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Jewish World Review Nov 22, 2011 / 25 Mar-Cheshvan, 5772 The worst thing about ‘crony capitalism’ isn't the tens of billions of taxpayer dollars wasted or stolen By Jack Kelly
http://www.JewishWorldReview.com |
In most countries for most of history, people were pretty much locked into the social class into which they were born. But in America men and women of modest means could become rich -- if they had an idea for making life better, and worked tirelessly to make their vision real.
Entrepreneurs such as Thomas Edison, Henry Ford, Bill Gates and Steven Jobs became very, very rich. The rest of us were enriched, too, by the fruits of their genius and their labor -- the electric light, the automobile and the computer, and tens of thousands of other inventions and new, better ways of organizing things.
People who don't have good ideas and who don't want to work hard want to be rich, too. Some have found a way.
CBS' 60 Minutes program broadcast a report Nov. 13 on insider trading by Members of Congress. Among the worst offenders are House Democratic Leader Nancy Pelosi of California and Rep. Spencer Bachus, the Alabama Republican who chairs the House Financial Services Committee.
There are many, many others. Trades by U.S. Senators beat the market by an average of 10 percent a year, according to a study by Georgia State University economist Alan Ziobrowski. Corporate insiders, trading their own stock, beat the market by only 6 percent.
No law forbids insider trading. But if you aren't a Member of Congress or on a congressional staff, Securities & Exchange Commission regulations prohibit it.
Nearly half (261) the 535 Senators and Representatives are millionaires. Most were rich before they got to Washington. But a large and growing number got rich while in Congress. Few get poorer from "public service." In the last two years, while middle class Americans have been struggling, the net worth of Members of Congress increased 25 percent.
"How do politicians who arrive in Washington D.C. as men and women of modest means leave as millionaires?" Sarah Palin asked. "How do they miraculously accumulate wealth at a rate faster than the rest of us?"
The Hoover Institution's Peter Schweizer has answers. The 60 Minutes segment was based on his book, "Throw Them All Out." (Buy the book at a 40% discount by clicking here or in Kindle Edition at a 46%discount by clicking here) Insider trading is just one of many -- and by no means the most important -- ways in which politicians enrich themselves and their friends at the expense of the public they claim to serve.
Countrywide Mortgage, the fly-by-night firm at the epicenter of the subprime mortgage crisis, gave below market home loans to powerful Democrats in the Senate, who resisted reforms that might have reined in firms like Countrywide before they crashed the economy.
The Wall Street investment banks whose recklessness converted crisis into catastrophe received bailouts instead of bankruptcy. They've made more money under President Obama than they did in eight years under President Bush.
The top fundraisers for President Barack Obama raised $457,834 for his 2008 campaign -- and were approved for federal grants and loans of $11.4 billion. Of the $20.4 billion in loan guarantees the Department of Energy gave to "green" businesses, $16.4 billion went to firms either run or owned by Obama donors, Mr. Schweizer found.
Several, like the now notorious Solyndra, already are bankrupt. Others, like the company owned by Robert F. Kennedy Jr. which received a $1.4 billion bailout, aren't likely ever to stand on their own.
"How are experimental technologies based on ideological fantasies supposed to achieve commercial sustainability by being rushed to market for purely political considerations?" asked engineer and venture capitalist Bill Frezza.
The answer, of course, is that they won't. But when the purpose of federal aid is to reward political allies, commercial viability is rarely much of a consideration.
The worst thing about "crony capitalism" isn't the tens of billions of taxpayer dollars wasted or stolen.
Competing in a free market is tough. It's easier to make money when you have friends in Washington who will subsidize you, throw legal hurdles in the path of your competition, and bail you out when you get into trouble.
But when businessmen seek to profit by currying favor with politicians rather than by serving their customers better, the result is corruption and economic stagnation.
"Would a farmer who put out a trough of slop be surprised if it attracted a bunch of pigs?" Mr. Frezza asked.
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JWR contributor Jack Kelly, a former Marine and Green Beret, was a deputy assistant secretary of the Air Force in the Reagan administration.
© 2011, Jack Kelly |
Arnold Ahlert | |||||||||||
