Not All Capitalism Is Created Equal [Reader Post]

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Without a doubt one of the two must underrated sites on the internet is Intellectual Takeout. It’s a place where questions are answered filtering out the bias of the political spectrum. I love this site for the challenges it presents to its readers to think beyond themselves and their world view. A few days ago I stumbled upon a gem. It goes a long way into understanding what is bubbling in the belly of the Conservative political gut. It takes on Capitalism as preached by those in power and Capitalism as understood by the conservative/libertarian voter. They are definitely not the same animal.

The article “Free Market Capitalism vs. Crony Capitalism” explores the difference and may be a look into the problem the Republican Party has in making inroads to Tea Party and Libertarian voters. They instinctively know the difference, while the Republican Party doesn’t seem to be able to acknowledge any difference at all. A quote from the article;

Unlike in a free market capitalist system, under crony capitalism it is often more profitable for businesses to spend resources lobbying legislators for handouts in the form of grants, loans, or tax advantages, and protections against competition in order to increase their profits. In turn, the government’s willingness to hand out special privileges promotes the politically well-connected rather than those who seek to earn the preference of investors and consumers based on merit.

The one failure of the article is that it moves forward citing demands by Occupy Wall Street protests as the only ones who understand the difference and are the only ones challenging this status-quo. That could not be further from the truth. The fact is that these people are Johnny Come Lately’s to the fight.

The Tea Party and Libertarians have been fighting Crony Capitalism for at least 3 years now. Some even longer. It’s not that Tea Party/Libertarian leaning people want others to be taxed at a higher rate or be regulated out of existence. It’s the influence of Crony Capitalism on policy and uses of elected officials to gain advantages single voters have no chance of getting that is the difference. Let us face facts, who is a politician going to be most influenced by:

A K Street lobbying firm who has resources bundling millions of dollars for a politicians election and also has members working inside these election campaigns. Some of these people are previous politicians who know the game, the players, and what it takes to get favorable policy passed.

Joe and Jane Doe who give what little they can afford because they believe in the promises of the politician at the time.

To pretend that there is no difference between the two examples is willful ignorance. This difference is what is holding back usually staunch Republicans and Conservatives from giving enthusiastic support to the party’s nominees. Most self-described Tea Party/Libertarians see this as fundamental to the reason why the government is broken, will not be fixed any time soon, and will continue to only get worse until people willing to make substantive change are able to be elected. Crony Capitalism has long ago been pointed out by these people as not a symptom of what ails our government, but its root cause. The promises of the Republican Party of fixing what is broke rings hollow to more and more people of conservative foundations. They are considered just as guilty of using Crony Capitalism as the Democrats party. Democrats use unions; Republicans use special interest lobbying firms. Both addicted to the money both of these entities provide in keeping them in power. Crony Capitalism is as far from Free Market Capitalism as football is to baseball. The only similarity is that they are both games that happen to share the same word.

The Republican Party has tried to condemn anyone who attacks the inbred form of Crony Capitalism they practice as an attack on Free Market Capitalism. They cannot allow there to be a distinction of the two and for years they were able to do so. Until the age of the internet. That has changed everything.

People now have a wealth of information literally at their fingertips. One of the most valuable things that the internet provides is a quick reference to voting histories, donation histories, promises made, and promises not kept. The line between Crony and Free Market Capitalism is not as easy to blur as it once was and is becoming clearer and clearer each election cycle. The history of promises and who gets the attention of politicians is able to plotted and viewed. People are designed to recognize patterns. It’s ingrained into our sub-conscious. It’s a function that we cannot escape or avoid. And patterns are forming. The pattern of Crony Capitalism is forever trending upward and the pattern for Free Market Capitalism is trending in its opposite direction.

Why?

P.S. The other most underrated site on the internet surely is Flopping Aces. I would be a fool to say otherwise for so many reasons.

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I believe all of these corrections would help turn around this country:
1. Institute a flat tax so everyone has skin in the game
2. No tax deductions, for anyone (this should stop lobbyists and tax lawyers)
3. Workfare not welfare (we will still need a safety net for the truly needy, but must requalify every year). Just think of all the infrastructure projects that need manpower.
4. Term limits for all federal elected offices (max 12 years) and retired elected officials should get retirement benefits commensurate with private benefits
5. Tort reform, you sue and lose, you pay ALL costs and fees
6. No federal or state unions unless the voters get to vote on any and all issues
7. Stop foreign aid, especially to those countries that do not support us
8. Get the US out of the UN and the UN out of the US (this organization has become a very crooked insitution)
9. FICA and Medicare deductions on all earned income

I absolutely hate state capitalism. The State should be calling the balls and strikes, not pitching, fielding, and striking out. They run the military. Everything else, including NASA, is failing.

I’m going to give you all a real example of something that happened in the paper/printing industry under Obama then ask you whether you would call it “Crony Capitalism,” or “Free Market Capitalism.”

For CENTURIES, paper mills have used a by-product of wood pulp to power their paper-making mills.
It is a 100% green form of energy.
As a new president with a million czars, Obama made use of this energy illegal.
America lost many paper companies.
Printers (including government printers) complained about the poor quality of foreign-made paper products as they go through the machinery to become printed.
Eventually Obama relented and now allows that green energy to be used.
Some of the larger old paper companies were able to restart their paper production.
Many smaller ones were gone forever.

So, which was it?
Crony Capitalism?
Free Market Capitalism?

We were a small part of the printing industry’s coordinated effort to get that particular green energy back in use.
We have better paper to work with today because we (collectively….you know….through lobbyists) succeeded.

@Bruce: #1
I agree with most of what you say. If you haven’t read “The Fair Tax” book, I suggest you do. It is very simple, everybody pays the same percentage, and the poor are taken care of. The bill is in congress now.

@oil guy from Alberta: #2
Minor correction: “state” is a state in the USA. “State” is the Federal government. I still don’t understand why one word was used for both meanings.

@Nan G: #3
Another question is who knows the better way to run a company? (1) The ones who own it. (2) The government.

Ways to protest Obama’s government:
(1) Buy as much American as reasonable. For items that I will probably buy once in my lifetime, or very seldom, I don’t mind paying more. If I have to buy non-american made products, I look for companies that I want to support. They are out there, but you have to look for them.

(2) Don’t buy Chinese unless you have to. I tried to find a tow strap or rope for my new pickup, but they were all made in China. I didn’t want a chain because I don’t have a tool box and didn’t want it inside the pickup. The chain was made in the USA, so I bought it and looped it around the two front tow rings. Where I live, it fits right in.

(3) Let your politicians know how you feel about things they do and don’t do, and let them know what you want them to do and not do.

(4) Be an ACTIVE member of a Tea Party. If you haven’t been to a Tea Party rally, I have been to most of them in Washington DC and other places, and you won’t find a more polite, courteous, and kid friendly group. We even pick up after ourselves.

http://goodsensepolitics.blogspot.com/2009/09/compare-garbage-after-tea-party-vs.html

We have better paper to work with today because we (collectively….you know….through lobbyists) succeeded.

Nan G
I cannot debate that Lobbying sometimes does result in better policy. But I have one word for you to consider as a argument it is not always the case.

TARP

The companies that have been awarded taxpayers’ money from Congress’s bailout bill spent $77 million on lobbying and $37 million on federal campaign contributions, Center finds. The return on investment: 258,449 percent.

http://www.opensecrets.org/news/2009/02/tarp-recipients-paid-out-114-m.html

Jesus was a socialist. The New Testament warns us again and again where a preoccupation with personal material wealth will take us.

Nan G.
is that would be CRONY CAPITALIST?
I’m not sure, but I see GOVERNMENT IMPLICATION, AND CHANGE OF DECISIONS.
BYE
I also think that this GOVERNMENT is getting into a busyness and intimidate threaten and it’s to get hand out from company, if they don’t the first time, they will send a thug with a tone of voice in high pitch like BIDEN OR THE UNION BOSS TYPE OF GUY, AND IT MIGHT WORK, IF NOT THEY GIVE THE PRICE OUT LOUD THE 3RD TIME AND GET MORE PRECISE ON WHAT THEY WANT AND WHAT THEY CAN DO IF.
AND THE DEAL IS DONE, MANY COMPANY WHERE INTIMIDATED THE UNION STYLE THAT WAY FOR OBAMA CAMPAINGN
the bully guy get a good job after this campaign

jason
I think that JESUS ALSO PROFIT FROM HAND OUT FROM HIS APOSTELS WHO TOOK CARE OF HIM,
AND NOT JUST FOLLOW HIM BUT FED HIM AND PROVIDE SERVICES. NO ONE CAN DO COMPLETELY ALONE, BUT JESUS DID NOT TAKE TO PROFIT FOR HIMSELF, AS MANY ALSO DO BUT THEY NEED A CERTAIN BALANCE OF PROFIT SO TO RISE ABOVE BEING POOR,AND TO SURVIVE and to continue their merchant position they are good at, some want it all only for them but not the other, like OBAMA AND THE DEMOCRATS
BYE

All the “free trade” agreements, the World Trade Organization, were also from progressive globalist lobbyists, their goal: global interdependence as a stepping-stone leading to a one world government (and to enrich themselves of course). The United States economy and it’s people was doing quite well financially under the old system of taxes and protective tariffs. Employment was high, only one bread-earner was required for most families, the living standard was high. We even managed to pay for the entitlement programs of the FDR administration.

Smorgasbord,

Thanks for your comment. I’m not sure if the Fair Tax eliminates all deductions or not. I think if we get the government out of all personal spending decisions, the flat tax is simpler. If everyone competes for ideas on an even keel without goverment ‘favorites’ (i.e. tax deductions), the free market will determine winners and losers. And just think how many lobbyists, tax lawyers and IRS agents we could eliminate!

I think it is very important to get everyone involved in the economy so they feel that they are contributing. A flat tax will do just that.

THE FLAT TAX IS FAIR FOR EVERYONE INCLUDING THE WELFARE RECIPIENTS AND ANYTHING BOUGHT FROM GOVERNMENT, ANY EMPLOYEE IN GOVERNMENT INCLUDING THE PRESIDENT,ANYONE ON THE TAXPAYER TICKET AND ANY FOOD STAMPS SPENDING,
THAT IS WHAT WE CALL FAIR, YOU SEE MANY POOR BUYING MORE THAN THE WORKING PERSON,
WHEN YOU GO SHOPPING AND OBSERVE THE CROWD, IF THEY ALL PAY THEIR TAX ON WHAT THEY BUY, IT IS FAIR. THEY NEED TO LEARN THEY ARE WITHIN THE SHARING THE EXPANSES AS THE TAXPAYERS DO, AND YOU WILL SEE THEIR CHANGE OF VIEW AND THEY WILL CONTINUE TO BUY BUT WITH A FEELING THEY CONTRIBUTE AND WILL BE PROUD OF BEING AMERICANS ON THE SAME LEVEL, THIS WILL DRIVE THEM TO FIND WORK WHEN THEY CAN LEAVE THE WELFARE.
AND ALSO EDUCATE THEIR CHILDREN TO LEAVE THE GANGSTA CROWD AND GET INTO CRIME,

@Ditto: #11

…only one bread-earner was required for most families,….

The reason one bread winner could earn enough to support a family back then is because the income level was far below what it is now. You had to work your way up to make it into the lowest income level. As inflation increased, the workers started at higher and higher wages, but the income tax levels stayed the same. This means that each generation of workers starts at a higher income tax level than the last one did. As time goes on, and inflation keeps raising the starting wages, the new worker will start out at the highest tax level and stay there all of their working life.

This is why the politicians want to keep the income tax system the way it is. Even if the taxes aren’t raised, each time wages are increased for inflation, you probably pay more to the IRS (Income Redistribution Service). It should be adjusted for inflation. I prefer scrapping it completely and replacing it with the Fair Tax.

@Bruce: #12
Concerning the Fair Tax, when I read the book I thought some of the ideas were really STUPID. As time went on, I have changed my mind. Nobody should reject the Fair Tax unless they have read the book or gone to their web sight and read about it.

I’m not sure if the Fair Tax eliminates all deductions or not.

The Fair Tax doesn’t have ANY deductions because the only tax there is is a sales tax when you buy NEW stuff. They should have called it the Federal Sales Tax, because that is what it is.

…the flat tax is simpler. If everyone competes for ideas on an even keel without goverment ‘favorites’ (i.e. tax deductions), the free market will determine winners and losers. And just think how many lobbyists, tax lawyers and IRS agents we could eliminate!

How much simpler is paying your taxes with every purchase you make and NEVER filling out an income tax form? With any kind of an income tax you will ALWAYS have people who don’t pay ANY taxes: The illegals, the thieves, the poor, people like lumpers at loading docks who are paid cash and earn $200-500 per day and don’t pay taxes because they are paid in cash. I heard one lumper talking about his welfare check.

With the Fair Tax, even the illegals and lumpers will pay the tax because they buy stuff. The IRS will completely disappear because the businesses will collect the tax at the point of sail and send it in.

There wouldn’t be any Federal Income Tax forms to fill out, and if the states would do the same, there wouldn’t be ANY income tax forms to fill out. By the way, the states that don’t have an income tax are doing better than the ones who do.

The Fair tax even takes care of the poor in the stupidest way I have ever heard,,,,, until I started thinking about it, and it certainly beats the welfare system now, because it eliminates all of the Federal ones.

Fair Tax homepage: http://www.fairtax.org/site/PageServer

How the Fair Tax works: http://www.fairtax.org/site/PageServer?pagename=HowFairTaxWorks

The Fair Tax people have a tax calculator that people can use to compare your present taxes to what they would be under the Fair tax. It was shut down when I went to it. It is at: http://www.fairtax.org/site/PageServer?pagename=calculator&autologin=true

@ilovebeeswarzone: #13

THE FLAT TAX IS FAIR FOR EVERYONE INCLUDING THE WELFARE RECIPIENTS….

The Flat Tax is a straight percentage tax on all income. The Fair Tax is the one that is actually a Federal sales tax, and that is what they should have called it to avoid confusion.

Great piece, Michael. The subject you write about is also one that is quite misunderstood by the liberal/progressives. To them, ALL capitalism, but especially the capitalism that TEA party people talk about, is “crony capitalism”. And even then, they deny, deny, deny that Obama and the liberal/progressives in Congress are practicing “crony capitalism”.

@Smorgasbord:

I love the idea of the Fairtax, and wish fervently that it would get more play to the masses. It makes sense, and treats everyone as fair as they could possibly be treated.

Unfortunately, pols like Obama, Reid, and the rest of the liberal/progressives do not want this for a reason. It takes away an avenue of politics that they use every election to pit groups of people against one another, in order to gain votes. The establishment GOP doesn’t want it either, as it does away with a large part of “crony capitalism”, mainly, the tax breaks the government can hand out, as a perk, of supporting the GOP.

One of the best things about the Fairtax is that it does away with corporate taxes altogether, and would make America the place to be for businesses starting out or expanding that are worried about corporate or business tax levies. And since we, the consumers, actually pay those taxes anyways, albeit indirectly, the change for the consumer won’t be felt hardly at all. I’d read somewhere that a vehicle, for instance, while having a lower list price due to no taxes on the companies making it, or making the parts, or mining the raw materials, etc., would be roughly the same price once the “consumption” tax is levied. We, the consumer, would pay the same price, essentially, as we do now.

Of course, the one area of the economy that might boom, if the Fairtax was instituted, would be the “secondhand” stores selling the used items. I don’t remember how the Fairtax treats this area, but I don’t believe that any taxes would be levied on such items. Am I wrong?

@johngalt:
Another thing: the young don’t seem to want it, either, johngalt.
This is an interesting graphic polling result done by Harvard University’s Institute of Politics asking young people (ages 18-29) various questions and pitting their views on one issue against many others to see which takes precedence.
The original work is here:
http://www.iop.harvard.edu/var/ezp_site/storage/fckeditor/file/spring_poll_12_exec_summ.pdf

Look down to the issue ”addressing income inequality.”
It only wins in priority over ONE other issue: Combating the impact of climate change.”
Obviously a flat or fair tax is irrelevant to them.

Lots of other really interesting match-ups there, too.

Smorgasbord
you are telling me that I goof by mixing the flat tax and the fair tax,
is in it?
I meant the rest of the comment,
so by right I should have said to begin with ; THE FAIR TAX is fair for everyone and so on and so on
am I right?
sorry about it, and like you said it is confusing with the two,
bye

@johngalt: #18
Another reason the politicians don’t want the Fair Tax is that it would eliminate a lot of Federal jobs, and that would be a lot less people who the politicians would have control over. You know how politicians like to control people.

Another advantage of the Fair Tax is that American corporations would bring their headquarters back to the USA, since there won’t be any corporate taxes, which are the highest in the world right now. Other countries businesses would start bringing their corporate headquarters here, since they won’t have to pay ANY taxes here.

There won’t be ANY taxes on used items, only NEW items, but it would tax EVERYTHING including food, drugs, medicine, and services. As you mentioned, the price would still be the same. The Fair Tax won’t raise the prices. One lie those apposed to the Fair Tax is that it would ADD the tax to items. It actually SEPARATES the taxes and puts the amount of the taxes you are paying on your receipt so you will see how much you are paying in taxes. This is another reason the politicians don’t want the Fair Tax; they don’t want you to know how much you are paying in taxes. If you knew, you would complain.

If you want the Fair Tax to be passed, contact your Federal reps and tell them. It is in congress right now. You might want to contact your state politicians and ask them for their own Fair Tax.

@Nan G: #19
I always have a problem with surveys when they don’t list the EXACT questions. I want to know what was asked, especially when it comes from liberal organizations like The New York Times and Harvard.

@Smorgasbord:
Yeah, me, too, smorg.
But I just loved the WAY they graphed the answers by comparison to one another.

Back to ”crony capitalism.”
What’s new with Obama’s greendoggle, Solyndra?
They left behind a toxic mess, that’s what!

Solyndra leased a building on California Circle for the final assembly of its solar panels. But the cleanup at the leased building in Milpitas is in limbo, because Solyndra doesn’t want to pay.

CBS 5 found the building locked up, with no one around. At the back, a hazardous storage area was found. There were discarded buckets half filled with liquids and barrels labeled “hazardous waste.”

The building’s owner, a company called iStar, claimed in court documents, “there may be serious environmental, health and safety issues” at the premises. According to the documents, they include, “numerous containers of solvents and chemicals. . . and processing equipment contaminated with lead.”

“Essentially it looks like they left a pretty big mess behind,” San Jose State Assistant Professor Dustin Mulvaney told CBS 5. Mulvaney has written a white paper (.pdf) on solar industry waste for the Silicon Valley Toxics Coalition. . . .

“Materials labeled hazardous waste require a lot more protocol, so its actually a lot more expensive to clean,” Mulvaney said.

http://sanfrancisco.cbslocal.com/2012/04/28/solyndra-not-dealing-with-toxic-waste-at-milpitas-facility/
Many heavy metals were simply left behind.
Cadmium, lead and other toxics just abandoned.
Let the taxpayers clean it up.
Obama’s bundlers walked away with tens of millions of OUR money!

Nan G.
WOW, another of your important find,
this is the crumbled dream of OBAMA ‘S GREEN ASPIRATIONS,
WHERE IS HE GOING NEXT? MAYBE THE ALGA WHERE THEY WILL
ENHANCE THE GERMINATION USING CHEMICAL FERTILIZER

@Nan G: #23
I read about the hazardous waste from Solyndra from another source. I never thought about all of the hazardous chemicals the green companies would create. It would be interesting to know how much of it is produced for each kind of product.

For those who want the compact florescent light bulbs, read the instructions that come with them telling you what to do if one breaks in your house, and how, after they burn out, you will have to pay $6-7 to send them to a hazardous waste disposal plant to be disposed of properly because of all of the mercury in them.