THIKNING OUTSIDE THE BOX Another
Socialist Lie:
Crony Capitalism
Dr. Charles Ormsby
Circles cant be squares and
squares cant be circles. For
something to meet the requirements of
both definitions is a logical
impossibility.
Just as square circles and circular
squares dont exist, I can assure
you that crony capitalism doesnt
exist. And if you knew and understood the
meaning of the word capitalism you would
immediately understand the logical
impossibility of such a creature.
The term crony capitalism is a purposeful
contradiction that seeks to undermine the
meaning of capitalism while laying at
capitalisms doorstep the evils of
socialism.
What image comes to mind when you hear
the term crony capitalism?
Do you picture excessively wealthy
businessmen raking in gobs of additional,
undeserved wealth because they have
special political connections? The
emotional response that is provoked
proceeds from a rational distaste for
injustice: Why should these individuals
benefit from special privileges when
these same privileges are not available
to me or to others? It makes you mad, and
rightfully so!
After your initial anger dissipates, the
concluding emotion is intended to be a
visceral hatred for the wealthy and
specifically for the wealthy businessmen
who are the icons of capitalism. The
elixir that socialists want you to
embrace is bigger and more powerful
government.
In simple terms you are supposed to
conclude: The wealthy are evil.
Capitalism is evil. Government is good.
And government is the proper instrument
for setting things right.
This is quite an accomplishment for a
two-word lie.
So why is crony capitalism a logical
impossibility a square circle?
Because the special, government-granted
privileges that are at the core of this
problem contradict the very essence of
capitalism and would never exist under
capitalism.
Ayn Rand defined capitalism as
a social system based on the
recognition of individual rights,
including property rights, in which all
property is privately owned.
She goes on to say, The recognition
of individual rights entails the
banishment of physical force from human
relationships: basically rights can be
violated only by means of force. In a
capitalist society, no man or group may
initiate the use of physical force
against others. The only function of
government, in such a society, is the
task of protecting mans rights,
i.e., the task of protecting him from
physical force.
Finally, Ayn Rand writes, In a
capitalist society, all human
relationships are voluntary. Men are free
to cooperate or not, as their individual
judgments, convictions, and interests
dictate. They can deal with one another
only in terms of and by means of reason,
i.e., by means of discussion, persuasion,
and contractual agreement, by voluntary
choice to mutual benefit. And later
in the same paragraph, It is the
institution of private property that
protects and implements the right to
disagree and thus keeps the road
open to mans most valuable
attribute (valuable personally, socially,
and objectively): the creative mind .
How in a capitalist society are
government-granted special privileges
possible?
They are not.
In a capitalist society, individuals have
the right to deal with others or not
based on their own rational judgment. The
government would have no power to
transfer one individuals wealth to
another just because the other is
connected. It would have no power to
interfere with a private commercial
transaction nor to dictate that any such
transaction be concluded when both
parties do not consent.
So how did the crony capitalist
end up with his unearned wealth? Did the
government hand him property expropriated
from individuals via taxation? Did the
government provide special monopoly power
or restrict competition through licensing
or tariffs? Did the government give
special tax advantages or burden his
competitors with onerous regulations? If
so, he is a thief and a beneficiary of
socialism. If he supports the system that
gave him these privileges he is not a
capitalist, he is a socialist.
No, the culprit isnt crony
capitalism. And the beneficiaries of
these evils are not crony capitalists;
they are crony socialists.
While the term crony capitalism suffers
from being a logical contradiction, crony
socialism suffers from being a
redundancy.
When private property rights are
abolished, a central tenets of socialism,
those with special access to the inner
sanctum of government via friendship,
bribes, or backroom deals will acquire
special privileges. Such privileges are
not the exception in a socialist system;
they are the rule. Corruption is not just
an unfortunate occurrence in a socialist
society; it is a central and unavoidable
feature of socialisms core tenants.
It would take an encyclopedia to detail
even a very small fraction of the
instances where crony socialism has
committed theft on behalf of those
seeking special privilege. From labor
laws and licensing requirements to
tariffs and permitting, the government is
constantly using its powers to
expropriate wealth from some and to
confer advantages to others all
while diminishing the freedoms of us all.
Crony socialism has accelerated
dramatically under the Obama
administration. Today the government
intrudes on every part of our lives. We
live in a society where we have no right
to keep what we earn, or to decide for
ourselves how to expend what the
government does allow us keep. Today,
whenever we decide to do anything of
consequence, we must ask, Mother
may I? If we really want to play
the game, we send lobbyists to Washington
to ask the price of gaining special
privileges.
Where the misuse of one hundred dollars
by a government employee used to be
considered criminal, today billions of
dollars are thrown around with no
accountability. We all know of prominent
examples: bank bailouts, loan guarantees
(be they for rotten mortgages or for
corporations such as Solyndra), or the
takeover of GM and Chrysler, or the
hundreds of billions in stimulus projects
which would never pass muster with
private investors the list is
endless.
Everyone likes to complain about the
influence of lobbyists in Washington, but
the simple fact is that all of these
lobbyists would disappear overnight if
our federal government wasnt in the
business of selling favors. There were no
swarms of lobbyists in the early decades
of our republic when the federal
government stuck to its enumerated
powers.
Today there are two kinds of lobbying,
one moral and one immoral. The moral kind
consists of individuals and organizations
trying to defend themselves from rules,
regulations and taxes that infringe on
their right to property and freedom of
action. The immoral kind consists of
attempts to gain special privilege.
Our current socialist government has
become a master of soliciting both: the
first by making threats and the second by
offering potential privileges. The price
of escaping the threats or winning the
booty is the same: boot licking in the
form of campaign contributions, bribes or
any other means that increase and
solidify the politicians or the
bureaucrats wealth and power.
The system is rotten to the core. Of
course it is it is socialism.
So the next time someone complains about
crony capitalism, do not let the insult
to capitalism stand. Interrupt them and
ask, Dont you mean crony
socialism?
Dr. Ormsby is an ex- member
of the N.A. School Committee. He is a
graduate of Cornell and has a doctorate
from MIT. He is currently a Professor of
Mathematics at UMASS, Lowell. You can
email him at: ccormsby@comcast.net