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

bloomberg.com

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

#81

Post by rtx »

jondubois wrote: post #65

I think that these issues are getting a lot of attention recently. A lot of people feel that their jobs are not meaningful anymore and that they cannot find any meaningful work that pays well. Most of the jobs that pay well are zero-sum games. Finance, tech, law. Even medicine and pharmaceuticals are becoming zero-sum games (e.g companies boosting drug prices because it's easier than inventing new ones). People have…

Thats why we need space colonization. We as a species are programmed to expand. We have become stagnant in the last 100 years.

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

#82

Post by [deleted] »

dudul wrote: post #51

Not native english speaker here. My comment is probably of very limited value, but mostly for my personal improvement :). When I read "the wrong kind of entrepreneurs flourish in America" it surprises me to not see: "the wrong kind of entrepreneurs flourishes in America". I understand that "kind" should be the subject of the sentence, not the entrepreneurs. I have seen this construct several times (e.g. "this type of…

[deleted]

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

#83

Post by bostonscott »

bjl wrote: post #49
bostonscott wrote: post #41

The concept of "crony capitalism" is a misnomer. "Crony" is not a type of capitalism, it's the antithesis of capitalism. It's enabled by giving too much power to government. For example. When insurance companies jack-up rates or impose customer "unfriendly" terms, they are not acting within the "free market." They are exploiting "crony'esque" rules that limit competition by restricting insurance companies from compet…

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 numbers (voting)

These groups enable eachother. Motives range from "defense" (virtuous) to "offense" (sinister).

You will find no practical solution to this problem other than starving the beast (decentralizing power away from government).

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

#84

Post by crpatino »

rm_-rf_slash wrote: post #44
zackmorris wrote: post #39

I think the great problem of our time is that the challenges get easier to solve every day but we mostly spend our time making rent. And not the kind of rent mentioned in the article - just plain old fashioned too-much-month-not-enough-money kind of rent. When we’re desperate, we grovel and do whatever work we need to to survive. This is akin to how researchers spend inordinate amounts of time applying for grants rat…

Or simply, our means of production have become so efficient that it didn't matter whether you were right or wrong, things would still hum along and the profits would continue. In the agricultural age, if you fucked up a harvest, you and your family could starve. Before agriculture, if you fucked up a hunt, your whole kin-clan could starve. Nowadays, if you fuck up the housing market, and millions of people go bankrup…

It is not that we are so efficient, but that a priviledged tiny cabal have learned how to push the consequences of their mistakes to the rest of the population.

To borrow your example: In agricultural age, if you fucked up harvest your family starves. Today, if you fuck up the housing market, thousand of families end up in bankrupcy, and tens of thousands of small investors loose their savings... but you do not personally know any of them, so you wont even feel shame when you cash-in that million dollar yearly bonus.

There's historic precedent for that kind of divorce between actions and consequences, and it is not pretty. There's a certain French doctor you should google: his name's Josheph Guillotin.

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

#85

Post by CalChris »

api wrote: post #71
rm_-rf_slash wrote: post #44

Earlier quoted context omitted.

Or simply, our means of production have become so efficient that it didn't matter whether you were right or wrong, things would still hum along and the profits would continue. In the agricultural age, if you fucked up a harvest, you and your family could starve. Before agriculture, if you fucked up a hunt, your whole kin-clan could starve. Nowadays, if you fuck up the housing market, and millions of people go bankrup…

Many people have proposed variations of this as the reason civilizations collapse. They are destroyed by their success. They gain so much surplus that it completely isolates them from any kind of feedback mechanism, over time causing them to completely rot from within. Eventually the core becomes so rotten that the whole system falls apart. This can be sudden. I think an intuitive grasp of this is why so many conserv…

This is about right. Think of the F35 as welfare, a big ugly mistake isolated from consequences yet employing and profiting a professional welfare class.

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

#86

Post by AndrewKemendo »

rtx wrote: post #81
jondubois wrote: post #65

I think that these issues are getting a lot of attention recently. A lot of people feel that their jobs are not meaningful anymore and that they cannot find any meaningful work that pays well. Most of the jobs that pay well are zero-sum games. Finance, tech, law. Even medicine and pharmaceuticals are becoming zero-sum games (e.g companies boosting drug prices because it's easier than inventing new ones). People have…

Thats why we need space colonization. We as a species are programmed to expand. We have become stagnant in the last 100 years.

Sounds like bacteria or a virus.

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

#87

Post by bjl »

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…

> You will find no practical solution to this problem other than starving the beast (decentralizing power away from government)

All this will lead to is dictatorship by the wealthy. I much prefer our current system, as flawed as it is, to corporate fascism.

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

#88

Post by Animats »

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 the labor force. Agriculture is at 1.4%.[2] So business growth has to be in low-productivity sectors, with low wages. That's cost disease.

If you want to read about rent seeking, read Peter Theil's "Zero to One". It's a manual on rent-seeking. It's all about how to create a monopoly.

Changing Government policy to reduce rent-seeking is very tough politically. Successful rent-seekers are the biggest political contributors. They pay to not have their income stream cut off.

[1] https://hbr.org/2017/06/is-america-encouraging-the-wrong-kin... [2] https://www.bls.gov/emp/ep_table_201.htm

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

#89

Post by _qc3o »

I find the juxtaposition of productive and capitalism odd. The entire point of capitalism is to slush money around. That is the definition of productivity in capitalism but somehow some people got the money part mixed up with "value" and now they need fancy mental gymnastics to explain how the system working as intended is in fact not working.

Basic system theory 101 says if you work with and optimize a proxy instead of the true metric then you will always deviate from your true and intended path. Money is only a proxy for value and some people did not get the memo. You need some second and third order correction terms if you use proxies.

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

#90

Post by a3n »

> Sometimes the government allows companies to get a certain amount of rent -- for example, the royalties from patents, which we protect in an attempt to encourage innovation.

This is the classic, maybe the reason given to justify patents. The implication being that no one would bother innovating if patents didn't grant them rent for a time.

But I wonder if the reality is merely that different people, and different kinds of people, would innovate in a patent-free world.

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