Saturday, October 17, 2009

Government Failure: The Rise of Crony Capitalism in the US

This is arguably one of the major cases of government failure that has ever taken place in the US: during the last twenty years, each new administration, irrespective of party, has promoted crony capitalism as the country's economic system, at the cost of the best economic system ever experienced by humanity: free-market capitalism. The push for crony capitalism is particularly intense under the current administration.

Examples of crony capitalism abound right now. In this article, Roberts talks about the ludicrousness of Goldman Sachs' boastful attitude about its recent profits and explains:

Goldman Sachs being proud of its performance this year is like the Harlem Globetrotters bragging that they went undefeated. It's not really a normal competition. ...

We have a financial system that not only rewards cronies and encourages recklessness. It also funnels precious capital into areas like the housing sector instead of into more productive investments.

We have to stop rescuing the reckless. We have to let people who make bad decisions bear the consequences.

Goldman Sachs bravado at the cost of the sucker, I mean, the taxpayer is a perfect example of crony capitalism. All with the help of the administration, naturally.

Another perfect example is given by this ridiculous BusinessWeek interview with Vikram Pandit, which reveals how sheepish these so-called "businessmen" have become in their wish to pander to the powers that be. Here's a segment that made my blood boil:

Businessweek: Is Citi a good investment?

Pandit: Well, I have two responses to that. Anything that's good for the government should be good for all of us. Second, whether you know it or not, you own it as well.

No Mr. Pandit, what's good for the government *is not* necessarily good for me. And whether I own it or not, this is my personal problem, not the problem of the American taxpayer.

1 comment:

Taha said...

Couldn't stop laughing after reading Pandit's response