http://www.economist.com/news/leaders/21598996-political-connections-have-made-many-people-hugely-rich-recent-years-crony-capitalism-may
In this article from The Economist, crony capitalism in the modern era is discussed. The article is optimistic about the future of capitalism world wide because the world has seemed to learn from the mistakes of years ago and is making progress toward implementing better policies.
Throughout history, there have been many examples of monopolies and industries that have thrived due to corruption. Much of this can be traced to ties with political officials who give certain people perks from their political resources. However, in modern times, we are seeing that countries realize the negative impact this can have. Aggressive anti-trust laws are showing up throughout the world which is making markets much more competitive and making society better off.
I think this is a very wishful thinking because companies or firms will always find a way to make profit even at the cost of consumer getting hurt. Although the government might try to implement laws to stop company from taking advantages of consumers, there will always be a way around government regulation.
ReplyDeleteI don't think that crony capitalism has anything to do with consumers. It has to do with business being cozy with government officials. In political science, there is a term for the relationship between Congress and companies called "iron triangles" (the third point being the company's regulator). I think a lot of cronyism comes from the bureaucracy having a lot of arbitrary power in enforcing the law. Connections within the regulatory agency and Congress can lead to poor enforcement. I think the key is to weaken one part of the triangle, which is what anti-trust laws do. They are very white and black, and the fear of being prosecuted under the law scares companies from even thinking about colluding. For that reason, the US doesn't have several monopolies (outside the Post Office and the TVA).
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