Blame Cronyism, Not Capitalism • Hacker News Board

Re: Blame Cronyism, Not Capitalism

#141

Post by justinmchase » Mon, Jan 10, 2022, 3:37 PM UTC

mcv wrote: post #13

episode0x01 wrote: post #9

Not a shocker that corruption ruins things. I guess then the question is how you can design a broadly distributed system that removes the incentives for corruption and minimizes its impact. My guess is that such a system won't be found in capitalism

Capitalism quite clearly requires strong regulation. At least, any sort of positive capitalism that doesn't immediately succumb to monopolies, cartels and corruption. The problem is that the loudest voices arguing for capitalism, also tend to argue against regulation, accountability, and that sort of thing.

Regulation implies regulators, and regulators can become a bottleneck for power. They can demand bribes and favors in exchange for being allowed to operate and they can use their power to selectively eliminate political opponents sources of power.

Read "The Path to Power", LBJ biography. They describe this process plainly and how he continuously used his across his entire career in this way. Its very enlightening.

Re: Blame Cronyism, Not Capitalism

#142

Post by pmyteh » Mon, Jan 10, 2022, 3:37 PM UTC

HPsquared wrote: post #91

pmyteh wrote: post #64

Earlier quoted context omitted.

The entire basis of modern public administration (and one of the reasons it can be more bureaucratic than market mechanisms for delivering services) is that it attempts to rigorously exclude cronyism. The reason for civil service tenure, for example, was to stop politicians selling public service jobs to the highest bidder, or handing them over as a quid-pro-quo for favourable decisions. As seen in the late 19th and…

The existence of all these protections against cronyism in the public sector is evidence that it is an inherent problem. If it wasn't, there would be no need for all the protections. Edit: the problem is kind of moral hazard. Much like a chemical plant or nuclear reactor needs a range of protection systems to prevent the dangerous chemicals from going out of control, public administration needs a range of systems to…

Yes indeed (and, even more so, the culture of non-corruption which reformers tried to put in place at the same time). But, like in the chemical plant, it is possible to run a government with minimal levels of corruption and many (better-governed) countries do it.

It's not just a public admin problem, either - corruption and self-dealing are potentially endemic in the private sector, too. The concern has traditionally been higher for the public sector, both because of the potential for abuse of state power and because it is/was seen to be corrosive to public trust and self-government. A private company is more likely to trade off the cost of controls versus the dollar value of the future loss (or the controller is the one running the firm strictly for their own benefit, in which case they're likely to get away with it without intervention by the legal system). And the largest companies have had actual public power greater than the smallest countries for centuries by this point, so the two concerns are not completely disjoint.

Re: Blame Cronyism, Not Capitalism

#143

Post by sebow » Mon, Jan 10, 2022, 3:38 PM UTC

vlunkr wrote: post #81

For the political experts out there, what would happen if we stopped allowing lobbying? That seems to me like the most obvious source of corruption. Edit: ok, I should have worded better. What if we stopped allowing corporate lobbying through donations to elected officials? I understand there would be loopholes to close, but isn't this the obvious source of government corruption?

Lobbying is not actually that harmful when it's relatively transparent: i.e everybody can look up who funded who, which this kinda applies to US.

Many US citizens think lobbying is the source of the problem.At a first thought you may think that, but without lobbying you de facto have "unseen" lobbying: which is corruption, more or less.That's why in 'democratic' countries where lobbying is illegal, there's way more corruption.This is not to say that lobbying reduces corruption, no, but it's a way to somewhat keep transparency while influencing and pressuring politicians, which happens, happened, and will always happen.

Re: Blame Cronyism, Not Capitalism

#144

Post by simonh » Mon, Jan 10, 2022, 3:38 PM UTC

MichaelGlass wrote: post #117

"Government casuses cronyism -- especially anti-cronyism laws". What should the role of government be? I guess the authors would say: Governments should be replaced with financial modeling. I'm not convinced. There's something fundamentally undemocratic (and perhaps, sadly, realistic) about this take. Will advocating for broad de-regulation and business rule actually reduce cronism? Will it / can it reduce negative e…

I think the best approach is a balance of powers between multiple branches of government, as we have in many liberal democracies. Executive, legislative and judicial. It's a long way from perfect, but it's actually worked pretty well for hundreds of years. Combined with a robust system of individual freedoms of speech, association, ownership and labour rights. What that all adds up to is capitalism plus regulation by a representative government.

The main alternatives that have been tried concentrate power in the hands of a single group, or ultimately a single person. In fact arguably giving power to a single group implicitly gives it to the leader of that group. This has always been a disaster, and always will be a disaster as long as we are recognisably human, with all the associated flaws.

Corruption and abuses are the result of human failings. We're always going to have to continuously strive against them.

Re: Blame Cronyism, Not Capitalism

#145

Post by notahacker » Mon, Jan 10, 2022, 3:38 PM UTC

hnuser847 wrote: post #120

usrbinbash wrote: post #26

[flagged]

> Company A, having been dominant on the market for a long time, can simply tap into their savings and lower its prices, to the point where X is more attractive to consumers than X'. B, new to the market and wo. such substantial savings, cannot compete and goes bankrupt. If it was this simple, why have so many gigantic corporations gone out of business over the years? Sears was once the world's largest retailer and b…

Just because an approach doesn't always work doesn't mean that it is often tried and often successful.

Even feudalism had numerous examples of once-powerful barons being deposed, but that didn't mean inherited privilege and killing off weaker competitors weren't characteristics of the system.

Re: Blame Cronyism, Not Capitalism

#146

Post by lwansbrough » Mon, Jan 10, 2022, 3:38 PM UTC

jkhdigital wrote: post #130

vlunkr wrote: post #81

For the political experts out there, what would happen if we stopped allowing lobbying? That seems to me like the most obvious source of corruption. Edit: ok, I should have worded better. What if we stopped allowing corporate lobbying through donations to elected officials? I understand there would be loopholes to close, but isn't this the obvious source of government corruption?

Lobbying, as it manifests in our (the United States, in my case) current form of governance, is a direct consequence of the fact that 538 people control how 30% of GDP is spent.

538 (elected) people. Seems far more (rather than too few) than is necessary. If it were 10 elected people for example it becomes harder to hide in the crowd. Look how much scrutiny is applied to the supreme court.

Re: Blame Cronyism, Not Capitalism

#147

Post by aww_dang » Mon, Jan 10, 2022, 3:38 PM UTC

vannevar wrote: post #123

aww_dang wrote: post #61

The author makes an important distinction between state enabled cronyism and market activities. Comments here seem to be missing the point. Regulation is the pretense which enables cronyism. I enjoyed his appearance on the "Economics for entrepreneurs" podcast.

>Regulation is the pretense which enables cronyism. Sort of, if you narrowly define cronyism as government favoritism. But it would be more accurate to say that capitalism itself encourages cronyism---in the absence of regulation, there is no need to rope in government officials and so the cronyism stays in the private sector. But it is no less cronyism. The article misses the real problem, which is that the over-con…

>the over-concentration of capital that develops naturally in unregulated capitalism...

In such an unregulated capitalism system the producer would only obtain wealth by freely trading. It is the state intervention which creates the conditions for the centralization of wealth.

We're living in a time where interest rates (set by appointed technocrats) don't keep pace with the rate of inflation. Inflation as it is originally defined means literally to inflate the money supply. Again, the money supply is determined by unelected appointees. These same experts form a "plunge protection team" determined to protect financial markets, at the expense of all other participants in the economy. So yeah, we're seeing a large amount of wealth inequality currently.

We could turn to the historical cases as well. Railroad monopolies and government bailouts of these essential industries owned and controlled by blue blood families.

What I have a hard time turning to and finding empirical evidence for, would be this mythical unregulated capitialist economy which produced so much of the the inequality critics of laissez-faire capitalism ceaselessly cite.

Re: Blame Cronyism, Not Capitalism

#148

Post by dudzik » Mon, Jan 10, 2022, 3:39 PM UTC

vlunkr wrote: post #81

For the political experts out there, what would happen if we stopped allowing lobbying? That seems to me like the most obvious source of corruption. Edit: ok, I should have worded better. What if we stopped allowing corporate lobbying through donations to elected officials? I understand there would be loopholes to close, but isn't this the obvious source of government corruption?

One of the arguments I heard around corruption caused by lobbying is that centralization of power makes it worse. It kind of boils down to persuading one person is easier than convincing many people.

Re: Blame Cronyism, Not Capitalism

#149

Post by Broken_Hippo » Mon, Jan 10, 2022, 3:41 PM UTC

petermcneeley wrote: post #94

Whats the cause of amazon workers reportedly having to pee in bottles? Is that the government? Capitalism is just evolution without physical war. It has the same beauty and horror as a lion eating a gazelle alive.

Whats the cause of amazon workers reportedly having to pee in bottles? Is that the government?

Yes, as a matter of fact, it is! Or rather, lack of effective government. An effective government would not only have laws to protect the workers, but also have a regulatory zeal to enforce such laws in ways they bite the employer, who obviously isn't treating its workers well enough.

Re: Blame Cronyism, Not Capitalism

#150

Post by goda90 » Mon, Jan 10, 2022, 3:41 PM UTC

hypersoar wrote: post #103

vlunkr wrote: post #81

For the political experts out there, what would happen if we stopped allowing lobbying? That seems to me like the most obvious source of corruption. Edit: ok, I should have worded better. What if we stopped allowing corporate lobbying through donations to elected officials? I understand there would be loopholes to close, but isn't this the obvious source of government corruption?

The broad concept of "lobbying" is really just people bringing their concerns to elected representatives. I don't really see how you would ban it entirely.

The problem is actually in the wide gulf between illegal bribery, and regulated lobbying. The law says "This is lobbying, these are the rules, and required reporting", and the law says "This is bribery, and these are the punishments". There's a lot of activities involving politicians and money that don't fall under either.