crony capitalism

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pages: 335 words: 104,850

Conscious Capitalism, With a New Preface by the Authors: Liberating the Heroic Spirit of Business by John Mackey, Rajendra Sisodia, Bill George

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Berlin Wall, Buckminster Fuller, business process, carbon footprint, collective bargaining, corporate governance, corporate social responsibility, crony capitalism, cross-subsidies, en.wikipedia.org, Fall of the Berlin Wall, fear of failure, Flynn Effect, income per capita, invisible hand, Jeff Bezos, job satisfaction, lone genius, Mahatma Gandhi, microcredit, Occupy movement, profit maximization, Ralph Waldo Emerson, shareholder value, six sigma, Steve Jobs, Steven Pinker, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, too big to fail, union organizing, women in the workforce

In recent years, the myth that business is and must be about maximization of profits has taken root in academia as well as among business leaders. This has robbed most businesses of the ability to engage and connect with people at their deepest levels. Regulations and the size and scope of government have greatly expanded, creating the conditions for the spread of crony capitalism, restricting competition in favor of politically well-connected businesses. Crony capitalism is not capitalism at all, but is seen as such by many because it involves businesspeople. These are significant challenges, but they must be overcome if we are to continue to spread freedom and bring dignity and the fruits of modernity to the billions on the planet who are still in dire need.

Large corporations have to overcome a lot of inertia and decades of legacy thinking. But the barriers that prevent them from changing are not legal ones; they are the outmoded mental models with which companies have operated in the past. Investing in the Future Much of the animosity toward capitalism today comes from the distortions that crony capitalism has created. In no place is crony capitalism more evident than in the financial sector of the economy. No sector of capitalism more urgently needs to become more conscious and discover its higher purposes and the importance of stakeholder value creation than the financial sector. The sector’s philosophy of maximizing short-term profits and personal compensation while ignoring all other stakeholders is a proven failure with extremely harmful consequences for all of us.

In such situations, regulations are often crafted to benefit the industry (or certain companies in the industry) rather than to serve the public interest.9 Society has countless examples of special favors being granted to well-connected people. When people see this kind of corruption, they usually blame business for doing the corrupting. But the government is equally to blame. This kind of crony capitalism represents the worst danger to free-enterprise capitalism. The danger is especially great in emerging economies, but is a problem everywhere and is becoming a serious problem in the United States. Many people who condemn capitalism do so for this reason. But crony capitalism is not free-enterprise capitalism; it is a perversion of it. The bottom line is that good government is absolutely essential. If government becomes too corrupt, it is impossible to have a free-enterprise system and healthy capitalism.


pages: 348 words: 99,383

The Financial Crisis and the Free Market Cure: Why Pure Capitalism Is the World Economy's Only Hope by John A. Allison

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Affordable Care Act / Obamacare, bank run, banking crisis, Bernie Madoff, clean water, collateralized debt obligation, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, disintermediation, fiat currency, financial innovation, Fractional reserve banking, full employment, high net worth, housing crisis, invisible hand, life extension, low skilled workers, market bubble, market clearing, minimum wage unemployment, moral hazard, obamacare, price mechanism, price stability, profit maximization, quantitative easing, race to the bottom, reserve currency, risk/return, Robert Shiller, Robert Shiller, The Bell Curve by Richard Herrnstein and Charles Murray, too big to fail, transaction costs, yield curve

Instead of dealing with market forces, it is easier to influence the political allocation of resources, that is, money. However, the problem is not Goldman. The problem is that the politicians and bureaucrats have this power. If the U.S. Constitution were enforced, crony capitalism would not work because the politicians and bureaucrats would not have the authority to hand out favors to their friends. If there were a separation of economics and state as there is of church and state, crony capitalism would not be possible. Crony capitalism is really crony socialism and is caused by politicians, that is, government. There can be no moral justification for saving Goldman and letting Lehman fail. Many insiders will tell you that Paulson hated Lehman.

., 183 government debt in, 200 manufacturing in, 10, 25–26, 161 market-based pricing in, 34 military spending in, 198 stimulus fund use, 181–182 trade with, 204–205 U.S. investment by, 29, 159 Chrysler, 130, 179–180 Citigroup: bailout of, 50, 104, 130, 177 CDOs of, 125–126 credit decisions, 238 crony capitalism, 6 funding of shadow banking system, 120 long-term debt of, 71 and panic during financial crisis, 163 pragmatism at, 217–218 reason at, 245 “too-big-to-fail” firms, 173 Clearing, 104 Clinton, Bill: lending reforms, 42–44, 56 subprime lending requirements, 58–60 Collateralized debt obligations (CDOs), 124–126 Colonial Bank, 47–48 Commercial real estate, 11, 97 Common good, 215–216 Community Reinvestment Act (CRA), 42, 55–57, 59 Compensation, 50, 83–84, 197–198 Confidence, 84–87, 184–185 Conservatives, 108 Consumer compliance, 193 Consumer Price Index (CPI), 26–27 Consumption: borrowing for, 57–58 housing as, 9–12, 54–55, 73–74 Contagion risk, 123 Corporate debt, 107 Counterparty risk, 123, 124 Countrywide: crony capitalism at, 6 and fair-value accounting change, 114, 118 and FDIC insurance, 39, 41, 46 necessary failure of, 159 pick-a-payment mortgages of, 91–93 subprime business at, 99 thrift history of, 98 CPI (see Consumer Price Index) CRA (see Community Reinvestment Act) Creativity, 7, 247 Credit default swaps (CDSs), 126–128 Credit rating agencies (see Rating agencies) Crony capitalism, 6, 102, 129, 179 Cross-guarantor insurance fund, 48–52 Cuba, 34, 247, 252 Cuomo, Andrew, 58 Currency, debasing, 22 Debt, 21–22, 107 Declaration of Independence, 220, 252 Defaults, 90–91, 126–128 Defense spending, 198–199, 227 Deflation, 22 Demand, supply and, 104, 185, 209, 210 Department of Housing and Urban Development (HUD), 15, 58 Deposits, disintermediation of, 120–121 Derivatives, 3, 120, 122–124 Disclosure requirements, 150–152 Dodd, Christopher, 7, 46, 61, 63, 64 Dodd-Frank Wall Street Reform and Consumer Protection Act: deficiencies of, 193 introduction of, 63–64, 183 as misregulation, 147 results of, 130 and TARP, 173, 174 Dollar, U.S., 77, 188, 229 Durbin amendment, 193 Earnings, operating, 103–106 East Germany, 34, 247 Eastern Europe, 34, 252 Economic cycles, 108, 189–193 Economic health, 159–161 Economic recovery, 1, 207–208 Economy, banking industry in, 67–69 Edison, Thomas, 19, 158–159 Education, 230–235, 247 Egypt, ancient, 230 Elitism, 7 Ely, Bert, 48 Employee Retirement Income Security Act (ERISA), 82, 149 Enron, 60, 109, 133, 149 Entitlement programs, reforms for, 199–204 Equal Credit Opportunity Act, 42, 55 ERISA (Employee Retirement Income Security Act), 82, 149 Ethical incentives, lending, 57–58 Euro, 189 European banking crisis, 51–52, 137 Expensing (stock options), 114–117 Experiential learners, 244–245 Fair Housing Act, 55 Fair-value accounting, 103–118 asset valuation in, 106–108 and expensing of stock options, 114–117 and losses on CDSs, 126–127 private accounting systems vs., 177–178 SEC involvement in, 151–152 for selling vs. servicing mortgages, 113–114 Fannie Mae: accounting scandal, 112–113, 149 in current environment, 251 and disintermediation of deposits, 121 failure of, 61–65, 164 and fair-value accounting, 118 in housing policy, 58–61 misallocation of resources by, 14 misleading of rating agencies by, 83 mortgage lending by, 97–101 reforms for, 190–192 selling mortgages to, 113–114 subprime lending by, 58, 99–101 FASB (see Financial Accounting Standards Board) FDIC (see Federal Deposit Insurance Corporation) FDIC insurance, 37–52 and bank liquidity, 171 and failing banks, 140 and fractional reserve banking, 68–69 and pick-a-payment mortgages, 91 reform of, 190 and S&L failures, 97 Federal Deposit Insurance Corporation (FDIC), 37–38 as external auditors, 134 and failing banks, 47–48 misallocation of resources by, 14 and pick-a-payment mortgages, 91 as regulator, 41–48, 143 take over of Washington Mutual, 75–77 Federal Housing Administration (FHA), 15, 190–192, 252 Federal Reserve, 22–23, 102, 189 antitrust policy, 174 bailouts by, 120–121, 190, 192 and banking industry reforms, 187–188 as external auditors, 134 and federal debt, 21–22 and leverage, 72 mathematical modeling by, 136 misallocation of resources by, 14, 208 misleading information from, 46, 83, 101, 125 monetary policy of, 17–20, 31–35, 96 overreaction by, 154 stimulus from, 152, 153, 208 and TARP, 165, 167–168, 171 and unemployment, 213 and Washington Mutual, 75 Federal Reserve Board, 18 Federal Reserve Open Market Committee, 31 Federal Savings and Loan Insurance Corporation (FSLIC), 37–38, 50, 96 FHA (see Federal Housing Administration) Financial Accounting Standards Board (FASB), 105, 106, 114–117 Financial crisis (2007-2009), 1–3, 251–254 banking industry in, 70–72 derivatives in, 122–124 Freddie Mac and Fannie Mae in, 65 free-market response to, 177–186 and Great Depression, 25 lessons from, 251–252 SEC role in, 154–155 Financial reporting requirements, SEC, 150–152 Financial Services Roundtable (FSR), 32, 61–62 First Horizon, 237 Fitch, John Knowles, 150 Fitch Ratings: investor confidence in, 84–87 misratings by, 82–84, 101, 125, 126 and SEC, 81–82, 149–150 Flat tax, 197 Forbes, Steve, 197 Ford, 179 Foreclosure laws, 77–80 Fractional reserve banking, 69–70 Frank, Barney, 7, 61, 63, 64 Fraud, 109–113 Freddie Mac: accounting scandal, 112–113, 149 current environment, 251 and disintermediation of deposits, 121 failure of, 61–65, 164 in housing policy, 58–61 misallocation of resources by, 14 misleading information from, 83 mortgage lending by, 97–101 reforms for, 190–192 selling mortgages to, 113–114 subprime lending by, 58, 99–101 Free markets: experimentation in, 19 justice in, 92, 177 market corrections in, 157–159 and monetary policy, 31–35 risk taking by banks in, 40–41 wage rates in, 210–211 Free trade, 204–205 Friedman, Milton, 20, 189 FSLIC (see Federal Savings and Loan Insurance Corporation) FSR (Financial Services Roundtable), 32, 61–62 GAAP accounting, 116, 117 Gates, Bill, 216 GDP, 183, 197–199 General Electric, 168, 169 General Motors (GM), 169, 178–180 General Theory of Employment, Interest and Money, The (Keynes), 181 Germany, 52 GM (General Motors), 169, 178–180 GMAC, 168, 169, 178–180 Gold standard: and deflation, 25–26 and economic future of U.S., 188–189 Greenspan’s view of, 32 Golden West, 39, 91, 92, 98, 159 Goldman Sachs, 71, 173 as AIG counterparty, 128–129 bailout of, 104, 164, 179 CDSs of, 126 counterparty risk at, 124 crony capitalism at, 6 financial “innovations” of, 101 Government policy: as cause of financial crisis, 1, 5–6, 251 and residential real estate bubble, 6 (See also Housing policy; Policy reforms) Government regulation, 5–8, 41–48, 204 Government spending, 180–183, 197–199 Government-sponsored enterprises (GSEs), 59, 64–65, 98, 137 (See also Fannie Mae; Freddie Mac) Great Depression: and avoidance of stock market, 74 banking industry in, 70–72 economic policies after, 161 and Federal Reserve, 19–20, 24, 188 and gold standard, 188 and government interference, 170 and Smoot-Hawley Tariff Act, 205 Great Recession, 1, 251–254 and Federal Reserve, 188 Freddie Mac and Fannie Mae in, 65 and interest-rate variation, 33 market corrections and depth of, 160 and monetary policy, 17 and residential real estate, 9–15 Great Society, 6, 55, 96 Greece, 51, 52, 137, 228 Greenspan, Alan, 23–30, 32, 33, 160 Gross domestic product, 183, 197–199 Hamilton, Alexander, 19 Harvard University, 43, 131 Hayek, Friedrich, 31 Health insurance, 201–202 High-net-worth shareholders, 93 Home Builders Association, 60 Home foreclosure laws, 77–80 Homeownership, 53–55 Hoover, Herbert, 24, 161, 205 Housing: as consumption, 9–12, 54–55, 73–74 government support of, 12 Housing policy, 53–65 HUD (Department of Housing and Urban Development), 15, 58 Human Action (von Mises), 238 Immigration, 19, 205–206 India, 10, 25, 205 IndyMac, 39, 75, 98 Inflation: CPI as indicator of, 26–27 and fair-value accounting, 103 and Federal Reserve, 21–22 and prices, 24–25 (See also Monetary policy) Initial public offerings, 150 Insurance: bond, 86–87 cross-guarantor, 48–52 FDIC (see FDIC insurance) health, 201–202 private deposit, 48–52 self-insurance at banks, 48–52 unemployment, 212–213 Interest rates, 26–27, 31–35 Inverted yield curves, 27–29 Investment banks: disclosure requirements for, 151 government bailout of, 162 “innovations” of, 101–102 leverage ratios of, 71–72 IPOs, 150 Iran, 198, 199, 227 Iraq, 198 Ireland, 77 Isaac, Bill, 107–108, 161–162 Italy, 51, 52 Japan, 159, 200, 205 Jefferson, Thomas, 19, 220 Johnson, Lyndon Baines, 6, 55, 96, 161, 188 JPMorgan Chase, 75 and Bear Stearns, 162 and shadow banking system, 120 as “too-big-to-fail” firm, 173 and Washington Mutual, 163 Keynes, John Maynard, 181 Labor: allocation of, 10–11, 14 minimum-wage laws, 209–212 Lehman Brothers, 71, 76, 101, 104, 129, 164 and Bear Stearns bailout, 162–163 corporate debt at, 107 counterparty risk at, 124 derivatives from, 123 Limited government, 182–183, 195, 231, 253 Liquidity: of banks, 68–69 and FDIC insurance, 171 and financial crises, 70–72 and housing prices, 74–75 and TARP, 171–172 Loan loss reserves accounting, 152–154 Loans: capital standards for, 51–52 qualified, 98 substandard, 140–141 Madoff, Bernie, 149, 225 March of Dimes, 241 Market corrections, 157–165 Federal Reserve’s prevention of, 23, 32 prevention of, 13 residential real estate, 78 and response to financial crisis, 177–180 Market discipline, 21, 38 Market-based monetary policy, 31–35 Market-clearing price, 209 Mathematical modeling: for loan loss reserves, 152–153 by ratings agencies, 82–83 for risk management, 136–138 MBIA, 86 Medicaid, 6, 55, 201 Medicare, 6, 8, 55, 201, 203 Meltdown (Michaels), 35 Merrill Lynch, 101, 124–125 Michaels, Patrick J., 35 Microsoft, 217 Military spending, 198–199, 227 Minimum-wage laws, 209–212 Mises, Ludwig von, 34, 238 Monetary policy, 17–35 of Bernanke, 27–31, 33, 35, 40, 125, 213 and federal debt, 21–22 and Federal Reserve, 17–23 of Greenspan, 23–27 market-based, 31–35 and unemployment, 208–209 Money market mutual funds, bailout of, 120–121, 192 Money supply, 21–22, 24, 189 Moody, John, 83, 150 Moody’s, 81–87 investor confidence in, 84–87 misratings by, 82–84, 101, 125, 126 and SEC, 81–82, 149–150 Morgan Stanley, 71, 101, 124, 173 Mortgage lending, 95–102 by Fannie Mae and Freddie Mac, 97–101 and investment bank innovations, 101–102 prime, 59, 97–99 by private banks, 97–99 savings and loan industry in, 95–97 subprime, 43, 56–57, 99–101 Mortgages: by BB&T Corporation, 97–98 jumbo, 62 pick-a-payment (see Pick-a-payment mortgages) selling vs. servicing, 113–114 Mozilo, Angelo, 46 Multiplier effect, 181 Naked shorting, 127–128, 151 Nationally recognized statistical rating organizations, 82 Negative real interest rates, 26–27 Neo-Keynesian response to financial crisis, 185–186 Neutral taxes, 197 New Deal, 53, 170, 232 Nixon, Richard, 96, 161, 188 North Korea, 34, 198, 227, 247, 252 NRSROs, 82 Obama administration, 142–144: and Dodd-Frank Act, 64 economic policies of, 15, 161 healthcare bill, 183, 201 and Patriot Act, 45 stimulus plan, 181–182 Office of the Comptroller of the Currency (OCC), 40, 154 Office of Thrift Supervision, 40, 41, 45–46 Operating earnings, 103–106 OTS, 40, 41, 45–46 Panics, 137–138, 161–165 Patriot Act, 45, 46, 48, 133–136, 147 Paulson, Henry: in 2008 panic, 164, 167 and AIG bailout, 128, 129 credibility of, 164 development of TARP, 76, 168–170, 172 Pick-a-payment mortgages, 89–93 borrowers using, 90–91 and FDIC, 91 and rise of Fannie Mae/Freddie Mac, 98 Policy reforms, 195–206 for entitlement programs, 199–204 and free trade, 204–205 and government regulations, 204 for government spending, 197–199 for immigration, 205–206 for political system, 206–207 and tax rate, 196–197 Politics: in banking regulation, 42–46 and crony capitalism, 129 and failure of Fannie Mae/Freddie Mac, 59–62 and Federal Reserve appointments, 18 policy reforms for, 206–207 Poor, Henry Varnum, 150 Portugal, 51 Price fixing, 31, 193 Price setting, 31–32 Prime lending, 59, 97–99 Prince, Charlie, 217 Principles-based accounting, 109 Privacy Act, 133, 135 Private accounting systems, 177–178 Private banks, 97–99, 187–188 Private deposit insurance, 48–52 Public schools, 228, 233–235 Racial discrimination (in lending), 42–45 Raines, Frank, 59 Rand, Ayn, 225, 231 Rating agencies, 81–87 investor confidence in, 84–87 mathematical modeling by, 136 and subprime mortgage bonds, 82–84 and “too-big-to-fail” firms, 173 and SEC, 81–82, 149–150 Real estate: commercial, 11, 97 residential (see Residential real estate market) Recessions, 28, 29, 160 Recovery (see Economic recovery) Reforms: banking industry (see Banking industry reforms) government policy (see Policy reforms) Regions Bank, 237 Regulation: of banking industry (see Banking regulation) by government (see Government regulation) Reporting, financial, 150–152 Reserve currency, U.S. dollar as, 77, 188, 229 Residential real estate market: economics of, 73–74 misinvestment in, 9–15 Residential real estate market bubble, 73–80 and government policy, 6 international impact of, 77 and job creation, 80 and state home foreclosure laws, 77–80 Risk: contagion, 123 counterparty, 123, 124 with derivatives, 122–124 diversification of, 67–69 and economic cycles, 189–193 and FDIC insurance, 38–41 and government regulation, 50–51 liquidity, 68–70 mathematical modeling for, 136–138 and “originate and sell” model, 100 systemic, 50–51 RMBS (residential mortgage-backed securities), 81 Roman empire, fall of, 230 Roosevelt, Franklin D., 24, 37, 103, 161 Rules-based accounting, 109 Russia, 198 Samuelson, Paul, 238 Sarbanes-Oxley Act, 133–134 and fair-value accounting, 106 and Fannie Mae/Freddie Mac, 99 misregulation by, 48, 147 and SEC, 150 violations of, 136 SARs (Suspicious Activity Reports), 136 Satchwell, Jack, 57 Savings and loan (S&L) industry, 95–97, 110, 191 Securities and Exchange Commission (SEC), 149–155 capital ratio guidelines, 71–72 and complexity of accounting rules, 116–117 and expensing of stock options, 114, 115 loan loss reserves accounting for, 152–154 misallocation of resources by, 14 and rating agencies, 81–82, 149–150 requirements for shorting stock, 127–128, 151 and rules-based accounting, 109, 110 and Sarbanes-Oxley Act, 150 Self-insurance, 48–52 Selgin, George, 189 Senate Banking Committee, 46 Shadow banking system, 119–131 and AIG bailout, 128–130 credit default swaps in, 126–128 and derivatives, 122–124 Federal Reserve’s role in, 30 losses from, 131 S&L industry, 95–97, 110, 191 Small businesses, 144–147, 183–184 Smoot-Hawley Tariff Act, 205 Social Security, 8, 199–204 South Financial, 237 South Korea, 247 Soviet Union, 34, 195–196, 252, 254 S&P (see Standard & Poor’s) Spain, 51, 52, 77 Spitzer, Eliot, 71, 134–135, 151 Stagflation, 181, 208 Standard & Poor’s (S&P), 81–87 investor confidence, 84–87 misratings by, 82–84, 101, 125, 126 and SEC, 81–82, 149–150 Standard of living, 6–7, 10, 161, 177 Start-up banks, 38–39 State home foreclosure laws, 77–80 Stimulus plan, 181–182 Stock options, expensing of, 114–117 Stocks, shorting, 127–128, 151 Stress tests, banks, 171 Subprime lending: and CRA, 56–57 by Fannie Mae and Freddie Mac, 99–101 and racial discrimination in lending study, 43 Subprime mortgage bonds, 82–87 Substandard loans, 140–141 SunTrust, 152, 237 Suspicious Activity Reports (SARs), 136 Tails (mathematical models), 137 TARP (see Troubled Asset Relief Program) Tax rate, 196–197 Tea Party Movement, 218, 231 Technology industry, 5 “Too-big-to-fail” firms, 130, 173, 193 Trader principle, 92, 223–224 Troubled Asset Relief Program (TARP), 167–175 and 2008 panic, 165 and FDIC, 37 Underwriters Laboratories, 117, 150 Unemployment, 207–213 in economic recovery, 207–208 and minimum-wage laws, 209–212 and misinvestment in residential real estate, 10–11 and monetary policy, 208–209 Unemployment insurance, 212–213 Unions, 179, 180, 212 United Auto Workers, 179, 180 United States: demographic problem in, 228 economic future of, 8, 227–230, 252–253 educational system of, 230–235 founding concepts of, 219–220 as free trade zone, 204–205 GDP of China vs., 183 mixed economy of, 5–6 public schools of, 233–235 university system of, 230–233 United Way, 224, 241 University system, 230–233 U.S.

However, any errors by these institutions, individually and collectively, are far less important than government policy mistakes, and almost all the errors were the direct result of government policy incentives.2 It is important to note that many of the financial institutions that should have been allowed to fail had a history of being crony capitalists; that is, these companies did not advocate limited government but instead sought special favors for themselves. Goldman Sachs, Citigroup, and Countrywide are examples of crony capitalists. Crony socialist is probably a better name for these individuals and firms. If the United States had separation of “business and state” as it does separation of “church and state,” crony capitalism (or crony socialism) could not exist. 4. Almost every governmental action taken since the crisis started, even those that may help in the short term, will reduce our standard of living in the long term. If you misidentify the fundamental cause of a problem, you will almost certainly recommend the wrong solution.


pages: 88 words: 22,980

One Way Forward: The Outsider's Guide to Fixing the Republic by Lawrence Lessig

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collapse of Lehman Brothers, crony capitalism, crowdsourcing, en.wikipedia.org, Filter Bubble, jimmy wales, Occupy movement, Ronald Reagan

“You may or may not like capitalism,” I told them, “but nobody likes ‘crony capitalism,’ and it is crony capitalism that has corrupted this system of government and given us the misregulation that led to the collapse on Wall Street.” Just after I said that, in a scene that could have been scripted in Hollywood, a man sitting in the front row raised his hand and said, “I was one of the original Tea Partiers, and today I run a site called AgainstCronyCapitalism.org. I can guarantee you that if you started talking about the corruption from crony capitalism, you’d have thousands of Tea Partiers down here joining with you in this fight.”

There should be no conflict between the Left and the Right on this: Both sides should favor reform that ends this corrupting influence. We don’t need to destroy wealth. We need to destroy the ability of wealth to corrupt our politics. We don’t need to kill capitalism. We need to kill that form of capitalism—crony capitalism—that uses its power to corrupt our politics. We don’t need to hate success. We have to organize against those who think that their success entitles them to special benefits and privilege from those addicts to fundraising we call congressmen. We don’t need to foment another fundamental revolution.


pages: 183 words: 17,571

Broken Markets: A User's Guide to the Post-Finance Economy by Kevin Mellyn

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banking crisis, banks create money, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, call centre, Carmen Reinhart, central bank independence, centre right, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, disintermediation, eurozone crisis, fiat currency, financial innovation, financial repression, floating exchange rates, Fractional reserve banking, global reserve currency, global supply chain, Home mortgage interest deduction, index fund, joint-stock company, Joseph Schumpeter, labor-force participation, labour market flexibility, liquidity trap, London Interbank Offered Rate, lump of labour, market bubble, market clearing, Martin Wolf, means of production, mobile money, moral hazard, mortgage debt, mortgage tax deduction, Ponzi scheme, profit motive, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, rising living standards, Ronald Coase, seigniorage, shareholder value, Silicon Valley, statistical model, Steve Jobs, The Great Moderation, the payments system, Tobin tax, too big to fail, transaction costs, underbanked, Works Progress Administration, yield curve, Yogi Berra

Most often, crises are followed by the systematic imposition of “financial repression”—a regime in which the state systematically suppresses market forces in finance—especially interest rates—in order to direct credit for political ends and hold down its own funding costs. This regime leaves itself open to democratic crony capitalism at best. At worst, it leads to socialism or “corporatism”—the organization of society into collective interest groups such as big business and labor, all subordinate to the state (as with Italy and Germany and even some aspects of the New Deal). Financial repression is how banking works in China today, and once in place, it is very hard to change.

A competing narrative is far less frequently told outside the pages of the Wall Street Journal, although Gretchen Morgenson of The New York Times has, with mortgage expert Joshua Rosner, told it well in the book Reckless Endangerment (Times Books, 2011). It does not let greedy bankers off the hook, but maintains that to a large degree, the crisis was created through a mixture of bad if well-intended public policy and crony capitalism in the housing finance market. This narrative focuses on the GSEs we met in the last chapter, with a central role being played by Fannie Mae CEO Jim Johnson and a host of enablers in Congress and the Washington power structure, including Messrs. Dodd and Frank. In this tale, Fannie Mae and Freddie Mac became money-making machines for their managers by using their ambiguous status as “governmentsponsored” public companies to borrow cheap (essentially at US government debt rates) at very high leverage to build enormous portfolios of mortgage securities.

Dodd-Frank’s morass of inconsistent rule-making may even inhibit the Federal Reserve from executing bailouts. No panic in history has ever been foreseen, and inhibiting the discretion of central banks to pour water on the fire is storing up a future disaster for the world economy. A second key lesson is that banks must be free to fail—something that the crony capitalism of the Great Moderation inhibited until the institutions really became too big and interconnected to fail, turning finance into a one-way bet for the bankers. Dodd-Frank punts on too-big-to-fail, choosing instead to do the impossible: make finance safe. Its approach to doing this is to proscribe activities that had nothing to do with the crisis, such as proprietary trading, and to bring previously unregulated financial entities into the net even if they pose no systemic risk.


pages: 128 words: 38,187

The New Prophets of Capital by Nicole Aschoff

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3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, Bretton Woods, clean water, collective bargaining, crony capitalism, feminist movement, follow your passion, Food sovereignty, glass ceiling, global supply chain, global value chain, helicopter parent, hiring and firing, income inequality, Khan Academy, late capitalism, Lyft, Mark Zuckerberg, means of production, performance metric, profit motive, rent-seeking, Ronald Reagan, Rosa Parks, school vouchers, shareholder value, sharing economy, Silicon Valley, Slavoj Žižek, structural adjustment programs, Thomas L Friedman, Tim Cook: Apple, urban renewal, women in the workforce, working poor

Departing from the dominant idea that states have retreated from the market over the past three decades, Mackey argues states have become more interventionist than ever, and that in the process they have “fostered a mutant form of capitalism called crony capitalism” that is to blame for many of the problems societies face today. Mackey does not see crony capitalism as “real” capitalism. Instead it is a product of big government in which politicians trying to preserve their cushy jobs develop symbiotic, parasitic relationships with businesspeople too lazy or unimaginative to compete successfully in the marketplace. 10 In Mackey’s story, crony capitalism has been exacerbated by the rising power of the financial sector and shareholder-value ideology—the idea that firms are nothing more than a stream of assets designed to maximize profits for shareholders.

Instead, they are part of a chorus of new elite voices calling for a different kind of capitalism. The long list of “new” capitalisms being touted or disdained—conscious capitalism, creative capitalism, sustainable capitalism, equitable capitalism, philanthrocapitalism, eco-capitalism, inclusive capitalism, crony capitalism—illustrates the widespread feeling that capitalism needs to change. The New Prophets of Capitalism examines the stories told by four of these new storytellers: Sheryl Sandberg (COO of Facebook), John Mackey (CEO of Whole Foods), Oprah Winfrey (media mogul), and Bill and Melinda Gates (creators of the Gates Foundation).7 I argue that each of these storytellers acts as a prophet of capitalism.

The reader should note, however, that general views about conscious capitalism are shared and developed by Sisodia. 2See www.wholefoodsmarket.com/. 3Mackey and Sisodia, Conscious Capitalism, p. 236. 4For example, see Michael Strong, Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the World’s Problem’s, New York: Wiley, 2009. 5Mackey and Sisodia, Conscious Capitalism, pp. 264–5, 230. 6People and the Planet Report, Report 01/12, London: Royal Society Science Policy Centre, 2012. 7“Use It and Lose It: The Outsize Effect of US Consumption on the Environment,” Scientific American, September 14, 2012. 8Mackey and Sisodia, Conscious Capitalism, p. 3. 9Ibid., pp. 14, 27. 10Ibid., pp. 16, 21; Mackey is not alone in his emphasis on crony capitalism. See also www.againstcronycapitalism.org/. 11Ibid., pp. 16, 18. 12Charles. Fishman, “Whole Foods Is All Teams,” Fast Company, April/May1996. 13‘Trader Joe’s Top Survey of Best Grocery Chains, Walmart Lands at Bottom of List,” Huffington Post, July 23, 2013. 14Gert Spaargaren and Arthur P.J.


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The Rise and Fall of Nations: Forces of Change in the Post-Crisis World by Ruchir Sharma

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3D printing, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, Commodity Super-Cycle, corporate governance, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, hiring and firing, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Jeff Bezos, job automation, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labor-force participation, Malacca Straits, Mark Zuckerberg, market bubble, megacity, Mexican peso crisis / tequila crisis, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, pattern recognition, Peter Thiel, pets.com, Plutocrats, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, working-age population

A cover story I wrote for Newsweek International in September 2010 argued that the rise of crony capitalism was “India’s fatal flaw,” and it was greeted with great skepticism in Delhi’s political circles. Top officials told me that corruption is normal when a young economy is taking off, citing the robber barons who ruled America in the nineteenth century. But as economic growth fell by almost half in the years that followed, many of the same officials came to acknowledge that an abnormally high level of corruption and inequality † was one of the main factors in the slowdown. Rising crony capitalism steers money and deals to undeserving hands, but it also sets off a chain reaction in the political system.

The judges began denying bail to accused businessmen, holding them in jail for months before formal charges were filed; they began pressuring agents of the Central Bureau of Investigation (CBI) to push forward with corruption charges and questioned their probity if they dropped a case. By 2012, the crackdown was widening, and at parties in the lavish “farmhouses” that wealthy Indians keep as second homes on the outskirts of Delhi, it sometimes seemed that every other guest was either out on bail or about to go to jail. At this point it was not clear which was worse: crony capitalism or the backlash. Bureaucrats grew fearful of attaching their name to any policy or even approving any permit that might look pro-business, lest they be tarred as corrupt themselves. Businessmen started avoiding deals that might require government approval, which in India is an expansive list.

India’s finance minister Arun Jaitley, a lawyer himself, lamented in 2015 that government investigators were operating by “the golden rule that I must somehow make the case, and it is good luck of the accused to get a fair trial.” This culture of investigative “overkill,” he warned, has “hindered the whole process of economic decision-making.” India needed to grow rapidly to address poverty and inequality, but the rise of crony capitalism and the subsequent attempt to restrain it had instead impeded growth. It’s difficult to clearly define when the scale of billionaire wealth threatens to throw an economy out of balance, but comparing each country to its peers throws the outliers into stark relief. Total billionaire wealth in the past few years has averaged about 10 percent of GDP both in emerging countries and in developed countries.


pages: 411 words: 114,717

Breakout Nations: In Pursuit of the Next Economic Miracles by Ruchir Sharma

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3D printing, affirmative action, Albert Einstein, American energy revolution, anti-communist, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, business climate, business process, business process outsourcing, call centre, capital controls, Carmen Reinhart, central bank independence, centre right, cloud computing, collective bargaining, colonial rule, corporate governance, crony capitalism, deindustrialization, demographic dividend, Deng Xiaoping, eurozone crisis, Gini coefficient, global supply chain, housing crisis, income inequality, indoor plumbing, inflation targeting, informal economy, Kenneth Rogoff, knowledge economy, labor-force participation, labour market flexibility, land reform, M-Pesa, Mahatma Gandhi, market bubble, megacity, Mexican peso crisis / tequila crisis, new economy, oil shale / tar sands, oil shock, open economy, Peter Thiel, planetary scale, quantitative easing, reserve currency, Robert Gordon, Shenzhen was a fishing village, Silicon Valley, software is eating the world, sovereign wealth fund, The Great Moderation, Thomas L Friedman, trade liberalization, Watson beat the top human players on Jeopardy!, working-age population

Meanwhile, scores of “emerging” nations have been emerging for many decades now. They have failed to gain any momentum for sustained growth or their progress has begun to stall since they became middle-income countries. Malaysia and Thailand appeared to be on course to emerge as rich nations until the crony capitalism at the heart of those systems caused a financial meltdown in the crisis of 1998. Their growth has disappointed ever since. In the 1960s, the Philippines, Sri Lanka, and Burma were billed as the next East Asian tigers, only to see their growth falter badly, well before they could reach the “middle-class” average income of about $4,000.

Not a single billionaire in China has a net worth of more than $10 billion; compare that to eleven billionaires with a net worth of more than $10 billion in Russia and six in India, which have far smaller economies. Only one tycoon who made China’s list of top-ten billionaires five years ago was still on the roster in 2011. The government appears to be both creating competitive churn among the very wealthy and restricting their maximum wealth. To be sure, there is crony capitalism in China, or wealth built on friendly ties to the government. Some reports even suggest that a majority of the Chinese worth more than $10 million are children of high-level Communist Party officials. Still, it’s clear that Chinese leaders are acutely aware of the growing wealth gap. The ruling party won’t countenance growth at any cost, if one of the costs is stoking popular revolt.

Many outsiders were just as confident before the recent signs of trouble. I put the probability of India’s continuing its journey as a breakout nation this decade at closer to 50 percent, owing to a whole series of risks that the Indian and foreign elites leave out of the picture, including bloated government, crony capitalism, falling turnover among the rich and powerful, and a disturbing tendency of farmers to stay on the farm. The early signs of an unraveling have begun to emerge under the administration of Prime Minister Manmohan Singh, but not really because of it. Singh helped open India to global trade in the early 1990s, when he was finance minister.

When the Money Runs Out: The End of Western Affluence by Stephen D. King

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Albert Einstein, Asian financial crisis, asset-backed security, banking crisis, Basel III, Berlin Wall, Bernie Madoff, British Empire, capital controls, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, congestion charging, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-subsidies, debt deflation, Deng Xiaoping, Diane Coyle, endowment effect, eurozone crisis, Fall of the Berlin Wall, financial innovation, financial repression, floating exchange rates, full employment, George Akerlof, German hyperinflation, Hyman Minsky, income inequality, income per capita, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, London Interbank Offered Rate, loss aversion, market clearing, moral hazard, mortgage debt, new economy, New Urbanism, Nick Leeson, Northern Rock, Occupy movement, oil shale / tar sands, oil shock, price mechanism, price stability, quantitative easing, railway mania, rent-seeking, reserve currency, rising living standards, South Sea Bubble, sovereign wealth fund, technology bubble, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, trickle-down economics, Washington Consensus, women in the workforce, working-age population

As it turned out, the presumption of official support was at least to some extent misplaced, because the government did not clearly have the resources to provide that support.10 194 4099.indd 194 29/03/13 2:23 PM From Economic Disappointment to Political Instability Many Western observers preferred to be just a little more direct. Asian countries were suffering from crony capitalism, an unhealthy relationship between government and commerce associated with endemic bribery and corruption, and they’d fooled innocent foreign creditors into lending to them. The fact that South Korea, in particular, had delivered an extraordinary increase in living standards in previous decades was conveniently ignored. Between 1950 and the onset of the Asian crisis, Korean living standards had risen 15-­fold, suggesting that crony capitalism – if that’s what it was – had hardly been an impediment to rising prosperity.

THE ASIAN CRISIS The story of the late 1990s Asian crisis can be simply summarized: having been forced to recognize they had lived beyond their means, the nations involved took the pain up front but were then able to recover strongly. The near-­term losses in Asia were, in many cases, far bigger than those seen in the West following its later financial crisis but, having been written off as hotbeds of crony capitalism and, thus, doomed to fail, Asian economies were able to bounce back in style. There was no Western-­style economic stagnation but, instead, a return to economic dynamism within just a handful of years. Yet the political response varied from nation to nation. In the early 1990s, Asian nations had increasingly adopted the so-­called ‘Washington Consensus’, broadly speaking a commitment to low inflation, conservative fiscal policies and open cross-­border capital markets.

At the very least, he was surely invoking age-­old anti-­Jewish prejudice to explain why Malaysia, alongside other Islamic nations, had been so vulnerable economically. And his 2003 comments were hardly the first time he had claimed some kind of Jewish conspiracy against his country. Dismissing claims of crony capitalism, Mahathir survived – and thrived – by blaming others, however unreasonably, for Malaysia’s predicament. Unlike Suharto – whose decision to accept an IMF programme may have contributed to his downfall – Mahathir was able to argue that he was defending Malaysia against evil foreign forces. His use of capital controls – which led to a typically fraught debate among academic economists – was not so much an attempt to fix Malaysia’s financial problems but, instead, a deliberate decision to portray Malaysia as an innocent victim of an international conspiracy.

Falling Behind: Explaining the Development Gap Between Latin America and the United States by Francis Fukuyama

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Andrei Shleifer, Atahualpa, barriers to entry, Berlin Wall, British Empire, business climate, Cass Sunstein, central bank independence, collective bargaining, colonial rule, conceptual framework, crony capitalism, European colonialism, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, Francisco Pizarro, Hernando de Soto, income inequality, income per capita, labour market flexibility, land reform, land tenure, Monroe Doctrine, moral hazard, New Urbanism, oil shock, open economy, purchasing power parity, rent-seeking, Ronald Reagan, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, upwardly mobile, Washington Consensus

., Political Institutions and Economic Growth in Latin America (Stanford, CA: Hoover Institution Press, 2000). 7. According to Haber, crony capitalism “is usually thought of as a system in which those close to the political authorities who make and enforce policies receive favors that have large economic value.” He could have in mind the restrictions on sugar imports, or the Halliburton Iraq contracts, or the $14 billion subsidy to 126 The Politics of Underdevelopment in Latin America 8. 9. 10. 11. 12. 13. 14. 15. the oil industry. But none of these are possible, because in the United States the government is “limited.” Stephen Haber, Crony Capitalism and Economic Growth in Latin America: Theory and Evidence (Stanford, CA: Hoover Institution Press, 2002), pp. 12, 13.

The institutions that matter likely include not only those that protect property rights, but also those that mobilize savings and coordinated investments and those that subject those in government to the approval of the governed.5 Yet institutionalist answers to why Latin America fell behind are often drowned in ritualistic invocations of the institutionalist approach.6 In Stephen Haber’s most recent collection, for example, the culprit is Latin American “crony capitalism,” as if capitalism in the United States could be categorized differently.7 While recent works resulting from a revived interest in Latin America’s lagging development provide several insightful case studies,8 this chapter’s analysis is conducted at the cross-national level. Moreover, to the extent to which data limitations allow, this study closely adheres to the facts.

., La independencia americana: Consecuencias económicas (Madrid: Alianza, 1993); John H. Coatsworth and Alan M. Taylor, Latin America and the World Economy since 1800 (Cambridge, MA: Harvard University Press, 1998); and Haber, How Latin America Fell Behind, Political Institutions and Economic Growth, and Crony Capitalism. See Roberto Gargarella, Los fundamentos legales de la desigualidad: El constitucionalismo en América (1776–1860) (Madrid: Siglo XXI, 2005). José Luis Machinea and Cecilia Vera, “Comercio, inversión directa y políticas productivas,” paper presented at the seminar “Una nueva agenda de desarrollo para América Latina,” Salamanca, October 7–8, 2005.


pages: 358 words: 106,729

Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan

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accounting loophole / creative accounting, Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, barriers to entry, Bernie Madoff, Bretton Woods, business climate, Clayton Christensen, clean water, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, diversification, Edward Glaeser, financial innovation, floating exchange rates, full employment, global supply chain, Goldman Sachs: Vampire Squid, illegal immigration, implied volatility, income inequality, index fund, interest rate swap, Joseph Schumpeter, Kenneth Rogoff, knowledge worker, labor-force participation, Long Term Capital Management, market bubble, Martin Wolf, medical malpractice, microcredit, moral hazard, new economy, Northern Rock, offshore financial centre, open economy, price stability, profit motive, Real Time Gross Settlement, Richard Florida, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, school vouchers, short selling, sovereign wealth fund, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, Vanguard fund, women in the workforce, World Values Survey

Favoring the Few Instead of relying on state-owned firms to propel growth, a number of governments have tried to remedy private-sector organizational deficiencies and build domestic champions, even while relying on some market signals to allocate resources. The process of playing midwife, often derided as crony capitalism but better termed relationship or managed capitalism, involved a judicious mix of the government’s giving firms some protection from foreign competition and special privileges so that they could generate the profits around which they could build their organizational capital, while maintaining some incentives for firms to be efficient.

This was indeed what Western governments did in their own economies in 2008–2010, and what the IMF eventually turned to doing. But proud East Asian government officials were initially treated as derelicts who did not understand how to run clean governments. Overnight, managed capitalism was labeled crony capitalism, and there were certainly enough examples of cronyism to allow the Western financial press to go to town. Some of the initial policy advice from the Fund, the World Bank, and Western governments seemed to be focused on punishing the cronies, instead of recognizing that the system was so interconnected that many innocent people would suffer in the process.

Confident in the knowledge that the government will come to their rescue, these institutions can play a game of chicken with the authorities by refusing to take adequate precautions against failure, such as raising equity. Perhaps just as important are the political consequences of such rescues. It is hard for the authorities to refute allegations of crony capitalism. Aside from the stated intent of saving the economy, there is no discernible difference between a bailout motivated by the sense that institutions are systemically important and one motivated by the desire of those in authority to rescue their friends or their once and future employers. Even as conspiracy theorists have a field day, painting everyone remotely associated with the financial system into a web of corruption, the damage to the public’s faith in the system of private enterprise is enormous: it senses two sets of rules, one for the systemically important and another for the rest of us.


pages: 430 words: 109,064

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson, James Kwak

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Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bernie Madoff, Bonfire of the Vanities, bonus culture, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Gordon Gekko, greed is good, Home mortgage interest deduction, Hyman Minsky, income per capita, interest rate derivative, interest rate swap, Kenneth Rogoff, laissez-faire capitalism, late fees, Long Term Capital Management, market bubble, market fundamentalism, Martin Wolf, moral hazard, mortgage tax deduction, Ponzi scheme, price stability, profit maximization, race to the bottom, regulatory arbitrage, rent-seeking, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, sovereign wealth fund, The Myth of the Rational Market, too big to fail, transaction costs, value at risk, yield curve

Aided by the president and his family, who opened doors for their friends (and shut them for their competitors), these entrepreneurs built factories, developed cities, and learned how to export raw materials, agricultural products, and simple manufactured items to the rest of the world. As in many other low-income countries in the past half-century, economic development was dominated by a small economic elite defined by their personal ties to the ruling family, which traded favors for both political support and cold, hard cash—a pattern known as “crony capitalism.”26 For example, Indofood became one of the largest conglomerates in the country, largely because of a longtime personal friendship between its founder, Liem Sioe Liong, and Suharto.27 Suharto’s wife, Siti Hartinah Suharto, known as Madame Tien, was involved in so many business deals that she was referred to by critics as “Madame Tien Percent” for her alleged fees.28 Suharto’s children also cut themselves into many major deals; his daughter was involved in the largest taxi company, one son tried to build cars, and another son was a financial entrepreneur.29 For a long time, the system worked reasonably well.

Of course, the “dispossessed” oligarchs fight back, calling in political favors or even trying subversion—including calling up their contacts in the American foreign policy establishment, as the Ukrainians did with some success in the late 1990s.41 But the aftermath of an emerging market crisis typically leads to a shakeout of the oligarchy, with political power concentrated in a smaller number of hands. However, another common feature of emerging market crises is that they don’t last forever. Even while outside observers are still despairing over corporate governance, macroeconomic management, and crony capitalism, growth picks up again. In 1999, the Korean economy grew by 11.1 percent; the Russian recovery took slightly longer, with growth of 4.5 percent in 1999 and 11 percent in 2000; and while growth took longest to resume in Indonesia, by 2000 its economy was expanding at close to 4 percent per year.42 A lower exchange rate boosts exports, widespread unemployment reduces the cost of labor, and companies with rescheduled debts or new companies with clean books can take advantage of both higher sales and lower costs.

Foreign lenders learn exactly the wrong lessons from a crisis: they learn that when push comes to shove, the IMF will protect them against the consequences of their bad investments; and they learn that it’s always best to invest in the firms with the most political power (and hence the most assurance of being bailed out in a crisis), perpetuating the pattern of crony capitalism. As a result, foreign capital flows back, and emerging markets can repeat the boom-bust-bailout cycle for a long time, perhaps indefinitely. But long-term economic growth is unlikely to result. Although oligarchies may be consistent with episodes of growth, they are not good at supporting the development of new entrepreneurs and the commercialization of new technologies.44 In fact, entrenched economic elites may have an interest in limiting competition from new ideas and new people.


pages: 385 words: 101,761

Creative Intelligence: Harnessing the Power to Create, Connect, and Inspire by Bruce Nussbaum

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3D printing, Airbnb, Albert Einstein, Berlin Wall, Black Swan, clean water, collapse of Lehman Brothers, Credit Default Swap, crony capitalism, crowdsourcing, Danny Hillis, declining real wages, demographic dividend, Elon Musk, en.wikipedia.org, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, follow your passion, game design, housing crisis, Hyman Minsky, industrial robot, invisible hand, James Dyson, Jane Jacobs, Jeff Bezos, jimmy wales, John Gruber, Joseph Schumpeter, Kickstarter, lone genius, manufacturing employment, Mark Zuckerberg, Martin Wolf, new economy, Paul Graham, Peter Thiel, race to the bottom, reshoring, Richard Florida, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, six sigma, Skype, Steve Ballmer, Steve Jobs, Steve Wozniak, supply-chain management, Tesla Model S, The Chicago School, The Design of Experiments, the High Line, The Myth of the Rational Market, thinkpad, Tim Cook: Apple, too big to fail, tulip mania, We are the 99%, Y Combinator, young professional, Zipcar

We witnessed an inequality gap that hadn’t been as wide since the 1920s and the Great Depression. The Occupy Wall Street movement, with its rallying cry “We are the 99 percent,” crystallized the sense that something needed to change. You knew something fundamental was about to change when both the Tea Party and Occupy Wall Street found a common enemy, publicly blaming “Crony Capitalism” for destroying the American Dream. Even while the New Economy was at its peak, alternative ways of thinking and doing had begun springing up around the nation. Alice Waters’s groundbreaking organic restaurant Chez Panisse served as inspiration for a local food movement, which, four decades later, has gone truly global.

It is an economic system that would encourage the formation of vastly larger numbers of start-ups and promote policies that helped them scale successfully. It would reward large corporations with entrepreneurial cultures—companies like Corning and 3M—that generate substantial revenue each year from new products invented over the previous five years. And it would curtail the “crony capitalism” tactics of big corporations and banks that deploy political contributions to turn the tax and regulatory systems to their benefit. BUILDING A NEW ECONOMICS OF CREATIVITY Using the competencies of Creative Intelligence as a starting foundation, we can begin to build a new economic model for the twenty-first century.

Apple is pushing aside RIM and Nokia, Facebook is pressuring Google to move into social, online shopping is mauling the malls. But the brutality of the free market isn’t in operation in many industries where large corporations hold sway by virtue of their powerful connections, not their innovations. Creative destruction is the enemy of crony capitalism, as well as a force that’s essential for innovation. An economic model based on creativity would require a transparent economic playing field, a vigorous antitrust policy that breaks up unfair monopolies, and curbs lobbyists who manipulate tax and regulatory policies for special interests. The capital gains tax, for example, should be structured to promote start-ups and young companies.


pages: 481 words: 120,693

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland

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Albert Einstein, algorithmic trading, banking crisis, barriers to entry, Basel III, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Branko Milanovic, Bretton Woods, BRICs, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, conceptual framework, corporate governance, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial innovation, Flash crash, Frank Gehry, Gini coefficient, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, short selling, Silicon Valley, Silicon Valley startup, Simon Kuznets, Solar eclipse in 1919, sovereign wealth fund, stem cell, Steve Jobs, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy

The alpha geeks are the dominant tribe in Bangalore, the Indian city that invented technology outsourcing. In their incarnation as engineers, they overwhelmingly populate the Communist Party leadership in China, where political nous is a surer path to wealth than filing patents. The Russian oligarchs are a textbook example of crony capitalism, yet six of the original seven earned degrees in math, physics, or finance before becoming natural resource tycoons. Carlos Slim, who studied engineering in college and taught algebra and linear programming as an undergraduate, attributes his fortune to his facility with numbers. So does Steve Schwarzman, who told me he owed his success to his “ability to see patterns that other people don’t see” in large collections of numbers.

Most reports depicted the Orange Revolutionaries, with their determined, subzero encampment in the capital city’s central square, either as western Ukrainians rebelling against the government’s pro-Russian stance or as idealistic students who were unwilling to stomach political repression. Both characterizations were true, but Aslund saw a third dynamic at play. The Orange Revolution, he told me, was the rebellion of the millionaires against the billionaires. Ukraine’s crony capitalism worked extremely well for the small, well-connected group of oligarchs at the very top, but it was stifling the emerging middle class. This rising petite bourgeoisie was finally fed up and it was fighting for more equitable rules of the game. That battle of the millionaires versus the billionaires has been playing out across the world.

Graham told me, was when “the gains around them are much bigger than their own, and bigger than they can ever achieve in their lifetime.” Dr. Graham attributes this feeling of inadequacy vis-à-vis the 0.1 percent partly to greed. She points to work by economist Angus Deaton that shows the richer you are, the more covetous you become—the social science version of the biblical proverb about the eye of the needle. But she says crony capitalism is to blame, too. The middle-class achievers are the most frustrated in societies where getting to the top is seen as a function of connections rather than merit. A more sympathetic rationale, advanced most prolifically by Cornell economist Robert Frank, is the problem of positional goods. These are products and services whose value is derived in part from their scarcity and how much everyone else wants them.


pages: 868 words: 147,152

How Asia Works by Joe Studwell

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affirmative action, anti-communist, Asian financial crisis, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collective bargaining, crony capitalism, cross-subsidies, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Deng Xiaoping, failed state, financial deregulation, financial repression, Gini coefficient, glass ceiling, income inequality, income per capita, industrial robot, Joseph Schumpeter, land reform, land tenure, large denomination, market fragmentation, non-tariff barriers, offshore financial centre, oil shock, open economy, passive investing, purchasing power parity, rent control, rent-seeking, Ronald Coase, South China Sea, The Wealth of Nations by Adam Smith, urban sprawl, Washington Consensus, working-age population

If governments allow entrepreneurs access to what economists call ‘rents’ – sources of income at government discretion – without contributing to developmental objectives, this is a political dereliction of duty. What south-east Asians were the first to call ‘crony capitalism’, whereby businessmen are granted concessions without developmental strings attached, is a political failure rather than an entrepreneurial one. The term originates in the Philippines, where the political class has been the most selfish and culpable among all the major states in east Asia. Neo-liberal economists argue that developing countries should avoid the risk of crony capitalism by getting rid of economic rents. But while this might make sense in rich countries, in aspiring states it simply begs the question: How, in that case, will you get entrepreneurs to do what you need them to do in order to develop your economy?

What created the Canons, the Samsungs, the Acers and so on in Japan, Korea and Taiwan was the marriage of infant industry protection and market forces, involving (initially) subsidised exports and competition between manufacturers that vied for state support. The north-east Asian states found ways to overcome the problems that afflicted the ISI policies that were promoted in the 1950s (including by the World Bank in its early, ‘left-wing’ incarnation). Contrary to the claims of many economists, rent-seeking and crony capitalism did not inevitably undermine industrial policy so long as sufficient discipline could be wrapped around infant industry promotion. The mix of plan and market recalls the British development economist Ronald Dore’s contemporary observation about foreign perceptions of Japan at the height of its industrialisation: ‘Left-wing … observers come back from Japan convinced they have seen a shining example of state planning,’ he wrote.

But then came a downturn at the end of the 1980s, when the Berkeley Mafia were allowed to apply their most radical reforms to the financial system. Finally, in the boom immediately before the 1997 crisis, Suharto was leaning towards Habibie again.94 The Berkeley Mafia were not hardened ideologues, but they believed that only the market could overcome Indonesia’s tendency to crony capitalism. A peripheral member of the group offers an anecdote which helps explain why the economists felt more and more compelled to seek solutions in financial deregulation. Soedradjad Djiwandono, who was governor of the central bank from 1993 until 1998, recalls receiving a letter in late 1996 from Tommy Suharto.95 The president’s youngest son wrote that he had two state banks willing to lend him more than USD1 billion for a car plant.


pages: 300 words: 78,475

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream by Arianna Huffington

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American Society of Civil Engineers: Report Card, Bernie Madoff, Bernie Sanders, call centre, carried interest, citizen journalism, clean water, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, extreme commuting, Exxon Valdez, full employment, greed is good, housing crisis, immigration reform, invisible hand, knowledge economy, laissez-faire capitalism, late fees, market bubble, market fundamentalism, Martin Wolf, medical bankruptcy, microcredit, new economy, New Journalism, offshore financial centre, Ponzi scheme, Report Card for America’s Infrastructure, Richard Florida, Ronald Reagan, Rosa Parks, single-payer health, smart grid, The Wealth of Nations by Adam Smith, too big to fail, transcontinental railway, trickle-down economics, winner-take-all economy, working poor, Works Progress Administration

THEY’VE GOT LOW FRIENDS IN HIGH PLACES The third leg in the Access Triple Crown is the way corporate America has used its economic clout to cultivate—okay, “buy”—friends in high places. It’s so much easier to get a politician to take your call when you have donated millions to him or used to work in the office next to him. Facebook is great, but the crony capitalism of Washington takes social networking to a whole different level. We saw how all those former Senate and House staffers are making a buck by lobbying their former bosses and colleagues on behalf of the big banks looking to gut reform.74 It’s the same thing we saw during the health-care battle when those fighting against reform hired 350 former members of Congress and congressional staffers to influence the debate, including half a dozen former staffers of Senator Max Baucus, the influential chairman of the Senate Finance Committee.

Tom Daschle is a senator, then a near–cabinet member overseeing health-care reform, then a “special adviser” to companies looking to undermine health-care reform.96 Robert Rubin is co-chairman of Goldman Sachs, then secretary of the Treasury, then a senior counselor of Citigroup—pocketing more than $126 million in cash and stock during his almost ten years there.97 Dick Cheney is a congressman, then secretary of defense, then CEO of Halliburton, then the most powerful vice president in history—helping lead America into a war with Iraq that ends up netting his former company billions in sweetheart contracts.98 During the Bush-Cheney years, Halliburton became the poster child for crony capitalism, which is why it was both surprising and utterly predictable when the company came roaring back into the headlines during the BP oil spill fiasco. It’s like one of those horror movie killers who keeps popping back up from the grave. You thought Halliburton had been eradicated when government audits showed the company had bilked taxpayers out of a billion dollars during the war in Iraq?

Given that the piece is about the economic meltdown, it’s telling that the bio doesn’t include his nearly ten years at Citigroup—during the very time that ended with the bank having to be saved by the American taxpayers.109 But that’s how our system “works” these days: Someone like Rubin is able to wreak destruction, collect an ungodly profit, then go along his merry way, pontificating about how “markets have an inherent and inevitable tendency—probably rooted in human nature—to go to excess, both on the upside and the downside.”110 This from the man who, as Bill Clinton’s Treasury secretary, was vociferous in opposing the regulation of derivatives—a key factor in the current economic crisis—and who lobbied the Treasury during the Bush years to prevent the downgrading of the credit rating of Enron—a debtor of Citigroup.111, 112 The hidden costs of such crony capitalism are monumental for the middle class. Why would people strive to build businesses—risking their money and their sweat equity—when they know there will always be someone on the other side of the table playing with a stacked deck? THE VULCAN MIND MELD BETWEEN WASHINGTON AND WALL STREET So the deck is stacked.


pages: 422 words: 113,830

Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism by Kevin Phillips

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algorithmic trading, asset-backed security, bank run, banking crisis, Bernie Madoff, Black Swan, Bretton Woods, BRICs, British Empire, collateralized debt obligation, computer age, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency peg, diversification, Doha Development Round, energy security, financial deregulation, financial innovation, fixed income, Francis Fukuyama: the end of history, George Gilder, housing crisis, Hyman Minsky, imperial preference, income inequality, index arbitrage, index fund, interest rate derivative, interest rate swap, Joseph Schumpeter, Kenneth Rogoff, large denomination, Long Term Capital Management, market bubble, Martin Wolf, Menlo Park, mobile money, Monroe Doctrine, moral hazard, mortgage debt, new economy, oil shale / tar sands, oil shock, peak oil, Plutocrats, plutocrats, Ponzi scheme, profit maximization, Renaissance Technologies, reserve currency, risk tolerance, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, The Chicago School, Thomas Malthus, too big to fail, trade route

ONE Introduction The Panic of August We are living through the first crisis of our brave new world of securitised financial markets. It is too early to tell how economically important this upheaval will prove. But nobody can doubt its significance for the financial system. Its origins lie with credit expansion and financial innovation in the U.S. itself. It cannot be blamed on “crony capitalism” in peripheral economies, but rather on irresponsibility in the core of the world economy. —Martin Wolf, Financial Times, September 2007 The “crack cocaine” of our generation appears to be debt. We just can’t seem to get enough of it. And, every time it looks like the U.S. consumer may be approaching his maximum tolerance level, somebody figures out how to lever on even more debt using some new and more complex financing.

The nature of English-speaking capitalism as practiced especially by Wall Street but also by the City of London is drawing fire. Martin Wolf, the chief economic commentator at the Financial Times, noted at year’s end that “what is happening in credit markets today is a huge blow to the credibility of the Anglo-Saxon model of transactions-orientated financial capitalism. A mixture of crony capitalism and gross incompetence has been on display in the core financial markets of New York and London.”44 On the other side of the Atlantic, the iconic American investor Warren Buffett summarized his criticism: “You can’t turn a financial toad into a prince by securitizing it. . . . Wall Street started believing its own PR on this—they started holding this stuff themselves, maybe because they couldn’t sell it.

Connally, John ConocoPhillips Conservative Party, British Consumer Federation of America consumer price index (CPI) agflation and Boskin Commission and debasement of GDP and German hedonics in calculation of housing element of new methodology of Consumer Product Safety Commission consumer spending Corrigan, Gerald Corzine, Jon Coué, Émile Council of Economic Advisers Counter-Reformation Countrywide credit default swaps (CDSs) CreditSights Inc. crony capitalism Crudele, John Curzon, Lord Dalio, Raymond Das, Satyajit Davis, John W. Day of Reckoning (Friedman) debt credit card current account economic favoritism and EMH and expansion of federal bailouts and financial services sector and GDP and history of excessive LBOs and mortgage oil and in post-9/11 era private public in Reagan era see also mortgage crisis “Debt Explosion of the 1980s, The” (Synnott) Defense Department, U.S.


pages: 561 words: 87,892

Losing Control: The Emerging Threats to Western Prosperity by Stephen D. King

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Admiral Zheng, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, BRICs, British Empire, capital controls, Celtic Tiger, central bank independence, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, demographic dividend, demographic transition, Deng Xiaoping, Diane Coyle, Fall of the Berlin Wall, financial deregulation, financial innovation, Francis Fukuyama: the end of history, full employment, George Akerlof, German hyperinflation, Gini coefficient, hiring and firing, income inequality, income per capita, inflation targeting, invisible hand, Isaac Newton, knowledge economy, labour market flexibility, labour mobility, low skilled workers, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, Ponzi scheme, price mechanism, price stability, purchasing power parity, rent-seeking, reserve currency, rising living standards, Ronald Reagan, savings glut, Silicon Valley, Simon Kuznets, sovereign wealth fund, spice trade, statistical model, technology bubble, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, Washington Consensus, women in the workforce, working-age population, Y2K, Yom Kippur War

At that time, many emerging economies ran current-account deficits. In other words, domestic investment was higher than domestic saving, requiring inflows of capital from abroad to balance the books. These capital inflows were too often invested in unsound property deals or corrupt business ventures, leading to accusations of ‘crony capitalism’. As foreign investors took fright, capital left Asia and headed elsewhere. Without the inflows, Asia could no longer maintain its earlier standard of living: demand fell, imports dropped, exchange rates plummeted and economies collapsed. The Asian crisis demonstrated two things. First, in their hunt for yield, Western investors were happy to chase returns regardless of the risks involved.

Should the credit crunch of 2007/8 be described as a success for soft knowledge? And should Asia’s relentless rise over the last sixty years – the greatest economic expansion of all time – be simply described as a multi-decade credit-fuelled flash-in-the-pan, a wealth-creating machine that will ultimately be brought to its heels by crony capitalism and silly bank lending? That, after all, is the argument. The claim that Asia and, indeed, other emerging economies offer no real threat to Western economic superiority strikes me, however, as absurd, for the reasons outlined in this book. Those who take comfort in the idea of the West’s destiny point to Japan’s stagnation since the 1990s, arguing that while Japan successfully caught up with the US and Western Europe economically, it never surpassed them, despite projections to the contrary.

(i) Canada (i), (ii), (iii) Canning, David (i) capital Asian economic growth (i) empires (i), (ii) inequalities (i), (ii), (iii), (iv) price stability (i) protectionism (i) resource scarcity (i) Spain and silver (i) state capitalism (i) trade (i), (ii), (iii) capital controls (i), (ii), (iii) capital flows see cross-border capital flows capital goods (i), (ii), (iii) capitalism (i), (ii), (iii), (iv) capital markets anarchy in capital markets (i) emerging nation war-chest (i) at the end of the rainbow (i) foreign-exchange reserves (i) gold rush revisited (i) the hole in the story (i) hunt for yield (i) Japan’s currency appreciation (i) liquidity and greed (i) mispricing of Western capital markets (i) no promised land (i) role of capital markets (i) economic integration, political proliferation (i), (ii), (iii) globalization (i) indulging the US no more (i), (ii), (iii), (iv) political economy and inequalities (i), (ii), (iii) resource scarcity (i), (ii) state capitalism (i) trade (i), (ii) the West’s diminished status (i), (ii), (iii) capital mobility (i), (ii), (iii), (iv), (v), (vi) car industry (i), (ii), (iii), (iv), (v), (vi), (vii) carry trades (i), (ii) Catholic Church (i) Ceauşescu, Nicolae (i) Celler, Emanuel (i) central banks capital controls (i) capital flows and nation states (i) price stability (i), (ii), (iii), (iv), (v), (vi), (vii) printing money (i) Central Europe (i), (ii), (iii), (iv), (v) Chang, Ha-Joon (i) Chelsea FC (i) Cheney, Dick (i) Chevron (i) China anarchy in capital markets (i), (ii), (iii), (iv), (v), (vi), (vii) currency (i) globalization (i), (ii) indulging the US no more (i), (ii), (iii) political economy and inequalities (i), (ii), (iii), (iv), (v), (vi), (vii) population demographics (i), (ii), (iii), (iv), (v) price stability (i), (ii), (iii), (iv) savings (i) scarcity (i), (ii), (iii), (iv), (v) secrets of Western success (i), (ii), (iii), (iv) state capitalism (i), (ii), (iii), (iv) trade (i), (ii), (iii) the West’s diminished status (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) China National Offshore Oil Corporation (CNOOC) (i), (ii) Chinese Exclusion Act (1882) (i) choice (i), (ii), (iii), (iv), (v) Christianity (i), (ii), (iii) Chrysler (i) Clark, Gregory (i) classical economists (i) climate change (i), (ii), (iii), (iv), (v), (vi), (vii) coal (i) COFER (currency composition of official foreign exchange reserves) (i), (ii) Collier, Paul (i) colonialism (i), (ii), (iii) Columbus, Christopher (i), (ii) Comet jet airliner (i), (ii) Commission of the European Union (i) Committee on Foreign Investment in the United States (CFIUS) (i) commodity prices globalization (i) income inequality (i) a post-dollar financial order (i) price stability and economic instability (i), (ii), (iii), (iv), (v), (vi) savings (i) Spain and silver (i) state capitalism (i), (ii) Common Agricultural Policy (i) communications (i), (ii), (iii) communism capital markets (i) economic integration, political proliferation (i) fall of (i) political economy and inequalities (i) population demographics (i), (ii) scarcity (i), (ii) state capitalism (i) trade (i), (ii), (iii) the West’s diminished status (i), (ii), (iii) The Communist Manifesto (Marx and Engels) (i) Communist Party (i), (ii) comparative advantage political economy and inequalities (i), (ii), (iii) trade (i), (ii), (iii) the West’s diminished status (i), (ii) computers (i), (ii), (iii), (iv), (v) Congress of Vienna (i) Conservative Party (i) consumer prices (i), (ii), (iii), (iv) contraception (i), (ii), (iii), (iv), (v) ‘core’ inflation (i), (ii) corruption (i), (ii) Cortés, Hernando (i), (ii) Costa Rica (i) cotton industry (i), (ii) Cour de Cassation (i) credit (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) credit crunch anarchy in capital markets (i), (ii), (iii), (iv) indulging the US no more (i), (ii) politics and economics (i), (ii), (iii) price stability and economic instability (i), (ii), (iii), (iv) state capitalism (i), (ii) the West’s diminished status (i), (ii), (iii) crime (i), (ii), (iii) Crimean War (i) ‘crony capitalism’ (i) cross-border capital flows anarchy in capital markets (i), (ii) capital flows and nation states (i), (ii), (iii) comparative advantage (i) economic integration, political proliferation (i) economic models (i), (ii) globalization (i), (ii) Japan (i) price stability and economic instability (i), (ii) the West’s diminished status (i), (ii), (iii) Cuba (i), (ii) Cultural Revolution (i), (ii), (iii) currency capital markets (i), (ii), (iii), (iv), (v) economic integration, political proliferation (i) indulging the US no more (i), (ii), (iii), (iv), (v) monetary union (i), (ii), (iii) price stability and economic instability (i), (ii), (iii), (iv), (v), (vi), (vii) protectionism (i) single capital market and many nations (i), (ii) state capitalism (i) current account (balance of payments) (i), (ii), (iii), (iv), (v), (vi) current-account deficit (i), (ii), (iii), (iv), (v), (vi) current-account surplus capital markets (i), (ii), (iii), (iv), (v), (vi) indulging the US no more (i), (ii) resource scarcity (i) state capitalism (i), (ii), (iii), (iv), (v) Cyprus (i) Czechoslovakia (i) Czech Republic (i), (ii), (iii), (iv) debt capital markets (i), (ii), (iii) globalization (i) indulging the US no more (i), (ii), (iii), (iv) political economy and inequalities (i) population ageing (i) price stability and economic instability (i) state capitalism (i), (ii) deflation (i), (ii), (iii) demand-management policies (i), (ii), (iii) democracy (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) demographic deficit (i), (ii), (iii) demographic dividend (i), (ii), (iii) demographic profile (i), (ii), (iii) Deng Xiaoping (i), (ii), (iii) dependency ratios (i), (ii), (iii), (iv) Depression see Great Depression Desai, Meghnad (i) Deutsche Mark (i), (ii), (iii) developed world capital markets (i), (ii), (iii) globalization (i) political economy and inequalities (i), (ii), (iii), (iv) population demographics (i), (ii), (iii), (iv), (v), (vi), (vii) price stability and economic instability (i), (ii) state capitalism (i), (ii), (iii), (iv) trade (i), (ii), (iii), (iv), (v) diet (i), (ii), (iii), (iv), (v), (vi) see also food diversification (i), (ii) division of labour (i) dollar see US dollar Dominican Republic (i) dot.com bubble (i), (ii) drugs (i), (ii), (iii) Dubai Ports World (DP World) (i), (ii) Dutch East India Company (i), (ii) East Asia (i), (ii) Eastern Europe capital markets (i), (ii) migration (i), (ii), (iii) scarcity (i) state capitalism (i) the West’s diminished status (i), (ii), (iii) East Germany (i), (ii), (iii), (iv), (v) East India Company (i), (ii), (iii), (iv), (v), (vi), (vii) Economic Consequences of the Peace (Keynes) (i), (ii), (iii) economic crisis see also Asian economic crisis anarchy in capital markets (i), (ii) economic instability (i) price stability and economic instability (i), (ii) state capitalism (i) trade (i), (ii) economic growth capital markets (i), (ii), (iii) demographic dividends and deficits (i) globalization (i), (ii), (iii) political economy and inequalities (i), (ii), (iii) a post-dollar financial order (i) price stability and economic instability (i), (ii), (iii), (iv) scarcity (i), (ii), (iii), (iv), (v), (vi) trade (i), (ii) US domestic reform (i) economic instability (i), (ii), (iii), (iv), (v), (vi), (vii) economic models (i), (ii), (iii) economic rent (i), (ii), (iii), (iv), (v), (vi) economics (i), (ii), (iii), (iv), (v) economies of scale (i), (ii), (iii) The Economist (i) Ecuador (i) EdF (Électricité de France) (i), (ii) education capital markets (i) migration (i), (ii), (iii) political economy and inequalities (i), (ii), (iii), (iv) resource scarcity (i) state capitalism (i) Eichengreen, Barry (i), (ii) elderly population (i), (ii), (iii), (iv), (v) electricity (i) Elizabeth II, Queen (i) Ellis Island (i), (ii) emerging economies anarchy in capital markets (i), (ii), (iii), (iv), (v) globalization (i), (ii), (iii), (iv), (v) indulging the US no more (i), (ii), (iii), (iv), (v), (vi) political economy and inequalities (i), (ii), (iii), (iv), (v) population demographics (i), (ii), (iii), (iv), (v), (vi) price stability and economic instability (i), (ii), (iii), (iv), (v) scarcity (i), (ii), (iii), (iv) secrets of Western success (i), (ii), (iii), (iv), (v), (vi), (vii) state capitalism (i), (ii), (iii), (iv), (v), (vi), (vii) trade (i), (ii), (iii), (iv), (v) Western progress (i), (ii), (iii) the West’s diminished status (i), (ii), (iii), (iv), (v) ‘enabling’ resources (i), (ii), (iii), (iv) The End of History (Fukuyama) (i) energy supplies political economy and inequalities (i), (ii), (iii), (iv) politics and economics (i) price stability and economic instability (i), (ii), (iii), (iv), (v), (vi) resource scarcity (i), (ii) Russian power politics (i) Spain and silver (i) state capitalism (i), (ii), (iii) the West’s diminished status (i), (ii), (iii) Engels, Friedrich (i) England (i), (ii), (iii) English language (i) English Premier League (i), (ii), (iii) Enlightenment (i), (ii), (iii), (iv), (v), (vi) Enron (i) Entente Cordiale (i) equities anarchy in capital markets (i), (ii), (iii), (iv), (v) population ageing (i), (ii), (iii) a post-dollar financial order (i) price stability and economic instability (i), (ii), (iii), (iv), (v) savings (i) An Essay on the Principle of Population (Malthus) (i), (ii), (iii) EU see European Union euro (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) Europe political economy and inequalities (i), (ii) population demographics (i), (ii), (iii), (iv), (v) price stability and economic instability (i), (ii), (iii) secrets of Western success (i), (ii), (iii), (iv), (v) Spain and silver (i) state capitalism (i), (ii) trade (i), (ii) the West’s diminished status (i), (ii), (iii), (iv), (v), (vi) European Central Bank (i), (ii), (iii), (iv) European Union (EU) economic integration, political proliferation (i), (ii) migration (i), (ii), (iii) state capitalism (i) trade (i) the West’s diminished status (i), (ii), (iii), (iv), (v), (vi) exchange rates anarchy in capital markets (i), (ii), (iii), (iv), (v), (vi) income inequality (i) price stability and economic instability (i), (ii), (iii), (iv), (v), (vi), (vii) sovereign wealth funds (i) the West’s diminished status (i) exports China (i), (ii) political economy and inequalities (i) price stability and economic instability (i), (ii), (iii) state capitalism (i), (ii) trade (i), (ii), (iii), (iv) Eyser, George (i) Fannie Mae (i) Federal Open Markets Committee (FOMC) (i), (ii) Federal Reserve anarchy in capital markets (i), (ii), (iii) economic integration, political proliferation (i) price stability and economic instability (i), (ii), (iii), (iv), (v), (vi) the West’s diminished status (i), (ii), (iii) Ferrari (i) fertility rates (i), (ii), (iii), (iv), (v), (vi) Fidelity International (i) financial services industry (i), (ii), (iii), (iv) Finland (i) First World War (i), (ii), (iii), (iv), (v), (vi) FOMC see Federal Open Markets Committee food political economy and inequalities (i), (ii), (iii), (iv) price stability and economic instability (i), (ii), (iii), (iv), (v) rent-seeking behaviour (i) resource scarcity (i), (ii) savings (i) state capitalism (i), (ii), (iii) the West’s diminished status (i), (ii), (iii) Forbes.com (i) foreign direct investment anarchy in capital markets (i), (ii) income inequality (i) population demographics (i), (ii) trade (i), (ii), (iii), (iv), (v) foreign-exchange reserves anarchy in capital markets (i), (ii), (iii), (iv), (v), (vi), (vii) indulging the US no more (i), (ii), (iii), (iv), (v) price stability and economic instability (i) single capital market and many nations (i) state capitalism (i), (ii), (iii), (iv) fossil fuels (i) France economic integration, political proliferation (i), (ii) indulging the US no more (i), (ii) Louisiana Purchase (i), (ii) political economy and inequalities (i), (ii) population demographics (i) state capitalism (i), (ii), (iii), (iv), (v), (vi) trade (i) the West’s diminished status (i), (ii) Frank, Barney (i) Freddie Mac (i) freedom of speech (i), (ii) free market (i), (ii), (iii), (iv), (v), (vi) free trade (i), (ii), (iii), (iv), (v) Friedman, Milton (i), (ii), (iii) Friedman, Thomas (i) Fu Chengyu (i) fuel (i), (ii), (iii), (iv) Fukuyama, Francis (i) fund managers (i), (ii), (iii), (iv) G7 (i), (ii), (iii), (iv), (v) G8 (i), (ii), (iii) G20 (i), (ii), (iii), (iv), (v), (vi), (vii) Gagon, Joseph E.

The Power Surge: Energy, Opportunity, and the Battle for America's Future by Michael Levi

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American energy revolution, Berlin Wall, British Empire, Carmen Reinhart, crony capitalism, deglobalization, energy security, Exxon Valdez, full employment, global supply chain, hiring and firing, hydraulic fracturing, Kenneth Rogoff, manufacturing employment, oil shale / tar sands, oil shock, peak oil, RAND corporation, Ronald Reagan, Silicon Valley, South China Sea

Solyndra, they said, existed only because government bureaucrats had handed it hundreds of millions of taxpayer dollars. At best, its executives squandered that money, in the process destroying more than a thousand jobs. At worst, some pundits and political operatives darkly suggested, the pile of cash was an invitation to crony capitalism, with money simply steered to the president’s political friends.20 Here, in one small company, was everything that many people found wrong with alternative energy. The technology was nowhere close to being ready to compete with fossil fuels. This meant it required so much government intervention that corruption and incompetence were inevitable results.

But it is far from clear that governments are much good at identifying them. Government analysts evaluating projects for potential support don’t face the same financial incentives to get things right that private sector financiers do. Worse, this all can quickly be compounded by politics. That doesn’t require anything nefarious, like the debunked claims of crony capitalism surrounding Solyndra; it simply requires governments and their agencies to seek their own survival, as they are wont to do. Regular failures of government-backed companies make for awful politics, so in the long run big-ticket risk-taking government programs are rare. Instead, those programs often end up supporting less-than-innovative activities; alternatively, they sometimes just die.

Section=Home&TEMPLATE=/CM/ContentDisplay. cfm&CONTENTID=65139. 19. Chris Gentilviso, “President Obama Visits Green Energy Start-Up Solyndra,” Time.com, May 26, 2010, http://newsfeed.time.com/2010/05/26/ president-obama-visits-green-energy-start-up-solyndra/. 20. Seema Mehta, “Romney Accuses Obama of ‘Crony Capitalism’ in Solyndra Trip,” Los Angeles Times, May 31, 2012. 21. Clean Energy Ministerial, “Energy Ministers Announce Achievements and Actions for a Clean Energy Future at CEM3,” 2012, http://www. cleanenergyministerial.org/MediaPublications/Newsletters/Summer2012/TopStory1.aspx. 22. Krister Aanesen, Stefan Heck, and Dickon Pinner, Solar Power: Darkest before Dawn (New York: McKinsey and Company, May 2012). 23.


pages: 240 words: 60,660

Models. Behaving. Badly.: Why Confusing Illusion With Reality Can Lead to Disaster, on Wall Street and in Life by Emanuel Derman

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Albert Einstein, Asian financial crisis, Augustin-Louis Cauchy, Black-Scholes formula, British Empire, Brownian motion, capital asset pricing model, Cepheid variable, crony capitalism, diversified portfolio, Douglas Hofstadter, Emanuel Derman, Eugene Fama: efficient market hypothesis, Henri Poincaré, Isaac Newton, law of one price, Mikhail Gorbachev, quantitative trading / quantitative finance, random walk, Richard Feynman, Richard Feynman, riskless arbitrage, savings glut, Schrödinger's Cat, Sharpe ratio, stochastic volatility, the scientific method, washing machines reduced drudgery, yield curve

The great financial crisis has been marked by the failure of models both qualitative and quantitative. During the past two decades the United States has suffered the decline of manufacturing; the ballooning of the financial sector; that sector’s capture of the regulatory system; ceaseless stimulus whenever the economy has wavered; taxpayer-funded bailouts of large capitalist corporations; crony capitalism; private profits and public losses; the redemption of the rich and powerful by the poor and weak; companies that shorted stock for a living being legally protected from the shorting of their own stock; compromised yet unpunished ratings agencies; government policies that tried to cure insolvency by branding it as illiquidity; and, on the quantitative side, the widespread use of obviously poor quantitative security valuation models for the purpose of marketing.

Everyone should understand the difference between a model and reality and be unastonished at the inability of oneor two-inch equations to represent the convolutions of people and markets. What did shock and disturb me was the abandonment of the principle that everyone had paid lip service to: the link between democracy and capitalism. We were told not to expect reward without risk, gain without the possibility of loss. Now we have been forced to accept crony capitalism, private profits and socialized losses, and corporate welfare. We have seen corporations treated with the kindness owed to individuals and individuals treated pragmamorphically, as things. When models in physics fail, they fail precisely, and often expose a paradox that opens a door. When models in the social sciences fail, they fail bluntly, with no hint as to what went wrong and no clue as to what to do next.


pages: 261 words: 64,977

Pity the Billionaire: The Unexpected Resurgence of the American Right by Thomas Frank

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Affordable Care Act / Obamacare, bank run, big-box store, bonus culture, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Deng Xiaoping, financial innovation, housing crisis, invisible hand, Naomi Klein, obamacare, payday loans, profit maximization, profit motive, road to serfdom, Ronald Reagan, shareholder value, strikebreaker, The Chicago School, The Myth of the Rational Market, Thorstein Veblen, too big to fail, union organizing, Washington Consensus, white flight, Works Progress Administration

When the system is corrupted, as it obviously was in the case of the bailouts—and the subprime lending spree, and the West Virginia mine disaster, and the BP oil spill—the obvious answer is to clean up government so it can perform its police function properly. But that’s not how the revivified Right understands things. Instead, they blast the entire structure of the modern economy as “crony capitalism” or “socialism” and find, conveniently, that we can only cure its ills by doing away with the big-government side of the equation—with the regulating and taxing and pension-giving side. And thus are our choices spread before us. On the one hand, the small-business utopia; on the other, “socialism.”

The Tea Partiers aren’t the pawns of big business; because they believe in markets, they’re the sworn enemies of big business. Got that? And the way they’re going to take their revenge on the crony-capitalist behemoth is by attacking government. Recall, again, Paul Ryan’s famous Forbes essay, “Down with Big Business.” In it this conservative’s conservative painted a noxious picture of “crony capitalism,” telling us how lobbyists for the biggest firms cut deals with government and secured favors like the hated TARP, which Ryan called “an ad hoc, opaque slush fund for large institutions that are able to influence the Treasury Department’s investment decisions behind-the-scenes.” Which was accurate enough.


pages: 538 words: 121,670

Republic, Lost: How Money Corrupts Congress--And a Plan to Stop It by Lawrence Lessig

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asset-backed security, banking crisis, carried interest, cognitive dissonance, corporate personhood, correlation does not imply causation, crony capitalism, David Brooks, Edward Glaeser, Filter Bubble, financial deregulation, financial innovation, financial intermediation, invisible hand, jimmy wales, Martin Wolf, meta analysis, meta-analysis, Mikhail Gorbachev, moral hazard, place-making, profit maximization, Ralph Nader, regulatory arbitrage, rent-seeking, Ronald Reagan, Silicon Valley, single-payer health, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, WikiLeaks, Zipcar

What wins in the market is too often not what “a free market” would choose, but what a market bent by tariffs and subsidies and endless incumbency protective regulation defaults to. Call that “crony capitalism.” Our tax system is an abysmal inefficient mess not because of idiots at the IRS or on the Joint Committee on Taxation, but because crony capitalists pay top dollar to distort the system to their benefit. We don’t have real financial reform, because millions have been spent to protect bloated banks. We don’t have real health care reform, because the insurance companies and pharmaceutical companies had the power to veto any real change to the insanely inefficient status quo. Adam Smith never defended crony capitalism. Neither did Friedrich Hayek, or Milton Friedman, or William F.

“No conspiracy was necessary,” as Simon Johnson and James Kwak put it in their 2010 book, 13 Bankers: “By 1998, it was part of the worldview of the Washington elite that what was good for Wall Street was good for America.”52 As Raghuram Rajan writes, “Cognitive capture is a better description of this phenomenon than crony capitalism.”53 Still, pure ideas are not the whole story. Not by a long shot. The campaign to deregulate the financial services sector was a campaign, even if it was also an ideology. When it began, none could have thought it would succeed. But soon after it began, as I describe in chapter 9, both Democrats and Republicans alike became starved for campaign funds.


pages: 364 words: 99,613

Servant Economy: Where America's Elite Is Sending the Middle Class by Jeff Faux

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back-to-the-land, Bernie Sanders, Black Swan, Bretton Woods, BRICs, British Empire, call centre, centre right, cognitive dissonance, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, David Brooks, David Ricardo: comparative advantage, falling living standards, financial deregulation, financial innovation, full employment, hiring and firing, Howard Zinn, Hyman Minsky, illegal immigration, indoor plumbing, informal economy, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, lake wobegon effect, Long Term Capital Management, market fundamentalism, Martin Wolf, McMansion, medical malpractice, mortgage debt, Naomi Klein, new economy, oil shock, Plutocrats, plutocrats, price mechanism, price stability, private military company, Ralph Nader, reserve currency, rising living standards, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, school vouchers, Silicon Valley, single-payer health, South China Sea, statistical model, Steve Jobs, Thomas L Friedman, Thorstein Veblen, too big to fail, trade route, Triangle Shirtwaist Factory, union organizing, upwardly mobile, urban renewal, War on Poverty, We are the 99%, working poor, Yogi Berra, Yom Kippur War

When there is an economic downturn and the money stops rolling in, not only will the banking system spasm, but the entire fabric of Chinese society will shudder.”22 Friedman’s confidence in China’s meltdown is shared by a significant portion of U.S. policy intellectuals. It rests on an assumption that China’s ethnic conflicts make it an inherently unstable country, unnaturally held together by Mao’s revolutionary dictatorship and then by the wealth generated by crony capitalism. But British journalist Martin Jacques has pointed out that the Han Chinese represent 92 percent of the population and consider themselves not only one people but one race. “The explanation for this,” writes Jacques, “lies in the unique longevity of Chinese civilization, which has engendered a strong sense of unity and common identity while also, over a period of thousands of years, enabled a mixing and melding of a multitude of diverse races.”23 Jacques reminds us that the overwhelming majority of Chinese have lived in the same regions for about two thousand years, “acquiring a unity which has, despite long periods of Balkanization, lasted until the present.”24 From the mid-nineteenth century until the 1949 revolution, the country was exploited by outsiders, and this created a profound sense of nationalism.

If you are an American, your future depends on us doing just that. Notes 1. Martin Fackler, “Japan Goes from Dynamic to Disheartened,” New York Times, October 17, 2010. 2. Naomi Klein, “Capitalism vs. the Climate,” Nation, November 28, 2011. 3. “Bank Bailouts Supporter Palin Criticizes TARP as ‘Crony Capitalism,’ ‘Slush Fund . . . Just As We Had Been Warned About,’ ” Media Matters, February 6, 2010, http://mediamatters.org/mmtv/201002060024. 4. John Nichols, “Rick Perry’s Attack on Democracy,” Nation, October 10, 2011, http://www.thenation.com/article/163548/rick-perrys-attack-democracy. 5. Mark Danner, “State of Exception,” New York Review of Books, October 13, 2011. 6.


pages: 318 words: 85,824

A Brief History of Neoliberalism by David Harvey

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affirmative action, Asian financial crisis, Berlin Wall, Bretton Woods, business climate, capital controls, centre right, collective bargaining, crony capitalism, debt deflation, declining real wages, deglobalization, deindustrialization, Deng Xiaoping, Fall of the Berlin Wall, financial deregulation, financial intermediation, financial repression, full employment, George Gilder, Gini coefficient, global reserve currency, illegal immigration, income inequality, informal economy, labour market flexibility, land tenure, late capitalism, Long Term Capital Management, low-wage service sector, manufacturing employment, market fundamentalism, means of production, Mexican peso crisis / tequila crisis, Mont Pelerin Society, mortgage tax deduction, neoliberal agenda, new economy, phenotype, Ponzi scheme, price mechanism, race to the bottom, rent-seeking, reserve currency, Ronald Reagan, Silicon Valley, special economic zone, structural adjustment programs, the built environment, The Chicago School, transaction costs, union organizing, urban renewal, urban sprawl, Washington Consensus, Winter of Discontent

While the wealthiest Chinese business elite decamped to Singapore, a wave of revenge killings and attacks on property engulfed the rest of the Chinese minority, as ethnonationalism reared its ugly head in search of a scapegoat for the social collapse.9 The standard IMF/US Treasury explanation for the crisis was too much state intervention and corrupt relationships between state and business (‘crony capitalism’). Further neoliberalization was the answer. The Treasury and the IMF acted accordingly, with disastrous consequences. The alternative view of the crisis was that impetuous financial deregulation and the failure to construct adequate regulatory controls over unruly and speculative portfolio investments lay at the heart of the problem.

D. 183, 184, 206 Rosenblum, N. 212 Rosenthal, E. 218 Ross, A. 219 Rua, F. de la 105 rural areas 159 urban areas different 125, 126–7, 142–7 Russia 96, 105, 122, 139, 156, 182 freedom concept 17, 19, 32 freedom’s prospect 201, 202 neoliberal state 66, 76, 86 see also Soviet Union Sable, C. 212 Sachs, J. 186, 221 Saez, E. 208 Salerno, J. 214 Salim Group 34, 35–6 Salinas, C. 100–1 Saudi Arabia 27, 104, 139 Scandinavia 12–13 see also Sweden Schwab, K. 81 Seabrook, J. 219 Sen, A. 184 Shah of Persia 28 Shanghai 88, 127, 128, 131–3 passim, 136, 147–8 freedom’s prospect 157, 160 Sharapura, S. 214 Sharma, S. 216 Shenzhen 131, 133, 134, 136, 147 Shi, L. 217 ‘shock therapy’ 71 short-term contracts 166, 168 Silver, B. 222 Simon, W. 46, 49 Singapore 2, 169 and China 120, 138 neoliberal state 71, 81, 85–6 uneven development 89, 91, 96, 97, 116 slave trade 159 Slim, C. 17, 34, 35–6, 104 Smadja, C. 81 Smith, A. 20, 185 Smith, B. 221, 222 Smith, N. 27 social justice 41–2 socialism/communism 2, 12–13, 15, 86 consent 41–3 fight against 28 see also Cold War see also central planning; China; Marx; Soviet Union Soederberg, S. 214, 219 SOEs (state-owned enterprises, China) 125–6, 128, 129, 130, 132, 138, 144, 145 solidarity, social 80–1 Sommer, J. 219 Soros, G. 31, 34, 97–8, 186, 221 South Africa 3, 169 freedom’s prospect 185, 199, 203, 206 uneven development 91, 108, 116, 118 South America 120, 139, 140 consent, construction of 39, 40, 46, 54, 63 freedom concept 7–9, 11, 15–16, 28 freedom’s prospect 185, 186, 201, 206 neoliberal state 65, 74, 75, 79 neoliberalism on trial 153, 154, 160, 163, 165, 167, 174–5, 181 uneven development 91, 94–6, 104–6, 109, 115–18 US comparison with 189, 193, 194 see also Argentina; Brazil; Chile South East Asia 2 ASEAN 79 and China 120, 122, 130, 138–41 passim consent, construction of 40, 41, 53 freedom concept 5, 19, 31–2 neoliberal state 71, 76, 81, 85–6 neoliberalism on trial 153, 154, 156, 163, 167–9, 175, 178 uneven development 89, 91, 94, 96–7, 108–9, 116, 117, 118 see also crisis under Asia; Indonesia; Malaysia; Singapore; Thailand South Korea 2, 35, 169 and China 120, 123, 134, 136, 138–40 freedom’s prospect 199, 206 neoliberal state 72, 85 uneven development 89–91 passim, 94, 96, 97, 106–12, 115, 116, 118 ‘sovereignty’ 7 Soviet Union 117, 154 collapse of 3, 32, 87 freedom concept 5, 10, 22, 32 see also Russia Spain 12, 15 special economic zones (China) 130 sport 85, 132, 164 stagflation see under inflation Stanislaw, J. 51, 208, 211 state authoritarianism and market economy combined see China ‘crony capitalism’ 97 monopoly 98 -owned enterprises see SOEs uneven development 112, 115 see also neoliberal state; welfare Stevenson, C. 215 Stiglitz, J. 29, 51, 74, 152 freedom’s prospect 186, 221 uneven development 93, 98, 111, 118, 211, 213, 214 Strauss, L. 92 Stren, R. 212 strikes see unions structural adjustment 163, 188–9 student movements 99, 100 consent, construction of 41, 42, 44 Tiananmen Square 5, 123, 142, 176 Sudan 139, 173 Suez venture (UK) 55–6 Suharto, T.


pages: 345 words: 92,849

Equal Is Unfair: America's Misguided Fight Against Income Inequality by Don Watkins, Yaron Brook

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3D printing, Affordable Care Act / Obamacare, Apple II, barriers to entry, Berlin Wall, Bernie Madoff, blue-collar work, business process, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, colonial exploitation, corporate governance, correlation does not imply causation, Credit Default Swap, crony capitalism, David Brooks, deskilling, Edward Glaeser, Elon Musk, en.wikipedia.org, financial deregulation, immigration reform, income inequality, indoor plumbing, inventory management, invisible hand, Isaac Newton, Jeff Bezos, Jony Ive, laissez-faire capitalism, Louis Pasteur, low skilled workers, means of production, minimum wage unemployment, Naomi Klein, new economy, obamacare, Peter Singer: altruism, Peter Thiel, profit motive, rent control, Ronald Reagan, Silicon Valley, Skype, statistical model, Steve Jobs, Steve Wozniak, The Spirit Level, too big to fail, trickle-down economics, Uber for X, urban renewal, War on Poverty, women in the workforce, working poor

Carney, The Big Ripoff (New York: Wiley, 2006), pp. 59–61. 11. Chris Edwards, “Agricultural Subsidies,” DownsizingGovernment.org, June 2009, http://www.downsizinggovernment.org/agriculture/subsidies (accessed May 28, 2015). 12. Timothy P. Carney, Obamanomics (Washington, DC: Regnery, 2009), p. 122. 13. Hunter Lewis, Crony Capitalism in America: 2008–2012 (Edinburg, VA: AC2 Books, 2013), p. 104. 14. Timothy P. Carney, “Carney: How Hatch Forced Microsoft to Play K Street’s Game,” Washington Examiner, June 24, 2012, http://www.washingtonexaminer.com/carney-how-hatch-forced-microsoft-to-play-k-streets-game/article/2500453 (accessed May 28, 2015), Michael Kinsley, “Michael Kinsley: The Washington Lobbying Dance,” Los Angeles Times, April 5, 2011, http://articles.latimes.com/print/2011/apr/05/opinion/la-oe-kinsley-column-microsoft-20110405 (May 28, 2015). 15.

Russell Roberts, “Gambling with Other People’s Money: How Perverted Incentives Caused the Financial Crisis,” Mercatus Center, April 28, 2010, http://mercatus.org/publication/gambling-other-peoples-money (accessed May 28, 2015). 27. Jim Manzi, “Do CEOs Matter? Absolutely,” Atlantic, June 5, 2009, http://www.theatlantic.com/business/archive/2009/06/do-ceos-matter-absolutely/18819/ (accessed May 28, 2015). 28. Steven N. Kaplan, “The Real Story behind Executive Pay: The Myth of Crony Capitalism,” Foreign Affairs, April 3, 2013, https://www.foreignaffairs.com/articles/2013-04-03/real-story-behind-executive-pay (accessed May 28, 2015). 29. Piketty, Capital in the Twenty-First Century, pp. 302–303. 30. Albert R. Hunt, “Corporate Chiefs May Come to Rue Fat Paydays: Albert R.


pages: 554 words: 167,247

Money, Politics, Back-Room Deals, and the Fight to Fix Our Broken Healthcare System by Steven Brill

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Affordable Care Act / Obamacare, barriers to entry, Bernie Sanders, business process, call centre, collapse of Lehman Brothers, collective bargaining, crony capitalism, desegregation, Donald Trump, Edward Snowden, employer provided health coverage, medical malpractice, Menlo Park, Nate Silver, obamacare, Potemkin village, Ronald Reagan, Saturday Night Live, side project, Silicon Valley, the payments system, young professional

Most political observers would later consider this the beginning of the Tea Party movement, the loosely organized assortment of grassroots groups of mostly conservative people that staged rallies across the country beginning in the spring of 2009 to protest all varieties of government interference and Washington crony capitalism. By the summer of 2009, Washington’s idea of healthcare reform would become the Tea Party’s prime target. For as Santelli screamed into his microphone, a group of capital insiders representing multiple factions of America’s biggest industry—healthcare—was negotiating exactly the kinds of secret deals that would have made Santelli scream louder had he known about them.

Then he had routinely vowed, as he put it during a town hall in Virginia, that in framing his healthcare reform bill, “We’ll have the negotiations televised on C-SPAN, so that people can see who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies.” Instead, he had given the Tea Party activists exhibit A in crony capitalism—if they ever found out about it. THE NONPROFITS’ PROFITS The hospitals were next up at the Finance Committee negotiating table. More than 75 percent of America’s 5,700 hospitals were officially nonprofit institutions. So, they have no shareholders and, therefore, no stock analysts following them and issuing reports that Tony Clapsis could read.

But that shouldn’t have been a problem in Democratic Philadelphia, especially for Specter, who had begun his political career there. What had inflamed the crowd was healthcare reform, which was now starting to be called Obamacare. The crowd had been organized by one of the Tea Party groups that had sprung up following Rick Santelli’s CNBC rant in February. They were fed up, they proclaimed, with bailouts, crony capitalism, secret deals, and the government relentlessly trying to interfere with their lives. To them, Obamacare epitomized all that. The next day, in Adel, Iowa, Chuck Grassley got booed off the stage by hecklers holding “You’re fired” signs. Their principal complaint, too, was the purported government takeover of their healthcare.


pages: 554 words: 167,247

America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System by Steven Brill

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Affordable Care Act / Obamacare, barriers to entry, Bernie Sanders, business process, call centre, collapse of Lehman Brothers, collective bargaining, crony capitalism, desegregation, Donald Trump, Edward Snowden, employer provided health coverage, medical malpractice, Menlo Park, Nate Silver, obamacare, Potemkin village, Ronald Reagan, Saturday Night Live, side project, Silicon Valley, the payments system, young professional

Most political observers would later consider this the beginning of the Tea Party movement, the loosely organized assortment of grassroots groups of mostly conservative people that staged rallies across the country beginning in the spring of 2009 to protest all varieties of government interference and Washington crony capitalism. By the summer of 2009, Washington’s idea of healthcare reform would become the Tea Party’s prime target. For as Santelli screamed into his microphone, a group of capital insiders representing multiple factions of America’s biggest industry—healthcare—was negotiating exactly the kinds of secret deals that would have made Santelli scream louder had he known about them.

Then he had routinely vowed, as he put it during a town hall in Virginia, that in framing his healthcare reform bill, “We’ll have the negotiations televised on C-SPAN, so that people can see who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies.” Instead, he had given the Tea Party activists exhibit A in crony capitalism—if they ever found out about it. THE NONPROFITS’ PROFITS The hospitals were next up at the Finance Committee negotiating table. More than 75 percent of America’s 5,700 hospitals were officially nonprofit institutions. So, they have no shareholders and, therefore, no stock analysts following them and issuing reports that Tony Clapsis could read.

But that shouldn’t have been a problem in Democratic Philadelphia, especially for Specter, who had begun his political career there. What had inflamed the crowd was healthcare reform, which was now starting to be called Obamacare. The crowd had been organized by one of the Tea Party groups that had sprung up following Rick Santelli’s CNBC rant in February. They were fed up, they proclaimed, with bailouts, crony capitalism, secret deals, and the government relentlessly trying to interfere with their lives. To them, Obamacare epitomized all that. The next day, in Adel, Iowa, Chuck Grassley got booed off the stage by hecklers holding “You’re fired” signs. Their principal complaint, too, was the purported government takeover of their healthcare.

The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan

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air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business process, call centre, capital controls, central bank independence, collateralized debt obligation, collective bargaining, conceptual framework, Corn Laws, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Hernando de Soto, income inequality, income per capita, invisible hand, Joseph Schumpeter, labor-force participation, labour market flexibility, laissez-faire capitalism, land reform, Long Term Capital Management, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, new economy, North Sea oil, oil shock, open economy, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, reserve currency, risk tolerance, Ronald Reagan, shareholder value, short selling, Silicon Valley, special economic zone, the payments system, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, working-age population, Y2K

When a government's leaders routinely seek out private-sector individuals or businesses and, in exchange for political support, bestow favors on them, the 274 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright. THE M O D E S OF C A P I T A L I S M society is said to be in the grip of "crony capitalism." Particularly appalling was Indonesia under Suharto in the last third of the twentieth century, Russia immediately following the collapse of the Soviet Union, and Mexico during its many years under the PRI (the Institutional Revolutionary Party). The favors generally take the form of monopoly access to certain markets, preferred access to sales of government assets, or special access to those in political power.

The favors generally take the form of monopoly access to certain markets, preferred access to sales of government assets, or special access to those in political power. Such actions distort the effective use of capital, and, accordingly, lower standards of living. Then there is the broader issue of corruption of which crony capitalism is but a part. In general, corruption tends to exist whenever governments have favors to extend, or something to sell. If there were unobstructed, free flow of goods and people across national boundaries, customs and immigration officials, for example, would have nothing to sell. Indeed, their jobs would not exist.

Taiwan had significant governmentowned companies and, like the other Tigers, heavy trade protection of domestic industry. Most had charismatic but autocratic leaders. Singapore's Lee Kuan Yew sparked the emergence of a small but world-class city; other autocrats, like General Suharto, who ruled over Indonesia's system of crony capitalism, were arguably less successful. Malaysia's prime minister Mahathir Mohamad, still harboring resentments of his country's colonial past, was a very forceful nationalist leader. I have met, but cannot say I have gotten to know, many of these leaders. Over the years, I have had the most contact with Lee Kuan Yew, most recently in 2006, and have always found him impressive, even though we do not always see eye to eye.


pages: 499 words: 152,156

Age of Ambition: Chasing Fortune, Truth, and Faith in the New China by Evan Osnos

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conceptual framework, crony capitalism, currency manipulation / currency intervention, David Brooks, Deng Xiaoping, East Village, financial independence, Gini coefficient, income inequality, indoor plumbing, land reform, Lao Tzu, low skilled workers, market fundamentalism, Mohammed Bouazizi, Plutocrats, plutocrats, rolodex, Silicon Valley, South China Sea, sovereign wealth fund, special economic zone, Steve Jobs, transcontinental railway, Washington Consensus, Xiaogang Anhui farmers, young professional

“It’s entirely obvious that the biggest problem China faces right now is corruption,” he told me. “Corruption is the reason for the gap between rich and poor. Where did this corruption come from? From the fact that government continues to control too many resources.” In a furious stream of essays and books, Wu pointed to crony capitalism and the gap between rich and poor as evidence that China’s economic model had run up against the limit of what was possible without the government’s permitting greater political openness to mediate competing demands. In recent years, he had gone so far as to argue that China needed to adopt a Western-style democracy, and nationalists had blasted him for apostasy.

The central government would not allow them to issue their own debt, so they raised cash by selling land they already owned or by offering low prices to farmers (the source of many of China’s protests). In Beijing, one of Lin Yifu’s former students, a professor named Yao Yang, published a view of China’s political and economic future that was strikingly at odds with his mentor’s. Yao pointed to the rise of crony capitalism and the gap between rich and poor as evidence that China’s economic model had run up against the limit of what was possible without permitting greater political openness “to balance the demands of different social groups.” He cited control of the Internet and labor unions, and unsafe working conditions.


pages: 497 words: 150,205

European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right by Philippe Legrain

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3D printing, Airbnb, Asian financial crisis, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, cleantech, collaborative consumption, collapse of Lehman Brothers, collective bargaining, corporate governance, credit crunch, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, debt deflation, Diane Coyle, Downton Abbey, Edward Glaeser, Elon Musk, en.wikipedia.org, energy transition, eurozone crisis, fear of failure, financial deregulation, first-past-the-post, forward guidance, full employment, Gini coefficient, global supply chain, Growth in a Time of Debt, hiring and firing, hydraulic fracturing, Hyman Minsky, Hyperloop, immigration reform, income inequality, interest rate derivative, Irish property bubble, James Dyson, Jane Jacobs, job satisfaction, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, liquidity trap, margin call, Martin Wolf, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, North Sea oil, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, open economy, price stability, private sector deleveraging, pushing on a string, quantitative easing, Richard Florida, rising living standards, risk-adjusted returns, Robert Gordon, savings glut, school vouchers, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart grid, smart meter, software patent, sovereign wealth fund, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, working-age population, Zipcar

A cultural conservatism that is suspicious of change, hostile to diversity and deeply pessimistic about the future hampers innovation, investment and growth. The biggest underlying problem is the capture of governments by vested interests and self-serving elites who appropriate value created by others rather than creating it themselves – call it crony capitalism. Most European countries have an overmighty and dysfunctional financial sector that benefits from taxpayer bailouts and subsidised borrowing, extracts value from companies and households, and does a poor job of channelling savings to productive investments. Big landowners in rigged property markets benefit from vast subsidies from the EU’s Common Agricultural Policy in rural areas and capture the value created by others’ investment and hard work in urban ones.

Shifting tax off hard work and enterprise and on to unearned rewards from land ownership and inheritance. The ability to save for your retirement tax-free without your returns being gobbled up in fees. A future-proofed state pension system. The security that enables you to sleep easily at night – and take risks. Open capitalism, not crony capitalism. The freedom to be who you want to be, live the life you want to lead and still have a place in society. How, though, can one overcome entrenched vested interests? Sometimes war – or revolution – wipes out the old power structure. Change can also come about peacefully. Reform can be precipitated by external forces or domestic ones.


pages: 545 words: 137,789

How Markets Fail: The Logic of Economic Calamities by John Cassidy

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Albert Einstein, Andrei Shleifer, anti-communist, asset allocation, asset-backed security, availability heuristic, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black-Scholes formula, Bretton Woods, British Empire, capital asset pricing model, centralized clearinghouse, collateralized debt obligation, Columbine, conceptual framework, Corn Laws, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Daniel Kahneman / Amos Tversky, debt deflation, diversification, Elliott wave, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, global supply chain, Haight Ashbury, hiring and firing, Hyman Minsky, income per capita, incomplete markets, index fund, invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, laissez-faire capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, Mikhail Gorbachev, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Network effects, Nick Leeson, Northern Rock, paradox of thrift, Ponzi scheme, price discrimination, price stability, principal–agent problem, profit maximization, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, RAND corporation, random walk, Renaissance Technologies, rent control, Richard Thaler, risk tolerance, risk-adjusted returns, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, technology bubble, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, unorthodox policies, value at risk, Vanguard fund

The combination of a Fed that can print money, deposit insurance, and a Congress that can authorize bailouts provides an extensive safety net for big financial firms. In such an environment, pursuing a policy of easy money plus deregulation doesn’t amount to free market economics; it is a form of crony capitalism. The gains of financial innovation and speculation are privatized, with the bulk of them going to a small group of wealthy people who sit at the apex of the system. Much of the losses are socialized. Such a policy framework isn’t merely inequitable; it is also destabilizing. Once the Fed abdicates its responsibility of preventing excessive risk-taking, rational irrationality will eventually ensure that the system moves toward what Minsky referred to as Ponzi finance.

If these special interests succeed in blocking meaningful reform, we could well end up with the worst of all worlds: a financial system dominated by a handful of firms that are “too big to fail,” but that can take on as much risk as they please, secure in the knowledge that if things go wrong the taxpayer will be there to bail them out. Such an arrangement would amount to crony capitalism writ large, and it would make a mockery of the democratic ideals that both major parties claim to represent. Before the political will for reform dissipates, it is essential to put Wall Street in its place and to confront utopian economics with reality-based economics. Hopefully, this book can play a small part in that effort.


pages: 497 words: 144,283

Connectography: Mapping the Future of Global Civilization by Parag Khanna

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1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, 9 dash line, additive manufacturing, Admiral Zheng, affirmative action, agricultural Revolution, Airbnb, Albert Einstein, amateurs talk tactics, professionals talk logistics, Amazon Mechanical Turk, Asian financial crisis, asset allocation, autonomous vehicles, banking crisis, Basel III, Berlin Wall, bitcoin, Black Swan, blockchain, borderless world, Boycotts of Israel, Branko Milanovic, BRICs, British Empire, business intelligence, call centre, capital controls, charter city, clean water, cloud computing, collateralized debt obligation, complexity theory, corporate governance, corporate social responsibility, credit crunch, crony capitalism, crowdsourcing, cryptocurrency, cuban missile crisis, data is the new oil, David Ricardo: comparative advantage, deglobalization, deindustrialization, dematerialisation, Deng Xiaoping, Detroit bankruptcy, diversification, Doha Development Round, edge city, Edward Snowden, Elon Musk, energy security, ethereum blockchain, European colonialism, eurozone crisis, failed state, Fall of the Berlin Wall, family office, Ferguson, Missouri, financial innovation, financial repression, forward guidance, global supply chain, global value chain, global village, Google Earth, Hernando de Soto, high net worth, Hyperloop, ice-free Arctic, if you build it, they will come, illegal immigration, income inequality, income per capita, industrial robot, informal economy, Infrastructure as a Service, interest rate swap, Internet of things, Isaac Newton, Jane Jacobs, Jaron Lanier, John von Neumann, Julian Assange, Just-in-time delivery, Kevin Kelly, Khyber Pass, Kibera, Kickstarter, labour market flexibility, labour mobility, LNG terminal, low cost carrier, manufacturing employment, mass affluent, megacity, Mercator projection, microcredit, mittelstand, Monroe Doctrine, mutually assured destruction, New Economic Geography, new economy, New Urbanism, offshore financial centre, oil rush, oil shale / tar sands, oil shock, openstreetmap, out of africa, Panamax, Peace of Westphalia, peak oil, Peter Thiel, Plutocrats, plutocrats, post-oil, post-Panamax, private military company, purchasing power parity, QWERTY keyboard, race to the bottom, Rana Plaza, rent-seeking, reserve currency, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Scramble for Africa, Second Machine Age, sharing economy, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, six sigma, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, Stuxnet, supply-chain management, sustainable-tourism, TaskRabbit, telepresence, the built environment, Tim Cook: Apple, trade route, transaction costs, UNCLOS, uranium enrichment, urban planning, urban sprawl, WikiLeaks, young professional, zero day

Most important, opening the door to foreign-operated zones has paved the way for a post-oil future in which already 75 percent of Dubai’s economy is construction, real estate, finance, manufacturing, retail, and other services. As Dubai’s rapid rebound since the crisis has proved, governments and companies working hand in hand is crony capitalism only in theoretical orthodoxy.2 In the real world, it is part of strategic economic survival. — DESERTS ARE LIMITLESS PLACES, but only with modern desalination and irrigation—and air-conditioning—has man been able to colonize the desert at large scale rather than merely, though with great fortitude, crossing it as Bedouin have done in the Sahara and the Gulf’s fabled Empty Quarter.

In Somalia, armadas of warships and private flotillas won’t stop piracy attacks on oil and cargo tankers, while basic fishing boats would help Somali fishermen return to a more legitimate economy. Bringing better supply chains to people is the only way to prevent them from being exploited by worse ones. GETTING BEYOND CORRUPTION? The world is awash not only in cheap capital but also in crony capital as trillions of dollars of wealth seeking safe havens from government crackdowns are laundered into real estate and other assets from New York and London to Dubai and Singapore. The world’s economic pie is growing larger, and everyone wants a slice. The same trends free-market advocates celebrate such as privatization and foreign investment liberalization also enable surging volumes of corruption worldwide.


pages: 433 words: 125,031

Brazillionaires: The Godfathers of Modern Brazil by Alex Cuadros

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affirmative action, Asian financial crisis, big-box store, BRICs, cognitive dissonance, crony capitalism, Deng Xiaoping, Donald Trump, Elon Musk, facts on the ground, family office, high net worth, index fund, invisible hand, Jeff Bezos, Mark Zuckerberg, NetJets, offshore financial centre, profit motive, rent-seeking, risk/return, savings glut, short selling, Silicon Valley, sovereign wealth fund, stem cell, The Wealth of Nations by Adam Smith, too big to fail, transatlantic slave trade, transatlantic slave trade, We are the 99%

When I asked him about the government’s decision to fund companies that had backed the military regime, he told me, “You can’t develop the country just with the kind of people you’d invite home for dinner.” In the nineteenth-century United States, after all, railroad tycoons laid tens of thousands of miles of track not out of selfless civic interest but for profit, engaging in a crony capitalism that would be very familiar to Brazil’s “cordial man.” Like the leaders of the military regime in the sixties and seventies, Lula wanted to build highways and dams and ports, to get Brazil caught up with the developed world. He wanted to build huge refineries to process Petrobras’s oil discoveries, and he wanted Brazilian companies employing Brazilian workers to do the job.

, 91 Salve Jorge, 100–101, 102–7, 131 TV Record, 108, 110, 115, 121–22, 123, 126, 300n110 Macedo’s takeover of, 119–22, 301n120 R7 news, 231 TV SBT, 256 TV Tupi, 84, 297n84 TVX, 153–54, 155–56, 170, 180, 187–88 UBS (Swiss bank), 28, 218 UHNW (ultra-high-net-worth), 23 Ulloa, Santiago, 22–23 Ultragaz, 40, 42, 291n41, 291n42 Ultrapar, 291n41 United Arab Emirates, 180, 181, 183, 184, 217–18, 253 United States billionaires, 24, 26 Brazilian investment in, 18, 19, 144 campaign financing, 286, 317n286 capitalism and bubbles, 244 CIA and Brazilian politics, 39 crony capitalism, 55 Federal Reserve and 2008 crisis, 181 Hoover’s “Buy American Act,” 184 interest rates, 18 prosperity gospel and, 109 shale gas extraction, 67 “too big to fail” banks, 274 Universal Church of the Kingdom of God, 108–18, 123–26 Congress of Winners, 116–17, 124–25 cures and liberation, 115–17 Fogueiras Santas campaigns, 118 Globo targeting of, 122 Love Therapy, 114, 115 number of churches, 108, 110, 300n109 number of followers, 109, 300n109 radio network, 301n118 revenues, 110, 112, 118–19, 300n110 São Paulo church, 111, 114, 301n114 solicitation, 118–19, 125, 301n119 Solomon’s Temple replica, 126, 301n114 suits against, 301n118, 301n119 tax fines against, 123, 302n123 in the U.S., 109–10 University of São Paulo, 11 Uruguay, 24, 177 Vale, 136, 137, 138, 140, 160, 168, 171, 214, 305n160, 306n167 Valor Econômico, 244–45 Vanguarda Agro, 59 Vargas, Getúlio, 83, 86, 96, 172 Veja, 44–45, 120, 164, 166 Vilardi, Celso, 228–29 Villela family, 290n39 Volkswagen, 290n39, 294n69 Voz da Comunidade, 101, 106–7, 208 “Wagner,” 178, 179, 180–81, 205 Waimiri-Atroari tribe, 69 Wallace, David Foster, 194 Wallach, Joe, 88 Walton, Sam, 197 Warby Parker, 213 Wealth of Nations, The (Smith), 176, 280 Welch, Jack, 197 White, Richard, 244 Wilson, Charlie, 293n56 Winkler, Matt, 96 Workers Party, 54, 55, 56, 67, 95, 96, 131, 183, 191, 239–40, 257, 275.


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

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3D printing, accounting loophole / creative accounting, additive manufacturing, Airbnb, algorithmic trading, Asian financial crisis, asset allocation, bank run, Basel III, bonus culture, Bretton Woods, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial intermediation, Frederick Winslow Taylor, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, interest rate derivative, interest rate swap, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, knowledge economy, labor-force participation, labour mobility, London Whale, Long Term Capital Management, manufacturing employment, market design, Martin Wolf, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, pensions crisis, Ponzi scheme, principal–agent problem, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, sovereign wealth fund, Steve Jobs, technology bubble, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund

.,46 which has enabled it to turn back key areas of regulation (remember the trading loopholes pushed into the federal spending bill by the banking industry in 2014?) and change our tax and legal codes at will. Increasingly, the power of these large, oligopolistic interests is remaking our unique brand of American capitalism into a crony capitalism more suited to a third-world autocracy than a supposedly free-market democracy.47 Thanks to these changes, our economy is gradually becoming “a zero-sum game between financial wealth-holders and the rest of America,” says former Goldman Sachs banker Wallace Turbeville, who runs a multiyear project on financialization at the nonprofit think tank Demos.48 Indeed, one of the most pernicious effects of the rise of finance has been the growth of massive inequality, the likes of which haven’t been seen since the Gilded Age.

The Fed knew this and asked Chase and Goldman to take first dollar risk in the bailout, and then took ‘no’ for an answer. I think that the AIG bailout was a moment in which public confidence in the government’s decisions in the crisis being in the public interest started to collapse. Later on, some called this dynamic ‘crony capitalism.’ ” To be fair, Geithner was probably doing his best in a tough situation, one that had been unfolding for quite a while, rather than exploding in a short burst like LTCM. But it’s interesting to note, as the TARP investigation report does, that he backed down rather quickly when bank leaders like J.P.


pages: 196 words: 57,974

Company: A Short History of a Revolutionary Idea by John Micklethwait, Adrian Wooldridge

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affirmative action, barriers to entry, Bonfire of the Vanities, borderless world, business process, Corn Laws, corporate governance, corporate social responsibility, credit crunch, crony capitalism, double entry bookkeeping, Etonian, hiring and firing, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, knowledge worker, laissez-faire capitalism, manufacturing employment, market bubble, mittelstand, new economy, North Sea oil, race to the bottom, railway mania, Ronald Coase, Silicon Valley, six sigma, South Sea Bubble, Steve Jobs, Steve Wozniak, strikebreaker, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, tulip mania, wage slave, William Shockley: the traitorous eight

Keiretsu firms tended to overproduce and overinvest when compared with independent firms. Even in the boom years of 1971 to 1982, they derived significantly lower returns on assets.13 In the 1990s, they drifted from one disaster to another. The decade was also a humbling one both for the chaebol, which were flattened by the Asian currency crisis and charges of crony capitalism, and for German companies, which were hamstrung by the high labor costs that stakeholder capitalism entailed. The relative absence of “short-term” shareholder pressure proved a comparative weakness—all the more so because Anglo-Saxon firms, particularly American ones, were just beginning to benefit from genuine investor pressure.


pages: 202 words: 66,742

The Payoff by Jeff Connaughton

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algorithmic trading, bank run, banking crisis, Bernie Madoff, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, desegregation, Flash crash, locking in a profit, London Interbank Offered Rate, London Whale, Long Term Capital Management, naked short selling, Plutocrats, plutocrats, Ponzi scheme, risk tolerance, short selling, Silicon Valley, too big to fail, two-sided market, young professional

If you believe, as I do, that Wall Street’s capture of Washington is America’s biggest problem, it’s time to stop voting for the lesser of two evils and stand on principle. The Occupy Wall Street movement for a time had been a refreshing gust of renewed hope for change. When will the Tea Party and Occupy Wall Street realize that, when it comes to crony capitalism, they share common ground? We still need structural reform of Wall Street, either by separating federally insured commercial banking from risky investment banking by reinstating Glass-Steagall, or by passing Brown-Kaufman to place a size-and-leverage limit on too-big-to-fail institutions. We still need a Justice Department and SEC willing to enforce the law against the most powerful by holding accountable those individuals who are responsible for fraud.


pages: 219 words: 61,720

American Made: Why Making Things Will Return Us to Greatness by Dan Dimicco

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, Affordable Care Act / Obamacare, American energy revolution, American Society of Civil Engineers: Report Card, Bakken shale, barriers to entry, Bernie Madoff, carbon footprint, clean water, crony capitalism, currency manipulation / currency intervention, David Ricardo: comparative advantage, decarbonisation, fear of failure, full employment, Google Glasses, hydraulic fracturing, invisible hand, job automation, knowledge economy, laissez-faire capitalism, Loma Prieta earthquake, manufacturing employment, oil shale / tar sands, Ponzi scheme, profit motive, Report Card for America’s Infrastructure, Ronald Reagan, Silicon Valley, smart grid, smart meter, sovereign wealth fund, The Wealth of Nations by Adam Smith, too big to fail, uranium enrichment, Washington Consensus, Works Progress Administration

Government and Business Shouldn’t Be Antagonists An American industrial policy assumes government and business will work together with some degree of harmony. But aren’t government and business too close as it is? What’s the difference between government policy that encourages private enterprise at home and abroad versus one that’s out-and-out crony capitalism? Truth is, the relationship between the private and public sector right now is a lot more complicated than most Americans realize. When government regulates business, it’s in the business’s interest to make sure government doesn’t regulate too much. Problems start when lobbyists jockey for special favors and exceptions.


pages: 232

Planet of Slums by Mike Davis

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barriers to entry, Branko Milanovic, Bretton Woods, British Empire, Brownian motion, centre right, clean water, conceptual framework, crony capitalism, declining real wages, deindustrialization, Deng Xiaoping, edge city, European colonialism, failed state, Gini coefficient, Hernando de Soto, housing crisis, illegal immigration, income inequality, informal economy, Internet Archive, jitney, Kibera, labor-force participation, land reform, land tenure, low-wage service sector, mandelbrot fractal, market bubble, megacity, microcredit, New Urbanism, Ponzi scheme, RAND corporation, rent control, structural adjustment programs, surplus humans, upwardly mobile, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor

With land inflation raging even on the distant urban edge, the only choices seemingly left to the poorest Manilenos are either to risk death in the flood-prone metropolis by squatting in the beds of esteros or along the precarious banks of rivers, or to occupy the interstices of wealthier barangays where violent eviction is an imminent threat. Throughout the Third World, then, the (John) Turnerian frontier of free land for poor squatters has ended: the "slums of hope" have been replaced by urban latifundia and crony capitalism. The constriction or closure of opportunities for non-market setdement at the edge, in turn, has immense repercussions for the stability of poor cities. In lockstep with the increasing percentage of renters, the most dramatic consequence in the short run has been soaring population density in Third World slums — land inflation in the context of stagnant or declining formal employment has been the piston driving this compression of people.

The Haves and the Have-Nots by Branko Milanovic

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Berlin Wall, Branko Milanovic, colonial rule, crony capitalism, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, Fall of the Berlin Wall, financial deregulation, full employment, Gini coefficient, high net worth, illegal immigration, income inequality, income per capita, Joseph Schumpeter, means of production, open borders, Plutocrats, plutocrats, purchasing power parity, Simon Kuznets, very high income, Washington Consensus

Today, as the gap between the Goliaths and Davids is much greater than ever, surprises are much less likely to happen. Goliaths always win; moreover, they often do not deign to play with Davids. Vignette 3.6 Income Inequality and the Global Financial Crisis The current financial crisis is generally blamed on feckless bankers, financial deregulation, crony capitalism, and the like.1 Although all of these elements may have contributed, this purely financial explanation of the crisis overlooks its fundamental reasons. They lie in the real sector, and more exactly in the distribution of income across individuals and social classes. Deregulation, by helping irresponsible behavior, just exacerbated the crisis; it did not create it.


pages: 268 words: 74,724

Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank by John Tamny

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Airbnb, bank run, banks create money, Bernie Madoff, bitcoin, Bretton Woods, Carmen Reinhart, correlation does not imply causation, Credit Default Swap, crony capitalism, crowdsourcing, Donald Trump, Downton Abbey, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, Home mortgage interest deduction, Jeff Bezos, job automation, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, liquidity trap, Mark Zuckerberg, market bubble, moral hazard, mortgage tax deduction, NetJets, offshore financial centre, oil shock, peak oil, Peter Thiel, price stability, profit motive, quantitative easing, race to the bottom, Ronald Reagan, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Steve Jobs, The Wealth of Nations by Adam Smith, too big to fail, Uber for X, War on Poverty, yield curve

Not long before he was elected president of the United States, Barack Obama correctly criticized The Export-Import Bank (Ex-Im) as “little more than a fund for corporate welfare.”6 He was right. It exists to lend taxpayer funds to foreign companies interested in buying U.S. exports. Since reaching the White House, Obama has changed his position on the Bank. As of this writing, even a Republican-controlled Congress is still struggling to fully close this monument to crony capitalism. The existence of Ex-Im, along with the TVA and the War on Poverty, shows why supply-siders are so wrong when they sell income tax cuts to the political class as a way to get politicians more money to spend. That all three programs and subsidies still exist is a reminder that surging federal revenues morph into a major tax on future growth as politicians divine new ways to spend the money; the ideas hatched are exceedingly difficult to sunset.


pages: 270 words: 79,992

The End of Big: How the Internet Makes David the New Goliath by Nicco Mele

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3D printing, 4chan, A Declaration of the Independence of Cyberspace, Airbnb, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, big-box store, bitcoin, business climate, call centre, Cass Sunstein, centralized clearinghouse, Chelsea Manning, citizen journalism, cloud computing, collaborative consumption, collaborative editing, crony capitalism, cross-subsidies, crowdsourcing, David Brooks, death of newspapers, Donald Trump, Douglas Engelbart, en.wikipedia.org, Exxon Valdez, Fall of the Berlin Wall, Filter Bubble, Firefox, Galaxy Zoo, global supply chain, Google Chrome, Gordon Gekko, Hacker Ethic, Jaron Lanier, Jeff Bezos, jimmy wales, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, Lean Startup, Mark Zuckerberg, minimum viable product, Mohammed Bouazizi, Mother of all demos, Narrative Science, new economy, Occupy movement, Peter Thiel, pirate software, Ronald Reagan, Ronald Reagan: Tear down this wall, sharing economy, Silicon Valley, Skype, social web, Steve Jobs, Steve Wozniak, Stewart Brand, Stuxnet, Ted Nelson, Telecommunications Act of 1996, telemarketer, The Wisdom of Crowds, transaction costs, uranium enrichment, Whole Earth Catalog, WikiLeaks, Zipcar

And I was surprised to discover that the quality and depth of every submission transcended the vast majority of the output of bloggers or citizen journalists. Professionalism in journalism might not be sexy, it might seem old-fashioned, but it does matter. Consider what happened in the small town of Bell, California. The town’s mayor paid himself ever-larger salaries—over $800,000 a year—and engaged in the most crooked, crony capitalism, handing out other oversize salaries to his friends. Meanwhile, through a combination of lies and intimidation, he kept the largely poor, Hispanic city population in the dark, continuing to cut critical municipal services while giving himself and his buddies pay raises. After months of research and work, the Los Angeles Times delivered a pounding exposé of the corruption that led to multiple arrests.


pages: 726 words: 172,988

The Bankers' New Clothes: What's Wrong With Banking and What to Do About It by Anat Admati, Martin Hellwig

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Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bonus culture, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, diversified portfolio, en.wikipedia.org, Exxon Valdez, financial deregulation, financial innovation, financial intermediation, George Akerlof, Growth in a Time of Debt, income inequality, invisible hand, Jean Tirole, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, margin call, Martin Wolf, moral hazard, mortgage debt, mortgage tax deduction, Nick Leeson, Northern Rock, open economy, peer-to-peer lending, regulatory arbitrage, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, shareholder value, sovereign wealth fund, technology bubble, The Market for Lemons, the payments system, too big to fail, Upton Sinclair, Yogi Berra

Treasury secretary from 1999 to 2001, refers to “the increasing salience of long-standing financial-sector weaknesses, arising from some combination of insufficient capitalization and supervision of banks and excessive leverage and guarantee—the combination that, along with directed lending, has been captured in the term ‘crony capitalism,’ ” as a root cause of most crises (Summers 2000, 5). Turning to runs, Summers (2000, 7) states that “they are not driven by sunspots: their likelihood is driven and determined by the extent of fundamental weaknesses” and concludes that “preventing crises is heavily an issue of avoiding situations where the bank run psychology takes hold, and that will depend heavily on strengthening core institutions and other fundamentals.”

See also AIG; credit default swaps credit limits, regulations on, 88, 268n24 Crédit Lyonnais: cost of bailout of, 318n7; failure of, 55–56, 252n37 creditors: benefits of guarantees to, 129, 142; collateral used by, 164, 301n57; covenants of, 141; default as problem of, 36, 244n3; deposit insurance and, 62, 163; lending through repo (repurchase) agreements, 164; motivations for short-term lending by, 163–65; response to default, 35–36 credit ratings: guarantees in, role of, 9, 143, 235nn31–32, 290n28; for mortgage-related securities, 156–57, 185; risks hidden in, 124–25, 156–57, 222, 296n29; in securitization of mortgages, 259n33 credit risks: AIG and, 74, 161; definition of, 313n64; in financial crisis of 2007-2009, 157, 185; in risk-weighted approach, 183, 313n64, 313n66 creditworthiness assessments, 50; careless-ness in, 56, 277n12; challenges of, 50; economizing on, 249n13; hard versus soft information in, 50, 248n9; for mortgages, 56, 58, 248n9, 277n12 criminal proceedings, 208, 215, 228, 321n27 crony capitalism, 331n19 culture of banking: complacency in, 206; greed in, 208–9, 328n6; lying in, 328n5; return on equity in, 115, 125–28, 284–85nn29–30; unethical behavior in, 209, 328n6, 329n8 Cumming, Christine, 262n60, 263n62 currency, and risk of sovereign default, 276n6 currency boards, 294n15, 333n39 currency swaps, 260n37 Curry, Timothy, 252n34, 289n20, 293n3 Das, Satyajit, 230n9, 253n42, 259n34, 260nn37–38, 260n41, 261n43, 261n46, 261n50, 262nn52–53, 284n24, 284n29, 285n37, 286n40, 308n41, 323n38, 328n5, 329n6, 329n8 Dattel, Danny, 252n36 Davies, Richard, 270n31, 290n29, 291n34 Davydenko, Sergei A., 245n13 debit cards, 49, 150 debt, treated as equity, 187–88.


pages: 823 words: 206,070

The Making of Global Capitalism by Leo Panitch, Sam Gindin

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accounting loophole / creative accounting, airline deregulation, anti-communist, Asian financial crisis, asset-backed security, bank run, banking crisis, barriers to entry, Basel III, Big bang: deregulation of the City of London, bilateral investment treaty, Branko Milanovic, Bretton Woods, BRICs, British Empire, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collective bargaining, continuous integration, corporate governance, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, dark matter, Deng Xiaoping, disintermediation, ending welfare as we know it, eurozone crisis, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, full employment, Gini coefficient, global value chain, guest worker program, Hyman Minsky, imperial preference, income inequality, inflation targeting, interchangeable parts, interest rate swap, Kenneth Rogoff, land reform, late capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, manufacturing employment, market bubble, market fundamentalism, Martin Wolf, means of production, money: store of value / unit of account / medium of exchange, Monroe Doctrine, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, Northern Rock, oil shock, precariat, price stability, quantitative easing, Ralph Nader, RAND corporation, regulatory arbitrage, reserve currency, risk tolerance, Ronald Reagan, seigniorage, shareholder value, short selling, Silicon Valley, sovereign wealth fund, special drawing rights, special economic zone, structural adjustment programs, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, very high income, Washington Consensus, Works Progress Administration, zero-coupon bond

But both the grand principles and the local clientelism and patronage were totally embedded in local notables and balances of power.”83 This was the “crony capitalism” that the IMF would demand be extirpated in exchange for its emergency loan packages after the Asian financial crisis erupted in 1997. And when the contagion from that crisis spread to Russia the following year, it was the IMF’s very public despair at not being able to do anything about this “crony capitalism” in the Russian case that led it to pull back from its emergency lending, sparking the Russian government’s default in August 1998 on its foreign debt (which at $61 billion represented 17 percent of Russian GDP).


pages: 558 words: 168,179

Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer

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affirmative action, Affordable Care Act / Obamacare, anti-communist, Bakken shale, bank run, battle of ideas, Berlin Wall, Capital in the Twenty-First Century by Thomas Piketty, carried interest, centre right, clean water, Climategate, Climatic Research Unit, collective bargaining, crony capitalism, David Brooks, desegregation, diversified portfolio, Donald Trump, energy security, estate planning, Fall of the Berlin Wall, George Gilder, housing crisis, hydraulic fracturing, income inequality, invisible hand, job automation, low skilled workers, market fundamentalism, Mont Pelerin Society, More Guns, Less Crime, Nate Silver, New Journalism, obamacare, Occupy movement, offshore financial centre, oil shale / tar sands, oil shock, Plutocrats, plutocrats, Ralph Nader, Renaissance Technologies, road to serfdom, Ronald Reagan, school choice, school vouchers, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, the scientific method, University of East Anglia, Unsafe at Any Speed, War on Poverty, working poor

Harold Varmus, a former director of the National Cancer Institute, who knew Koch as a donor to scientific institutions, noted that many philanthropists had large business interests but admitted that he was “surprised” to learn of the company’s stance on formaldehyde. The Kochs’ corporate interests clashed with their philosophical positions on other issues as well, including their opposition to government-supported “crony capitalism.” Koch Industries took full advantage of a panoply of federal subsidies, ranging from artificially low grazing fees on the 40 percent of their 500,000 acres of cattle ranches that used federal lands, to a deal with the Bush administration in 2002 to sell eight million barrels of crude oil to fill the Strategic Petroleum Reserve, a federal supply set aside as a hedge against market disruptions.

Moreover, while Solyndra’s investors were portrayed as Obama supporters, among its biggest backers were members of the conservative Walton family, the founders of Walmart. A huge investor in another solar company that went bust after taking the same Energy Department loans was the venture capitalist Dixon Doll, a major contributor to the Kochs’ donor network. But as the House held hearings and various conservative front groups whipped up outrage about “crony capitalism,” the facts were buried in favor of a narrative that helped the fossil fuel industry. Congressman Upton insisted that he hadn’t changed his position on environmental issues. But Jeremy Symons, then a senior vice president of the nonpartisan National Wildlife Federation, said that the transformation was “like night and day.”


pages: 350 words: 109,220

In FED We Trust: Ben Bernanke's War on the Great Panic by David Wessel

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Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, Black Swan, central bank independence, credit crunch, Credit Default Swap, crony capitalism, debt deflation, Fall of the Berlin Wall, financial innovation, financial intermediation, full employment, George Akerlof, housing crisis, inflation targeting, London Interbank Offered Rate, Long Term Capital Management, market bubble, moral hazard, mortgage debt, new economy, Northern Rock, price stability, quantitative easing, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, savings glut, Socratic dialogue, too big to fail

Directors of regional Fed banks didn’t vote to approve Fed loans like the one Bear Stearns was seeking; the loans went to the Fed board in Washington, where all the power was with government employees like Bernanke. And directors weren’t supposed to participate in formal conversations about their own institutions. But the incestuousness was obvious, the kind of crony capitalism that the U.S. government criticized in Indonesia and other developing countries. Geithner was hired by bankers he was supposed to supervise and, now, was being asked to bail out. The arrangement underscored the New York Fed’s peculiar relationship with Wall Street. It was supposed to be a regulator and guardian of the public interest, but sometimes was seen — by banks, by other factions inside the Fed, and by the public — as Wall Street’s advocate, rather than its overseer.


pages: 223 words: 10,010

The Cost of Inequality: Why Economic Equality Is Essential for Recovery by Stewart Lansley

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banking crisis, Basel III, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Branko Milanovic, Bretton Woods, British Empire, business process, call centre, capital controls, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, Edward Glaeser, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, Goldman Sachs: Vampire Squid, high net worth, hiring and firing, Hyman Minsky, income inequality, James Dyson, Jeff Bezos, job automation, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, laissez-faire capitalism, Long Term Capital Management, low skilled workers, manufacturing employment, market bubble, Martin Wolf, mittelstand, mobile money, Mont Pelerin Society, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, Tyler Cowen: Great Stagnation, Washington Consensus, Winter of Discontent, working-age population

George W Bush’s first cabinet—dubbed a ‘junta of major corporate interests’—had a combined wealth more than ten times that of the Clinton cabinet.256 Government was effectively captured by a group of cheerleaders for the further deregulation of finance. Thomas Hoenig, President of the Reserve Bank of Kansas City has called the American economic system ‘crony capitalism … who you know, how big your political donation is.’257 A similar if less direct process has been at work in the UK. Gradually an elite group of financiers came to exercise an increasingly monopolistic influence on Britain’s political leaders, out of all proportion to their real economic contribution.


pages: 209 words: 89,619

The Precariat: The New Dangerous Class by Guy Standing

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8-hour work day, banking crisis, barriers to entry, Bertrand Russell: In Praise of Idleness, call centre, Cass Sunstein, centre right, collective bargaining, corporate governance, crony capitalism, deindustrialization, deskilling, fear of failure, full employment, hiring and firing, Honoré de Balzac, housing crisis, illegal immigration, immigration reform, income inequality, labour market flexibility, labour mobility, land reform, libertarian paternalism, low skilled workers, lump of labour, marginal employment, Mark Zuckerberg, means of production, mini-job, moral hazard, Naomi Klein, nudge unit, pensions crisis, placebo effect, post-industrial society, precariat, presumed consent, quantitative easing, remote working, rent-seeking, Richard Thaler, rising living standards, Ronald Coase, Ronald Reagan, science of happiness, shareholder value, Silicon Valley, The Market for Lemons, The Nature of the Firm, The Spirit Level, Tobin tax, transaction costs, universal basic income, unpaid internship, winner-take-all economy, working poor, working-age population, young professional

Obama never tried to reach out to the precariat, even though many in it had been hopeful that he would do so. The social democratic imagination could not empathise with real predicaments. In the United States and elsewhere, anger grew at some of the corrupt aspects of the globalisation era. Recall the systemic use of subsidies. Naomi Klein among others has called the globalisation era ‘crony capitalism’, revealing itself not as a huge ‘free market’ but as a system in which politicians hand over public wealth to private players in exchange for political support. Ironically, far-right groups captured the anti-corporatist backlash. If the state has been captured by cronyism, why should anyone support a ‘strong state’?


pages: 324 words: 92,805

The Impulse Society: America in the Age of Instant Gratification by Paul Roberts

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, accounting loophole / creative accounting, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, asset allocation, business process, Cass Sunstein, centre right, choice architecture, collateralized debt obligation, collective bargaining, corporate governance, corporate social responsibility, crony capitalism, David Brooks, delayed gratification, double helix, factory automation, financial deregulation, financial innovation, full employment, game design, greed is good, If something cannot go on forever, it will stop, impulse control, income inequality, inflation targeting, invisible hand, job automation, Joseph Schumpeter, knowledge worker, late fees, Long Term Capital Management, loss aversion, low skilled workers, new economy, Nicholas Carr, obamacare, Occupy movement, oil shale / tar sands, performance metric, postindustrial economy, profit maximization, Report Card for America’s Infrastructure, reshoring, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Rodney Brooks, Ronald Reagan, shareholder value, Silicon Valley, speech recognition, Steve Jobs, technoutopianism, the built environment, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, Walter Mischel, winner-take-all economy

Since the rise of the Impulse Society, however, that connection has faltered. In recent decades, we’ve demonstrated that it’s possible to have a roaring GDP and a failing society. It’s not simply that more and more of the growth is being rerouted to a smaller population of beneficiaries, via the efficiencies of financialization and crony capitalism. It’s also that, in a socioeconomic system whose values are set by the marketplace, economic “success” no longer necessarily coincides with social success. Indeed, it is part of the perverse nature of the self-centered economy that our social failures are often the source of our roaring GDP.


pages: 370 words: 102,823

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth by Michael Jacobs, Mariana Mazzucato

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3D printing, balance sheet recession, banking crisis, Bernie Sanders, Bretton Woods, business climate, Carmen Reinhart, central bank independence, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, forward guidance, full employment, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, low skilled workers, Martin Wolf, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, paradox of thrift, price stability, private sector deleveraging, quantitative easing, QWERTY keyboard, railway mania, rent-seeking, road to serfdom, savings glut, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Steve Jobs, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, trickle-down economics, universal basic income, very high income

See https://www.gov.uk/government/groups/uktistrategic-relations-team#supporting-the-uks-top-76-investors-and-exporters (accessed 22 October 2015). 13 Ibid. 14 R. H. Bork, The Antitrust Paradox: A Policy at War with Itself, New York, Free Press, 1993, 1st edn 1978; R. A. Posner, Antitrust Law, 2nd edn, Chicago, University of Chicago Press, 2001. 15 T. Cave and A. Rowell, A Quiet Word: Lobbying, Crony Capitalism and Broken Politics in Britain, London, Bodley Head, 2014. 16 Davis, Lister and Wrigley, NHS for Sale. 17 A helpful discussion of the various issues arising from the TTIP can be found in Queries, no. 6, Spring 2015, pp. 32–83, http://www.queries-feps.eu/PDF%20Complet%20-%20Queries%206.pdf (accessed 22 October 2015). 18 The most impressive example of this was R.


pages: 518 words: 107,836

How Not to Network a Nation: The Uneasy History of the Soviet Internet (Information Policy) by Benjamin Peters

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Albert Einstein, Andrei Shleifer, Benoit Mandelbrot, bitcoin, Brownian motion, Claude Shannon: information theory, cloud computing, cognitive dissonance, computer age, conceptual framework, crony capitalism, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, Dissolution of the Soviet Union, double helix, Drosophila, Francis Fukuyama: the end of history, From Mathematics to the Technologies of Life and Death, hive mind, index card, informal economy, invisible hand, Jacquard loom, Jacquard loom, John von Neumann, Kevin Kelly, knowledge economy, knowledge worker, linear programming, mandelbrot fractal, Marshall McLuhan, means of production, Menlo Park, Mikhail Gorbachev, mutually assured destruction, Network effects, Norbert Wiener, packet switching, pattern recognition, Paul Erdős, Peter Thiel, RAND corporation, rent-seeking, road to serfdom, Ronald Coase, scientific mainstream, Steve Jobs, Stewart Brand, stochastic process, technoutopianism, The Structural Transformation of the Public Sphere, transaction costs, Turing machine

The basic institutions that stitch together the social and political fabric of democratic society—the rule of law, functioning courts, equitable tax compliance, Madisonian checks and balances, human and civil rights, an independent press, and private institutions—underlie the often ambiguous and always limited moral foundations of all modern information societies and economies, even informal economies.16 The patronage socialism of the Soviet Union (like the crony capitalism of modern-day Russia) was missing many of these elements (it had no rule of law, no predictability of procedure, no regulated financial environment, no bankruptcy law, no antirust law, no courts for managing property disputes, and no virtuous regulation of inseparable market and state), but this routine criticism risks ignoring the bigger picture.


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

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asset allocation, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamonds, Bretton Woods, BRICs, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, financial innovation, Flash crash, forward guidance, Gini coefficient, global reserve currency, high net worth, High speed trading, hindsight bias, income inequality, inflation targeting, interest rate swap, Isaac Newton, Jaron Lanier, joint-stock company, joint-stock limited liability company, Kodak vs Instagram, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, Plutocrats, plutocrats, Ponzi scheme, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Richard Feynman, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, South Sea Bubble, sovereign wealth fund, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trickle-down economics, Washington Consensus, working poor, yield curve

Second, less well known and maybe more interesting, is the pattern of industrial ownership, in which large family-owned companies invest for the very long term, with complex and overlapping patterns of ownership and relationship between big, stable companies—the opposite of the Anglo-Saxon model in which everyone looks at the stock market price and the quarterly profits figures ahead of everything else. This Swedish industrial model is sometimes admired abroad for its long-termism and stability, sometimes deplored for its crony capitalism, depending on how it is perceived as performing relative to its foreign alternatives. synergy Mainly bullshit, but when it does mean anything, it means merging two companies and taking the opportunity to sack people. For instance, if two companies that make similar products merge, they will have similar warehouse and delivery operations: so one of the two sets of employees will lose their jobs.


pages: 372 words: 109,536

The Panama Papers: Breaking the Story of How the Rich and Powerful Hide Their Money by Frederik Obermaier

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banking crisis, blood diamonds, credit crunch, crony capitalism, Deng Xiaoping, Edward Snowden, family office, high net worth, income inequality, liquidationism / Banker’s doctrine / the Treasury view, Mikhail Gorbachev, mortgage debt, offshore financial centre, optical character recognition, out of africa, race to the bottom, We are the 99%, WikiLeaks

As well as Syriatel he also holds stakes in various banks, duty-free chain stores, an airline and much more. People in Syria have long since stopped asking what belongs to him and instead ask: what doesn’t? The New York Times wrote that Makhlouf was a ‘symbol of how economic reforms turned crony socialism into crony capitalism, making the poor poorer and the connected rich fantastically wealthier’. Rami Makhlouf, who was born in Damascus in 1969, is Bashar al-Assad’s cousin. Makhlouf’s aunt Anisa is the widow of the late president Hafis al-Assad, the current ruler’s father. Rami and Bashar played together when they were young, and today they are close allies – one the head of state, the other the businessman on whose money and connections Assad can count at all times.


pages: 332 words: 89,668

Two Nations, Indivisible: A History of Inequality in America: A History of Inequality in America by Jamie Bronstein

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Affordable Care Act / Obamacare, back-to-the-land, barriers to entry, Bernie Sanders, big-box store, blue-collar work, Branko Milanovic, British Empire, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, collateralized debt obligation, collective bargaining, Community Supported Agriculture, corporate personhood, crony capitalism, deindustrialization, desegregation, Donald Trump, ending welfare as we know it, Frederick Winslow Taylor, full employment, Gini coefficient, income inequality, interchangeable parts, invisible hand, job automation, John Maynard Keynes: technological unemployment, labor-force participation, land reform, land tenure, low skilled workers, low-wage service sector, minimum wage unemployment, moral hazard, mortgage debt, New Urbanism, non-tariff barriers, obamacare, occupational segregation, Occupy movement, oil shock, Plutocrats, plutocrats, price discrimination, race to the bottom, rent control, road to serfdom, Ronald Reagan, Scientific racism, Simon Kuznets, single-payer health, strikebreaker, too big to fail, trade route, transcontinental railway, Triangle Shirtwaist Factory, trickle-down economics, universal basic income, Upton Sinclair, upwardly mobile, urban renewal, wage slave, War on Poverty, women in the workforce, working poor, Works Progress Administration

Social thinkers in both Britain and the United States in the 1880s promoted the notion that no one was a social atom, that people ought to be knit to each other with certain rights and responsibilities by virtue of being co-citizens, and that the state had a role to play in nurturing accomplishment and education to make this possible.55 The Social Gospel movement, which emerged simultaneously from the churches and from the grassroots, provided a religious grounding for such policies by emphasizing that the Bible promoted neighborly uplift and care for the poor.56 Some writers, such as muckraking journalist Henry Demarest Lloyd, identified monopolies and corruption as the enemies of society. In Wealth Against Commonwealth (1894), Lloyd despaired because Americans’ attempts to institute municipal services like streetcars and gasworks were “sung to sleep with the lullaby about government best, government least.”57 Lloyd painstakingly chronicled the emergence of crony capitalism, false corporate entities, differential pricing, and rebates in the railroad and oil industries, all presided over by a sham regulatory system. But in the end he did not blame the corporations but rather the men behind them. “The real actors are men; the real instrument, the control of their fellows by wealth, and the mainspring of the evil is the morals and economics which cipher that brothers produce wealth when they are only cheating each other out of their birthrights.”58 Corporate capitalism eroded American morality.59 Lloyd noted that the United States was a political, but not an economic, democracy.

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America by Matt Taibbi

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affirmative action, Affordable Care Act / Obamacare, Bernie Sanders, Bretton Woods, carried interest, clean water, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, desegregation, diversification, diversified portfolio, Donald Trump, financial innovation, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, illegal immigration, interest rate swap, laissez-faire capitalism, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, medical malpractice, moral hazard, mortgage debt, obamacare, passive investing, Ponzi scheme, prediction markets, quantitative easing, reserve currency, Ronald Reagan, Sergey Aleynikov, short selling, sovereign wealth fund, too big to fail, trickle-down economics, Y2K, Yom Kippur War

The government might let other players on the market die, but it simply would not allow Goldman Sachs to fail under any circumstances. Its implicit market advantage suddenly became an open declaration of supreme privilege. “It wasn’t even an implicit assumption anymore,” says Simon Johnson, an economics professor at MIT and former International Monetary Fund official who compared the bailouts to the crony capitalism he had seen in the underdeveloped world. “It became an explicit assumption that the government would always rescue Goldman.” All of this government aid belies the myth of Goldman as a collection of the smartest cats in the world. All of this stuff sounds complicated, but when you get right down to it, it isn’t.


pages: 350 words: 103,988

Reinventing the Bazaar: A Natural History of Markets by John McMillan

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accounting loophole / creative accounting, Albert Einstein, Andrei Shleifer, Anton Chekhov, Asian financial crisis, congestion charging, corporate governance, crony capitalism, Dava Sobel, Deng Xiaoping, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, informal economy, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John von Neumann, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Ronald Coase, Ronald Reagan, sealed-bid auction, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, Xiaogang Anhui farmers, yield management

The concentration of ownership in a few hands reflects the absence of formal shareholder protections. Outsiders’ justifiable fears that the company will be run in the interests of the controlling family dissuade them from investing in it. The members of the clique often have special links to the government, and such crony capitalism adds to outside shareholders’ defenselessness. In Russia, there is little regulatory oversight and lawsuits are difficult to mount. Investors are told little about the state of firms, and what little they are told is unreliable. Sometimes they are even locked out of annual meetings. Managers often sell off subsidiaries and pocket the proceeds.


pages: 481 words: 121,300

Why geography matters: three challenges facing America : climate change, the rise of China, and global terrorism by Harm J. De Blij

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agricultural Revolution, airport security, Anton Chekhov, Ayatollah Khomeini, Berlin Wall, British Empire, colonial exploitation, complexity theory, computer age, crony capitalism, demographic transition, Deng Xiaoping, Eratosthenes, European colonialism, F. W. de Klerk, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global village, illegal immigration, Internet Archive, John Snow's cholera map, Khyber Pass, manufacturing employment, megacity, Mercator projection, out of africa, RAND corporation, risk tolerance, Ronald Reagan, South China Sea, special economic zone, Thomas Malthus, trade route, transatlantic slave trade, UNCLOS, UNCLOS

Russia was fortunate to possess substantial energy reserves from its share of the Caspian Basin in the west to Sakhalin Island in the east, with ready customers including Europe, Japan, and China. But overdependence on a single commodity entails risks and RUSSIA 241 skews development. It opened the way to "crony capitalism" as high-level insiders bought up state enterprises, tax collections faltered, factories failed, and, in 1998, the government defaulted and the economy crashed, driving away the first wave of investors. A vast reservoir of natural resources alone is not enough to ensure this (or any other) country's prosperity.


pages: 487 words: 147,891

McMafia: A Journey Through the Global Criminal Underworld by Misha Glenny

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anti-communist, Anton Chekhov, Berlin Wall, blood diamonds, BRICs, colonial rule, crony capitalism, Deng Xiaoping, Doha Development Round, failed state, Fall of the Berlin Wall, financial deregulation, Firefox, forensic accounting, friendly fire, glass ceiling, illegal immigration, joint-stock company, market bubble, Mikhail Gorbachev, Nick Leeson, offshore financial centre, place-making, rising living standards, Ronald Reagan, Skype, special economic zone, Stephen Hawking, trade liberalization, trade route, Transnistria, unemployed young men, upwardly mobile

Similarly, the yakuza struck up an intimate relationship with the key factions of the LDP, the Liberal Democratic Party, which dominated Japanese politics during the same period but unlike the Christian Democrats survived the fall of Communism and, despite some hiccups, still runs the country today. The bubble—when the zaibatsu, the LDP, and the yakuza all joined forces to realize what one commentator dubbed “the great transfer of wealth”—was no aberration. It was merely the country’s crony capitalism assuming its highest form for a blowout that lasted five years. This begs the question as to how the yakuza was ever able to occupy such an exalted position in Japanese society. Contrary to popular assumptions, they did not shoot, extort, or bribe their way to the top: they are, bizarrely, a product of Japan’s legal system.


pages: 497 words: 143,175

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

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1960s counterculture, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, Long Term Capital Management, manufacturing employment, market bubble, Martin Wolf, new economy, oil shale / tar sands, oil shock, open economy, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Ronald Reagan, Simon Kuznets, strikebreaker, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

Panic spread to South Korea, Malaysia, the Philippines, and Indonesia. On October 27 the Dow Jones average fell 554 points, 7.2 percent. Fed chair Alan Greenspan, Secretary of Treasury Robert Rubin, and his deputy secretary, Lawrence Summers, now changed the east Asian narrative. Instead of exemplars of free-market capitalism, the Asian tigers were icons of “crony capitalism.” In return for loans, the IMF demanded that nations cut government spending, increase interest rates to lure back private investors, pay back the worthless loans to Western banks, and ease the foreign purchase of domestic companies. But these measures worsened the recession, and Asian economies stagnated into 1998.


pages: 435 words: 127,403

Panderer to Power by Frederick Sheehan

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Asian financial crisis, asset-backed security, bank run, banking crisis, Bretton Woods, British Empire, call centre, central bank independence, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversification, financial deregulation, financial innovation, full employment, inflation targeting, interest rate swap, inventory management, Isaac Newton, Long Term Capital Management, margin call, market bubble, McMansion, Menlo Park, mortgage debt, new economy, Northern Rock, oil shock, place-making, Ponzi scheme, price stability, reserve currency, rising living standards, rolodex, Ronald Reagan, Sand Hill Road, savings glut, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, supply-chain management, supply-chain management software, The Great Moderation, too big to fail, transaction costs, trickle-down economics, VA Linux, Y2K, Yom Kippur War

“You don’t have to predict it, we’re in it.”46 The former Federal Reserve chairman explained: “As custodian of the nation’s money, the Federal Reserve has the basic responsibility to protect its value and resist chronic pressures toward inflation.”47 It was apparent that Bernanke’s concerns did not include the dollar. He was busy bailing out participants in the crony capitalism that was making the United States look like a fourth-world country. 48 43 Richard Russell, Dow Theory Letter, March 17, 2008, pp. 7–8. 44 Federal Reserve Bank of New York, “Primary Dealer Credit Facility: Frequently Asked Questions.” www.ny.frb.org 45Roger Lowenstein, “The Education of Ben Bernanke,” New York Times Magazine, January 20, 2008. 46“Volcker’s Demarche,” “Review & Outlook,” online.wsj.com, April 9, 2008. 47 Paul Volcker, remarks at a luncheon of the Economic Club of New York, New York, April 8, 2008.


pages: 386 words: 122,595

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

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affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, capital controls, Cass Sunstein, central bank independence, clean water, collapse of Lehman Brothers, congestion charging, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, Joseph Schumpeter, Kenneth Rogoff, libertarian paternalism, low skilled workers, lump of labour, Malacca Straits, market bubble, microcredit, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional

A private army is not an option, so this is the best we can reasonably expect. But the less the economy is left to politics, the better. Powerful politicians should not be deciding, for example, who gets bank credit and who does not. Yet that is exactly what happens in autocratic nations like China and in democratic countries like Indonesia where politicians play “crony capitalism.” Projects that have the potential to be highly profitable do not get financing while dubious undertakings sponsored by the president’s brother-in-law are lavished with government funds. Consumers lose in two ways. First, their tax money is squandered when projects that never should have been funded in the first place go bust (or when the whole banking system needs to be bailed out because it is full of rotten, politically motivated loans).


pages: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

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accounting loophole / creative accounting, Albert Einstein, asset-backed security, banking crisis, banks create money, Bretton Woods, British Empire, call centre, capital controls, carbon footprint, collective bargaining, corporate social responsibility, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial innovation, financial intermediation, Fractional reserve banking, full employment, Goldman Sachs: Vampire Squid, high net worth, income inequality, investor state dispute settlement, Isaac Newton, James Dyson, job automation, Julian Assange, labour market flexibility, laissez-faire capitalism, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, means of production, moral hazard, mortgage debt, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Plutocrats, plutocrats, predatory finance, price stability, pushing on a string, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, trickle-down economics, universal basic income, unpaid internship, upwardly mobile, Washington Consensus, Winter of Discontent, working poor, Yom Kippur War

(GPs are being given control of the majority of finance for health services, so that they can use whatever providers they wish, though in practice many lack the time to do so and will subcontract this allocation work to private companies: http://www.powerbase.info/index.php/Health_Portal.) Spinwatch itself does list its funders on its website, and how much they give: http://www.spinwatch.org/. 46 http://www.sourcewatch.org/index.php?title=State_Policy_Network and http://stinktanks.org/what-stinks/. 47 Cave, T. and Rowell, A. (2014) A quiet word: Lobbying, crony capitalism and broken politics in Britain, Oxford: The Bodley Head. 48 Bartels, L. (2005) ‘Economic inequality and political representation’, Working Paper, August, http://www.princeton.edu/~bartels/economic.pdf. See also Gilens, M. (2014) Affluence and influence, Princeton, NJ: Princeton University Press.


pages: 590 words: 153,208

Wealth and Poverty: A New Edition for the Twenty-First Century by George Gilder

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affirmative action, Albert Einstein, Bernie Madoff, British Empire, capital controls, cleantech, cloud computing, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversified portfolio, Donald Trump, equal pay for equal work, floating exchange rates, full employment, George Gilder, Home mortgage interest deduction, Howard Zinn, income inequality, invisible hand, Jane Jacobs, Jeff Bezos, job automation, job-hopping, Joseph Schumpeter, knowledge economy, labor-force participation, margin call, Mark Zuckerberg, means of production, medical malpractice, minimum wage unemployment, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, mortgage debt, non-fiction novel, North Sea oil, paradox of thrift, Plutocrats, plutocrats, Ponzi scheme, post-industrial society, price stability, Ralph Nader, rent control, Robert Gordon, Ronald Reagan, Silicon Valley, Simon Kuznets, skunkworks, Steve Jobs, The Wealth of Nations by Adam Smith, Thomas L Friedman, upwardly mobile, urban renewal, volatility arbitrage, War on Poverty, women in the workforce, working poor, working-age population, yield curve

Surprises of resurgent growth and creativity come not only from these showcase countries, but also from the United States after the crash of 1920–21, from Margaret Thatcher’s United Kingdom, from revival in Eastern Europe and in China after the fall of communism, and even from abrupt rewards of changing policy in Sweden and Brazil. Much of Europe may be on track to dramatic revival, as countries across the continent adopt Germany’s increasingly supply-side policies. All these turnarounds show that retrenching interventionist government—its subsidies, mandates, and crony capitalism, its gargantuan tax gouges—is all upside. A self-serving myth of bureaucrats is the idea that reducing government power and spending is a risky and perilous pursuit. But a clear change in policy and a bold assertion of leadership in favor of enterprise and creation can accomplish a drastic turnaround in the performance of an economy.


pages: 452 words: 134,502

Hacking Politics: How Geeks, Progressives, the Tea Party, Gamers, Anarchists and Suits Teamed Up to Defeat SOPA and Save the Internet by David Moon, Patrick Ruffini, David Segal, Aaron Swartz, Lawrence Lessig, Cory Doctorow, Zoe Lofgren, Jamie Laurie, Ron Paul, Mike Masnick, Kim Dotcom, Tiffiniy Cheng, Alexis Ohanian, Nicole Powers, Josh Levy

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4chan, Affordable Care Act / Obamacare, Airbnb, Bernie Sanders, Burning Man, call centre, Cass Sunstein, collective bargaining, crony capitalism, crowdsourcing, don't be evil, facts on the ground, Firefox, hive mind, immigration reform, informal economy, jimmy wales, Kickstarter, liquidity trap, Mark Zuckerberg, obamacare, Occupy movement, offshore financial centre, Plutocrats, plutocrats, prisoner's dilemma, rent-seeking, Silicon Valley, Skype, technoutopianism, WikiLeaks, Y Combinator

Lobbyists can do that because they exploit an obvious dependence: Candidates for Congress need campaign cash. Lobbyists are a reliable channel for that cash—so long, at least, as the clients of these lobbyists get what they want. Everyone profits when that system works smoothly—except, of course, us. Lobbyists profit, because billings go up. Businesses and other wealthy interests profit, because crony capitalism pays. And Members and their staff profit, because campaigns get funded and Capitol Hill, as Congressman Jim Cooper puts it, remains a “farm league for K. Street.” The business model of government service is temporary governmental service—a temporary stop on the way to a lucrative career as a lobbyist.


pages: 413 words: 119,379

The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa's Wealth by Tom Burgis

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Berlin Wall, blood diamonds, BRICs, British Empire, central bank independence, clean water, colonial rule, corporate social responsibility, crony capitalism, Deng Xiaoping, Donald Trump, F. W. de Klerk, Gini coefficient, Livingstone, I presume, McMansion, megacity, offshore financial centre, oil shock, open economy, purchasing power parity, rolodex, Ronald Reagan, Silicon Valley, South China Sea, sovereign wealth fund, structural adjustment programs, trade route, transfer pricing, upwardly mobile, urban planning, Washington Consensus, WikiLeaks

By then some five hundred thousand people had died. The MPLA found that the oil-fired machine it had built to power its war effort could be put to other uses. ‘When the MPLA dropped its Marxist garb at the beginning of the 1990s,’ writes Ricardo Soares de Oliveira, an authority on Angola, ‘the ruling elite enthusiastically converted to crony capitalism.’2 The court of the president – a few hundred families known as the Futungo, after Futungo de Belas, the old presidential palace – embarked on ‘the privatization of power’. Melding political and economic power like many a postcolonial elite, generals, MPLA bigwigs and the family of José Eduardo dos Santos, the party’s Soviet-trained leader who assumed the presidency in 1979, took personal ownership of Angola’s riches.


pages: 444 words: 151,136

Endless Money: The Moral Hazards of Socialism by William Baker, Addison Wiggin

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Andy Kessler, asset allocation, backtesting, bank run, banking crisis, Berlin Wall, Bernie Madoff, Black Swan, Branko Milanovic, Bretton Woods, BRICs, business climate, capital asset pricing model, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crony capitalism, cuban missile crisis, currency manipulation / currency intervention, debt deflation, Elliott wave, en.wikipedia.org, Fall of the Berlin Wall, feminist movement, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, German hyperinflation, housing crisis, income inequality, index fund, inflation targeting, Joseph Schumpeter, laissez-faire capitalism, land reform, liquidity trap, Long Term Capital Management, McMansion, moral hazard, mortgage tax deduction, naked short selling, offshore financial centre, Ponzi scheme, price stability, pushing on a string, quantitative easing, RAND corporation, rent control, reserve currency, riskless arbitrage, Ronald Reagan, school vouchers, seigniorage, short selling, Silicon Valley, six sigma, statistical arbitrage, statistical model, Steve Jobs, The Great Moderation, the scientific method, time value of money, too big to fail, upwardly mobile, War on Poverty, Yogi Berra, young professional

Neither the moderate steps resolved by the FOMC in its December 2008 meeting nor the swapping out of bad debt with Fed credit are likely to overcome the fears associated with what may be something like $20 trillion of excess debt being carried in the financial system relative to the low points of leverage experienced, such as the 1950s. About the only positive from not printing the massive amount of money needed to truly stabilize the system is that the gigantic moral hazard of wiping out savings might not happen. But, even without such printing, wealth will be redistributed from savers to nonsavers through crony capitalism to government contractors or whoever else would benefit from fiscal spending likely to be authorized, including or above the $1 trillion signed into law in February 2009. These dollars will be circulated soon, but the Treasury bonds and notes needed to be repaid would most certainly crimp taxpayer pocketbooks now or in subsequent generations unless so many were circulated that a great deal of consumer price inflation would result. 132 ENDLESS MONEY What this suggests is that the Fed will tinker with monetization in 2009, but consistently undershoot.


pages: 413 words: 117,782

What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences by Steven G. Mandis

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algorithmic trading, Berlin Wall, bonus culture, BRICs, business process, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, disintermediation, diversification, Emanuel Derman, financial innovation, fixed income, friendly fire, Goldman Sachs: Vampire Squid, high net worth, housing crisis, London Whale, Long Term Capital Management, merger arbitrage, new economy, passive investing, performance metric, risk tolerance, Ronald Reagan, Saturday Night Live, shareholder value, short selling, sovereign wealth fund, The Nature of the Firm, too big to fail, value at risk

Turns out, they were right” (Felix Salmon, “Hank Paulson’s Inside Jobs,” Reuters.com, November 29, 2011, http://blogs.reuters.com/felix-salmon/2011/11/29/hank-paulsons-inside-jobs/). Madison Ruppert says that Paulson’s actions epitomize “the plague upon our economy, and the greater global economic system, that is crony capitalism” (see “Turns Out the ‘Government Sachs’ Conspiracy Theorists Were Right All Along,” December 1, 2011, http://www.activistpost.com/2011/12/turns-out-government-sachs-conspiracy.html). 18. L. Wayne, “The Corridor from Goldman to Washington Is Well Traveled,” New York Times, December 13, 2002. 19.


pages: 475 words: 155,554

The Default Line: The Inside Story of People, Banks and Entire Nations on the Edge by Faisal Islam

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Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, British Empire, capital controls, carbon footprint, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, crony capitalism, dark matter, deindustrialization, Deng Xiaoping, disintermediation, energy security, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, financial repression, floating exchange rates, forensic accounting, forward guidance, full employment, ghettoisation, global rebalancing, global reserve currency, hiring and firing, inflation targeting, Irish property bubble, Just-in-time delivery, labour market flexibility, London Whale, Long Term Capital Management, margin call, market clearing, megacity, Mikhail Gorbachev, mini-job, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, North Sea oil, Northern Rock, offshore financial centre, open economy, paradox of thrift, pension reform, price mechanism, price stability, profit motive, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, reshoring, rising living standards, Ronald Reagan, savings glut, shareholder value, sovereign wealth fund, The Chicago School, the payments system, too big to fail, trade route, transaction costs, two tier labour market, unorthodox policies, uranium enrichment, urban planning, value at risk, working-age population

These coalesce in two groups, known as the Octopus group and the Squid. Inside the Octopus camp are many members of the Independence Party and some of the country’s largest privately owned companies. The Squid group embraces the cooperative movement and many members of the Progressive Party.’ Crony capitalism is rather difficult to avoid in a country of 300,000 people, where everybody seems to know everybody else’s business. A regular source of dismay for British corporate financiers was how most of Iceland seemed to know which British retailers, banks and football teams were on the target list of the Icelandic billionaires.

The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn’t What It Used to Be by Moises Naim

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additive manufacturing, barriers to entry, Berlin Wall, bilateral investment treaty, business process, business process outsourcing, call centre, citizen journalism, Clayton Christensen, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, conceptual framework, corporate governance, crony capitalism, deskilling, disintermediation, don't be evil, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, illegal immigration, immigration reform, income inequality, income per capita, intermodal, invisible hand, job-hopping, Joseph Schumpeter, Julian Assange, Kickstarter, Martin Wolf, megacity, Naomi Klein, Nate Silver, new economy, Northern Rock, Occupy movement, open borders, open economy, Peace of Westphalia, Plutocrats, plutocrats, price mechanism, price stability, private military company, profit maximization, Ronald Coase, Ronald Reagan, Silicon Valley, Skype, Steve Jobs, The Nature of the Firm, Thomas Malthus, too big to fail, trade route, transaction costs, Washington Consensus, WikiLeaks, World Values Survey

Across the Atlantic, the European Union—an ambitious project that many believed would form a counterpower to the United States—is mired in a devastating economic crisis, hampered by unwieldy governance, and slowed down by an aging population and a massive inflow of immigrants that the continent does not know how to absorb. Russia, the old rival and heir to Soviet resources and military capabilities, is another aging society, an authoritarian petro-state struggling to contain simmering popular discontent. Two decades of postcommunist crony capitalism, heavy-handed state intervention, and outright criminality have transformed the enormous nation into a hobbled and complicated beast that still owns a nuclear arsenal, yet is only a shadow of the superpower that preceded it. As noted, those searching for evidence of a new ascending great power have an easy answer: there is vitality in the east.


pages: 537 words: 158,544

Second World: Empires and Influence in the New Global Order by Parag Khanna

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Admiral Zheng, affirmative action, anti-communist, Asian financial crisis, Bartolomé de las Casas, Branko Milanovic, British Empire, call centre, capital controls, central bank independence, cognitive dissonance, colonial rule, complexity theory, crony capitalism, Deng Xiaoping, Dissolution of the Soviet Union, Donald Trump, Edward Glaeser, energy security, European colonialism, facts on the ground, failed state, flex fuel, Francis Fukuyama: the end of history, friendly fire, Gini coefficient, global reserve currency, global supply chain, haute couture, Hernando de Soto, illegal immigration, income inequality, informal economy, invisible hand, Islamic Golden Age, Khyber Pass, knowledge economy, land reform, low skilled workers, means of production, megacity, Monroe Doctrine, oil shale / tar sands, oil shock, open borders, open economy, Pax Mongolica, pirate software, Plutonomy: Buying Luxury, Explaining Global Imbalances, Potemkin village, price stability, race to the bottom, RAND corporation, reserve currency, rising living standards, Ronald Reagan, Silicon Valley, Skype, South China Sea, special economic zone, stem cell, Stephen Hawking, Thomas L Friedman, trade route, trickle-down economics, uranium enrichment, urban renewal, Washington Consensus, women in the workforce

Trust and commitment to leaders—these things do not exist: Few governments ever complete a first term. Latin culture is far too tolerant of “good corruption”—the kind that eases contract negotiations to make things move along—not recognizing that it actually derives from and perpetuates “bad corruption,” the prevalent system of big family rule and crony capitalism that operates in even Latin America’s best democracies. These gatekeepers and power brokers dominate all aspects of life, and democracy exacerbates the incentives for leaders to steal what they can and then flee. But Latin America could still become a solidly second-world region due to weighty economies like those of Brazil and Mexico, vast oil and gas resources, and proximity to the importing behemoth that is the United States. 22 In inaugurating South America’s visa-free zone, Brazilian foreign minister Celso Amorim declared, “Integration is an imperative because in a world of large blocs, we will be stronger if we are united.”


pages: 584 words: 187,436

More Money Than God: Hedge Funds and the Making of a New Elite by Sebastian Mallaby

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Andrei Shleifer, Asian financial crisis, asset-backed security, automated trading system, bank run, barriers to entry, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, capital controls, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, currency peg, Elliott wave, Eugene Fama: efficient market hypothesis, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, fixed income, full employment, German hyperinflation, High speed trading, index fund, Kenneth Rogoff, Long Term Capital Management, margin call, market bubble, market clearing, market fundamentalism, merger arbitrage, moral hazard, natural language processing, Network effects, new economy, Nikolai Kondratiev, pattern recognition, pre–internet, quantitative hedge fund, quantitative trading / quantitative finance, random walk, Renaissance Technologies, Richard Thaler, risk-adjusted returns, risk/return, rolodex, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical arbitrage, statistical model, technology bubble, The Great Moderation, The Myth of the Rational Market, too big to fail, transaction costs

It was an astonishing proposal: A small San Francisco fund would take over the commanding heights of the world’s largest Muslim country. Farallon boasted no more than a few dozen employees; Bank Central Asia had eight million accounts and eight hundred branches. Farallon was the product of the Goldman arb culture plus a dollop of California cool; Bank Central Asia had been the embodiment of Indonesia’s crony capitalism. Andrew Spokes, a dapper English banker whom Steyer had recruited from the Goldman Sachs office in Hong Kong, later conceded that the deal was a stretch. “We were a little off piste,” he conceded, coolly inspecting his cuffs.25 He sounded like a vintage James Bond who skis an avalanche in a tuxedo.26 By the time the Bank Central Asia opportunity arose, the September 11 terrorist attacks had made Indonesia dicier than ever.


pages: 719 words: 209,224

The Dead Hand: The Untold Story of the Cold War Arms Race and Its Dangerous Legacy by David Hoffman

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anti-communist, banking crisis, Berlin Wall, crony capitalism, cuban missile crisis, failed state, joint-stock company, Mikhail Gorbachev, mutually assured destruction, nuclear winter, Robert Hanssen: Double agent, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, Silicon Valley, Stanislav Petrov, Thomas L Friedman, uranium enrichment, Vladimir Vetrov: Farewell Dossier

The newly minted country was ruled by Nursultan Nazarbayev, a onetime steelworker whom Gorbachev had named Communist Party leader of the republic. An ethnic Kazakh, Nazarbayev gradually transformed himself after the Soviet collapse into a Central Asian potentate, mixing authoritarianism, oil wealth and crony capitalism. Now Nazarbayev wanted to be rid of the scourge of weapons that had so disfigured the landscape. He had no use for the uranium at Ust-Kamenogorsk. 7 A few weeks after their first meeting, Weber flew to join Mette for a hunting expedition. They drove in a jeep for hours to a base camp in the Altai Mountains of eastern Kazakhstan, near the borders of Russia and China, an ideal territory for hunting.


pages: 829 words: 229,566

This Changes Everything: Capitalism vs. The Climate by Naomi Klein

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1960s counterculture, battle of ideas, Berlin Wall, big-box store, bilateral investment treaty, British Empire, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, Climategate, cognitive dissonance, colonial rule, Community Supported Agriculture, complexity theory, crony capitalism, decarbonisation, deindustrialization, dematerialisation, Donald Trump, Downton Abbey, energy security, energy transition, equal pay for equal work, Exxon Valdez, failed state, Fall of the Berlin Wall, feminist movement, financial deregulation, food miles, Food sovereignty, global supply chain, hydraulic fracturing, ice-free Arctic, immigration reform, income per capita, Internet Archive, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, market fundamentalism, moral hazard, Naomi Klein, new economy, Nixon shock, Occupy movement, offshore financial centre, oil shale / tar sands, open borders, patent troll, planetary scale, post-oil, profit motive, quantitative easing, race to the bottom, Ralph Waldo Emerson, Rana Plaza, Ronald Reagan, smart grid, special economic zone, Stephen Hawking, Stewart Brand, structural adjustment programs, Ted Kaczynski, the scientific method, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, transatlantic slave trade, trickle-down economics, Upton Sinclair, uranium enrichment, urban planning, urban sprawl, wages for housework, walkable city, Washington Consensus, Whole Earth Catalog, WikiLeaks

In 2012, the conservancy managed to outrage many of its female staffers by partnering with the online luxury goods retailer Gilt to promote the Sports Illustrated Swimsuit Edition (the magazine explained that “whether you decide to buy a bikini, surfboards or tickets to celebrate at our parties, any money you spend . . . will help The Nature Conservancy ensure we have beaches to shoot Swimsuit on for another half-century”). VIII. Interestingly, before Nilsson got into the carbon game, he was investigated by a member of Queensland’s parliament for selling what appeared to be entirely fictional Australian real estate to unlucky marks in none other than Nauru. IX. Heartland regular Chris Horner called the bill “crony capitalism” on the Enron model—and Horner should know, because he used to work there. 7 * * * NO MESSIAHS The Green Billionaires Won’t Save Us “I had always got away with breaking rules and thought this was no different. I would have got away with it as well if I hadn’t been greedy.” —Richard Branson, on getting caught dodging taxes in the early 1970s1 “You gotta lead from the front.


pages: 662 words: 180,546

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

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Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, Bretton Woods, Brownian motion, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, full employment, George Akerlof, Goldman Sachs: Vampire Squid, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, invisible hand, Jean Tirole, joint-stock company, Kenneth Rogoff, knowledge economy, l'esprit de l'escalier, labor-force participation, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, payday loans, Ponzi scheme, precariat, prediction markets, price mechanism, profit motive, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, school choice, sealed-bid auction, Silicon Valley, South Sea Bubble, Steven Levy, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, War on Poverty, Washington Consensus, We are the 99%, working poor

The market designers still under contract responded to the Treasury’s volte-face in emphasis by insisting that there was no good reason the Treasury could not use auctions to purchase bank shares in addition to toxic assets, a position they maintained until the Treasury made it clear they had no intention to seek release of any additional TARP funds, therefore foreclosing any prospect for using auctions.135 Once that happened, things turned ugly: the market designers for hire themselves became some of the most fierce critics of the TARP, denouncing Cash for Trash. In an interview for NPR, Ausubel complained, “Instead of conducting transparent auctions, the Treasury is going to instead distribute suitcases of cash”; for Cramton, “It really is moving down the path to crony capitalism, in my mind, where the government is picking winners and losers in a nontransparent way.”136 This turnabout, however turncoat, was easy to pull off because both the market designers and the anti-TARP petitioners now claimed to have shared very similar assumptions about the economic role of government.


pages: 828 words: 232,188

Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy by Francis Fukuyama

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Affordable Care Act / Obamacare, Andrei Shleifer, Asian financial crisis, Atahualpa, banking crisis, barriers to entry, Berlin Wall, blood diamonds, British Empire, centre right, clean water, collapse of Lehman Brothers, colonial rule, conceptual framework, crony capitalism, deindustrialization, Deng Xiaoping, double entry bookkeeping, Edward Snowden, Erik Brynjolfsson, European colonialism, facts on the ground, failed state, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gini coefficient, Hernando de Soto, Home mortgage interest deduction, income inequality, invention of the printing press, iterative process, knowledge worker, land reform, land tenure, life extension, low skilled workers, manufacturing employment, means of production, Menlo Park, Mohammed Bouazizi, Monroe Doctrine, moral hazard, new economy, open economy, out of africa, Peace of Westphalia, Port of Oakland, post-industrial society, Post-materialism, post-materialism, price discrimination, quantitative easing, RAND corporation, rent-seeking, road to serfdom, Ronald Reagan, Scientific racism, Scramble for Africa, Second Machine Age, Silicon Valley, special economic zone, stem cell, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, too big to fail, trade route, transaction costs, Tyler Cowen: Great Stagnation, women in the workforce, World Values Survey

This gave the government access to resources that it could use to suppress lawlessness and provide essential political stability. This led to an extraordinary period of economic growth in which Mexico succeeded in partially catching up to both North America and more liberal emerging powers such as Argentina. Díaz did not, however, create an open or liberal economic order but rather a system we would today label crony capitalism. It was similar in certain ways to the old mercantilist system, only run by local elites rather than the Spanish Crown.22 It did nothing to empower the mass of the Mexican population either economically or politically. The resulting social tensions exploded in the Mexican Revolution, another convulsive affair that led to Díaz’s overthrow in 1911 and lasted until 1916.