1. The Age of Crony Capitalism David Stockman and Crony
Capitalism: An Overview Dr. Robert Batemarco, Fordham University
Mises Academy, November 12, 2013
2. This Weeks Readings 1. The Age of Crony Capitalism (Sundown
in America: The Keynesian State-Wreck Ahead on LewRockwell.com or
ZeroHedge.com) , October 7, 2013 2. My review of the Stockman book
at http://www.fee.org/the_freeman/
detail/the-great-deformation-the-corruption-of-capitalism-inamerica#axzz2k4mPcPEf,
October 3, 2013
3. Crony Capitalism in a Nutshell "The proposal is frequently
made that the government ought to assume the risks that are 'too
great for private industry.' This means that bureaucrats should be
permitted to take risks with the tax payers' money that no one is
willing to take with his own. Such a policy would lead to evils of
many different kinds. It would lead to favoritism: to the making of
loans to friends, or in return for bribes. It would inevitably lead
to scandals. It would lead to recriminations whenever the
taxpayers' money was thrown away on enterprises that failed. It
would increase the demand for socialism: for, it would properly be
asked, if the government is going to bear the risks, why should it
not also get the profits? What justification could there possibly
be, in fact, for asking the taxpayers to take the risks while
permitting private capitalists to keep the profits? Henry Hazlitt,
Economics in One Lesson
4. A Case of Mistaken Identity Free Market Capitalism a profit
and loss system Losses are painful but necessary Crony Capitalism a
private profit and public loss system Only the well connected,
i.e., the cronies of those in power are shielded from their
losses.
5. Crony Capitalisms Long and Dishonorable History Rothbard in
Anatomy of the State, shows how crony capitalism (creation of
vested interests) is one way the state maintains power.
Mercantilism was a crony capitalist system. Cronies of those with
power in government would try to block innovations that threatened
their interests. Controlling them helped spark the Industrial
Revolution in UK as opposed to government-backed guilds on the
continent US economic nationalism Henry Clays American System
Progressives brought it back with a vengeance Control of monetary
system Proliferation of laws that could be selectively enforced
Regulatory capture Military industrial complex Dealing with
crises
6. Stockmans Morality Tale Crony capitalism in Stockmans
telling revolves around money, specifically easy money. Easy money
is a fertile field in which crony capitalism can thrive. To
understand crony capitalism, we need to understand the monetary
environment that facilitates its most recent manifestations.
Stockman explicitly rejects Keynesian and monetarist views of
money. Both see money as a policy tool. He implicitly seems to
accept the Austrian view of money. A creation of the market Capable
of generating cycles and bubbles
7. Whats a Morality Tale Without Heroes and Villains? There are
a lot more villains than heroes and the heroes had a lot of flaws.
Heroes Carter Glass Henry Morgenthau Harry Truman Dwight Eisenhower
William McChesney Martin Paul Volcker Sheila Bair
8. Whats a Morality Tale Without Heroes and Villains? There are
so many villains we might as well list them by class: Academics
Politicians/Central Bankers John Maynard Keynes Irving Fisher
Milton Friedman George Warren The New Economists Walter Heller
James Tobin Gardner Ackley Franklin Roosevelt Arthur Burns Lyndon
Johnson Richard Nixon John Connally George Schultz Caspar
Weinberger Alan Greenspan George W. Bush Ben Bernanke Henry Paulson
Businessmen Leo Melamed John Mack Jeff Immelt
