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Crony capitalism may be cannibalizing productive capitalism in the U.S.

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Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#111

Post by kem »

kevmo wrote: post #60

Many of our regulatory bodies have been utterly captured by biggest companies that they are supposed to regulate, and they are tamping down innovation (which creates jobs), increasing prices, and decreasing quality. Both the Democrats and Republicans have been engaging too heavily in crony capitalism for decades, and this is the result. How it works: Regulations that are supposed to protect the public end up being a…

Regulatory capture, advertently or inadvertently, is one of the elephants in the healthcare room. I'm tired of all the discussion (on both sides) totally ignoring this issue.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#112

Post by sharemywin »

bostonscott wrote: post #83
bjl wrote: post #49

Earlier quoted context omitted.

Crony capitalism is not a misnomer, its the endgame of all capitalists. When people have the resources to buy a regulatory advantage, of course they are going to do so; that's just capitalism at its 'finest'.

It's not the endgame of all capitalists. Actual capitalists, limited in number as they are, prefer free markets (e.g. no cronyism) because they'll make more money that way over time. Opportunists are the ones who thrive when things are rigged. They can't survive on their own. But yes, many capitalists (and non-capitalists alike) "buy" regulatory advantages. Some leverage their dollars (buying) Some leverage their num…

I would argue all corporation are rent seekers. Markets which enable assets to be traded buy all and expose assets true value to all participants. corporations hide assets behind private contracts.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#113

Post by surfaceTensi0n »

bertjk wrote: post #80
balls187 wrote: post #24

I read the opening paragraph, them skimmed through the rest of the article looking for concrete examples of "Wrong Kind" of Entrepreneurs. I have a hard time imagining tech entreprenuers are the "wrong kind." They may disrupt by circumventing the law, but I don't buy the argument that they're not producing something of value in return.

If someone has to violate the law to produce value, then it is likely that they haven't really "produced" any value. More likely they are simply stealing from the commons.

That's a really great framing of this issue. Thanks!

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#114

Post by BFatts »

dv_dt wrote: post #27

Does it seem to anyone else that the finance industry is increasingly distracted from actually matching up capital to fundamentally productive companies, especially new companies? Looking at the stock market, there are few IPOs, and after IPO, being public only provides access to limited access vis issuance of new stock... Some capital flows to VCs, but it seems the more capital flows to large VC funds, the more the…

You're not limited to stock. You can purchase options or futures, or play around with foreign exchanges. IPOs show up more rarely because it's SUPPOSED to be hard to start a new business. You can approach companies to try and buy into their model by investing your cash - nothing is stopping you.

As for VC companies controlling the cash, that's not the whole picture. Being dependent on "free cash" from VC's is a pretty poor way of conducting business. It isn't all about the money - it's the product. VCs don't want to invest in junk just because one person is ecstatic about their idea. They really do want more sure things. A TON of VCs were hurt back in the early 2000's because companies were producing NADA and IPO-ing all the time. A lot of trust was lost.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#115

Post by pm90 »

sfifs wrote: post #53
pm90 wrote: post #45

Earlier quoted context omitted.

And yet, people swear by them as though they have the same validity as physics. I never really understood that mentality.

That's because they're what people _believe_ - their politics - an act of faith not dissimilar from religion. The set of econ axioms people espouse demonstrates their own world view - what they stand for. In a previous age, these would be moral principles and social norms - now it's political beliefs.

This is an interesting point, and I've been giving this a great deal of thought. The United States is surprisingly religious for a developed Western Nation, and my theory is that if people can be brainwashed into accepting things "on faith", then that can be extended to other things as well, such as facts. Maybe that can explain the huge numbers of climate change deniers, anti-abortionists and other anti-intellectuals in the US?

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#116

Post by tomjen3 »

Animats wrote: post #88

Good idea. Weak article. The HBR article cited [1] is an obituary for William Baumol. Baumol is associated more with the "cost disease" problem - high productivity industries shrink over time, as their market saturates. Agriculture and manufacturing in the US have great productivity, and are constantly shrinking employment while increasing output. US manufacturing output is at an all-time high, but is down to 8.1% of…

But cost disease can, at most, account for growth in prices that follows the growth in salary paid to the most productive professions, no? Because if so the price increase of health care and college (which is the two big expenditures) _cannot_ be explained by cost-disease alone, as they have both grown much higher than salaries.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#117

Post by BFatts »

mowenz wrote: post #48
dv_dt wrote: post #27

Does it seem to anyone else that the finance industry is increasingly distracted from actually matching up capital to fundamentally productive companies, especially new companies? Looking at the stock market, there are few IPOs, and after IPO, being public only provides access to limited access vis issuance of new stock... Some capital flows to VCs, but it seems the more capital flows to large VC funds, the more the…

>Does it seem to anyone else that the finance industry is increasingly distracted from actually matching up capital to fundamentally productive companies, especially new companies? This is somewhat controversial to posit, but I believe the corruption in the financial industry is extraordinarily entrenched because of the Fed. Before you call me a lunatic, smart and good people from Aaron Schwartz to Sanders have said…

You're saying we should get rid of the financial industry? What, because we're all so good at managing our own money?

Guaranteeing the big banks can't fail is how we keep the economy going. If a bank fails, everyone that is owed money by that bank fails too. Is that acceptable? Would you be fine with your employer going belly up because the bank they rely on can't pay out money?

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#118

Post by pm90 »

sadfjhsdf66 wrote: post #76
pm90 wrote: post #45

Earlier quoted context omitted.

And yet, people swear by them as though they have the same validity as physics. I never really understood that mentality.

Because the monopolies have exerted pressure on public education, including universities, to churn out advocates for the corporations bottom line. With no basis in reality, we've brainwashed people to believe the bottom lines of the elite are to be protected. That's the outcome sought of our educational system. It fascinates me how, on the one hand, we complain about how lazy people are. How much inducement the prole…

This is unfortunately too close to the truth. One thing I would like to add though is that despite the fruits of labor accruing disproportionately to the elite, the system has managed to lift up everyone else as well, right? So the system does work, and I wonder what would happen if it was changed to be more egalitarian....

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#119

Post by marcosdumay »

mowenz wrote: post #48
dv_dt wrote: post #27

Does it seem to anyone else that the finance industry is increasingly distracted from actually matching up capital to fundamentally productive companies, especially new companies? Looking at the stock market, there are few IPOs, and after IPO, being public only provides access to limited access vis issuance of new stock... Some capital flows to VCs, but it seems the more capital flows to large VC funds, the more the…

>Does it seem to anyone else that the finance industry is increasingly distracted from actually matching up capital to fundamentally productive companies, especially new companies? This is somewhat controversial to posit, but I believe the corruption in the financial industry is extraordinarily entrenched because of the Fed. Before you call me a lunatic, smart and good people from Aaron Schwartz to Sanders have said…

It's useful to stop and ask yourself what exactly do central banks do that is so harmful.

The US situation of those bailouts and "too big to fail" is certainly problematic, but most people pushing that line are really against fractional reserves, but those don't really seem to have the effects people attribute to them. (And if they do have that effect, it's the central bank that sets their fraction, so it's entirely a matter of policy, not structure.)

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