Does fighting crony capitalism necessarily involve fighting the growth of government?




Does fighting crony capitalism necessarily involve fighting the growth of government?




I have to say that I enjoy articles like this one by Mike Konczal in the New Republic. He argues that all the focus on crony capitalism is a “Right-wing” ruse. He argues that it is just a smear used by reactionary idiologues to tarnish this progressive president. Obama is no corpoartist he explains. All the regulations which have been used to enrich a certain group of campaign donors and otherwise connected individuals? This is a side issue. Such enrichment was certainly not done on purpose. It’s just the nuts on the “Right” who have a problem with this stuff. He argues that the small government anti-crony capitalism critique, which highlights how business and government collude to screw the taxpayer, is nothing but flack. There’s no real concern for people, or the Republic, or justice. It’s nothing but a meme created to derail the bright and shining day, corpoarti…, er I mean fascis…, I mean progressivism will one day deliver to us.

It not an unfamiliar charge. Many people who believe that government can make the world a better place, have a very difficult time coming to terms with crony capitalism. Often people think that fighting crony capitalism means passing new regulations, but sadly as many people dig into the issue they come to realize that this has never worked and that it always seems that regulations (and I speak in the broadest sense right now, there is a limited place for regs), and government are always manipulated by the powers that be for their ends.

Anyone who doesn’t understand this is deluding themselves. Where there is government there will be corruption, and once government reaches a certain size there will be crony capitalism. The size of government and the amount of crony capitalism correlate very closely.

The state is not some benevolent force. It is not “the people” as we have been taught by our civics text books. It is SOME people. People who are interested in power for one reason or another. A sophisticated and modern understanding of politics demands an understanding of this.

The state is many times the most efficient means by which private interests can to derive power. Goldman Sachs for instance should be dead. It should be long gone. It leveraged itself out too much and then the market caught the bank with its pants down. But because Goldman had the right connections in Washington they were bailed out by the US taxpayer.

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Mr. Konczal would like us to believe (following the logic in the attached article) that the Wall Street bailout was only the result of a well-meaning state seeking to keep the world economy from imploding. It wasn’t crony capitalism. So what if Goldman Sachs benefited and took all of the TARP money and spent it on bonuses for its people in 2009? Obama would never do that on purpose. He’s a “progressive.”

But “progressivism” is fundamentally a corporate ethos going right back to its birth at the turn of the 20th Century. At progressivism’s core is the idea of doing well and doing “good” (which is a laudable goal and one I strive for within the market) using government, while consolidating power for connected interests. That is fundamentally what “progressivism” is.

Notice how all the “progressive” reforms of that era and beyond seemed to end up working to the benefit of large private interests.

Take for instance the Interstate Commerce Commission, which was sold to the public as a way to bring the era’s “robber barons” to heel. It was the first big regulatory effort by the Feds and it set the tone for regulations to come.

This is what Richard Olney, Attorney General under Grover Cleveland had to say about the “reform.”-

“The Commission… is, or can be made, of great use to the railroads. It satisfies the popular clamor for a government supervision of the railroads, at the same time that supervision is almost entirely nominal. Further, the older such a commission gets to be, the more inclined it will be found to take the business and railroad view of things.… The part of wisdom is not to destroy the Commission, but to utilize it.”

Whether a “reform” is intended to help private interests or not, it is only a matter of time before that institution is captured.

Who befefits most from the Federal Reserve system? The big banks.

Who benefit’s the most from the FDA? The big drug companies.

Who benefits most from farm subsidies? Big agriculture.

Who benfits most from the Federal Communications Commission? The crony media and intellectual property zealots.

Who benefits most in the Obamacare scheme (if it worked)? The health insurance companies which were licking their chops at the prospect of a vast new group of customers subsidized by taxpayers.

And on and on.

It would be nice if government was some disinterested party which existed only for the greater good of all. But it is not. At best, government is to be tolerated, and kept small. When government is given power the crony capitalists start jockeying almost immediately. It’s like pouring tuna entrails into a shark tank.

I know that many people want to believe that government is here to help us. I am fairly sure that Mr. Konczal is one of these people. It is a nice thought, and limited government does indeed have its place, but benevolent government is not even a dream, it’s a delusion.

It’s a delusion- which one could understand in the days before the Information Age. People only heard one perspective. People were told that the government worked in their best interest. That government and evil corporations were opposing forces not complimentary ones. That taxes were “the price of society.” That wars were fought for “democracy.” And so on.

But there is no excuse for holding such naive views of government today. All one has to do is dig just a little bit to see that throughout history, probably since the dawn of history, the state (government, whatever) has been a tool by which the powerful have manipulated things in their interest. It is how monopolies survive – they don’t ever survive in a free market. It is how serfs were kept in their place. How slaves were kept in their place. It is how young men are drafted to fight wars. It is how our modern system of debt servitude is perpetuated. Ideally, for the average person who is not part of the “club” the state should be kept small and watched with a weary eye. The state is a drain on resources for most people.

The temptation of course (and the song of “progressivism”) is that the power of the state can be turned for good. Just think of the utopia which would blossom if the power of the state could be harnessed for the “people.”

But sadly government doesn’t work that way, history has shown us this over and over. At this point Mike Konczal, and many other “progressives” should understand this.

And Mike, it’s not the “Right-wingers” calling Obama a corporatist these days, it’s the “Lefties“.  [/wpex]

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Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.