Thursday, July 16, 2015
What Is Crony Capitalism?
When the government takes some actions which are in the public interest it will have unequal effects across industries and across firms. Some economists accuse the government of crony capitalism when this happens. They are generally opposed to government intervention in the economy. Noah Smith makes an effort to distinguish between crony capitalism and decisions by the government which serve private interests rather than the public interest. However, he actually makes a point which is much broader than he may have intended. It is not possible to have an economy that is even mostly independent from any government that is organized to provide for the general welfare. That is especially true among advanced economies with highly developed systems that provide education, research, infrastructure and enforcement of the rules in which the economic and social system function.