aimed to expand sales and create “jobs” before all other goals – even if it required rigging emission standards -- under pressure from German politicians and labor unions determined to assure “full employment.”

As economists, such as Ludwig von Mises, have argued, such government interference with free market competition and profit seeking creates a system of corruption, inefficiency, and plundered use of other people’s money.

Only truly free market capitalism successfully separates government from competitive private enterprise and institutionally precludes the emergence and sustaining of the “crony capitalism” under which the world suffers.


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