It's Not Capitalism, It's Cronyism

Many of you may have been wondering why the progressives have such a disdain for capitalism. It is maligned with such quips as:

• You didn't build that!
• Greedy Capitalist Pig.
• The Decade of Greed.
• Rich Republican donors.
• The Koch brothers are buying America.

In his movie, "Capitalism, A Love Story" Michael Moore ended with the quote, "Capitalism is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people and that something is democracy." Actually he doesn't know what he is talking about. Capitalism is an economic system, Democracy is a form of government. We can't have an economic system with out a government and vice versa.

Capitalism, as espoused first by Adam Smith, is simply a system where the producer profits from their productivity and efforts. If I spend the time to gather resources, create a product or service someone else deems of value, and I sell it to them for more than the cost to produce, I realize a profit in the difference between my expenses and the sales price. 

• If I price the items for less that the cost to produce, I loose money and go out of business.
• If I price the items too high, someone else emerges to sell it for less, and I loose business.
• If I create items that no one wants or needs, no one purchases them and I go out of business.

Smith explained that these "natural laws" of business would keep capitalism in check and provide the greatest good for the society. Supply and demand as well as competition keep the playing field balanced.

Michael Moore and other elitists celebrities do this all the time with their work, but refuse to acknowledge they are capitalists. Mr Moore finances a movie or documentary such as "Capitalism, A Love Story". He hires others to help him film and distribute the product, sells it to the public, and then he keeps the difference between the cost of the film and the revenue generated, his profit. He profits handsomely from the very system he maligns. It grossed over $14 Million dollars.

So whether you are; 1) a sole proprietor who makes and sells products or services, 2) an employer who hires other people to help with the production and distribution of the products or services, or 3) an employee who works for a company to produce products or services where you are paid for your productivity, you are a capitalist.

There is a moral obligation with capitalism to share proportionally the profits with those who helped to create them; but competition from other companies selling at a lower price or hiring away employees for a better wage, keeps employers looking out for the welfare of those working for them.

So, what has gone wrong? It is not capitalism that has failed, it is the introduction of cronyism.

Cronyism is profiting from our relationships with others. It has nothing to do with our productivity or efforts. We are dependent on whether or not we make our benefactor happy. This is how Socialism, Communism, and Monarchys survive.

Cronyism was the name of the game in the Middle Ages in Europe. The kings were accepted by the people as the Divinely appointed rulers of the country. Kings owned everything, including the people. They divvied out property and power to the nobility, comprised mostly of those who helped them to gain power. As long as the nobility fulfilled the wishes of the king, they retained their property and power, regardless of their productivity. One false step could forfeit, for them and their posterity, any claim to the prestige they enjoyed and it would be given to another. "Game of Thrones" ring a bell?

It has often been at play in the politics of the Untied States. Every time there is a newly elected President, he brings with him a gaggle of supporters to whom he owes his office. In gratitude, he bestows appointments, offices, and powers to help him govern the country. There are justifiable reasons for bringing along your supporters. A new President often brings a new focus, new direction or new ideology to the country. It is important for his success to surround himself with those who share his vision. This is wise leadership. But when he rewards donors with positions they are neither qualified nor capable of handling, it is cronyism.

Today our country is rife with Cronyism and its companion, incompetence. A few examples to accentuate the point.

President Obama appointed the following people to positions in the government:

• Timothy Geithner - Nominated for Secretary of the Treasury failed to properly pay his taxes from 2001-2004. A 2006 audit by the IRS revealed the error, but Geithner didn't pay the back taxes until he was nominated for the Cabinet position. Was he really qualified to hold this position?
• Tom Daschle - Nominated for Secretary of Health and Human Services but it seemed the former Senate Majority Leader had problems doing his taxes. He used a donated car and driver for 2 years without reporting the "income" to Uncle Sam. Fortunately, he declined the appointment when this information was made public.
• The average government employee spend up to 1/2 of their day at work watching porn or facebooking. The greater their salary, the more time spent surfing.

In an article entitled, "From Bad to Worse: US Taxpayers Keep Losing Money on Solyndra", it tells the story of how a company that was in financial trouble received over $537 Million dollars for research and development. In less that 2 years, the company folded and only about $27 Million of the $500 Million was projected to be repaid to the American People. The public has no idea where the rest of the money went.

Speaking of energy companies, "Obama's Green Energy Bets Keep Coming Up Short", lists 19 energy companies with government loans and their status as of a year ago.

Over 10 Billion dollars of American Taxpayer's money that was risked and most of it lost. Again, where did the money go? The most popular way to thank donors and sponsors is to finance their failing companies so they can siphon off enough for retirement while the ship sinks.

That is the beauty of Cronyism. Welcome to America.

Photos courtesy of:

http://02varvara.wordpress.com/2012/11/10/

http://www.rpc.senate.gov/policy-papers/obamas-green-energy-bets-keep-coming-up-short_update