The Perfection of Crony Capitalism: Use Regulation to Destroy Competitors
Crony capitalism uses its wealth to impose government regulations designed to hinder, cripple and destroy small business competitors.
In the U.S. we now have the perfection of cloaked crony capitalism: corporate cartels use their vast concentrations of capital and revenue to buy the political leverage needed to write regulations specifically designed to eliminate competition.
Recall that the most profitable business model is a monopoly or cartel protected from competition by the coercive Central State. Imposing complex regulations on small business competitors effectively cripples an entire class competitors, but does so in “stealth mode”—after all, more regulations are a “good thing” (especially to credulous Liberals) which “protect the public” (and every politico loves claiming his/her new raft of regulations will “protect the public.”)
This masks the key dynamic of crony capitalism: gaming the government is the most profitable business model. Where else can you “invest” a few hundred thousand dollars (to buy political “access” and lobbying) and “earn” a return in the millions of dollars, and eliminate potential competitors, too? No other “investment” even comes close.
The ever-expanding galaxy of regulations that business owners have to meet is a function of the corruption of government, i.e. corporations lobbying the government to pass laws and regulations (usually written by industry lobbyists to the specifications of their clients) specifically designed to eliminate competition by raising the costs of compliance amd imposing heavy fines via enforcement.
As an example, let’s take a slice of American mythology, the family farm, that is under increasing pressure from just this sort of Corporate-State crony capitalism. Consider the family-owned small to medium size farmer who understands that the farm is a nature-based system that requires certain practices to maintain the health of the farm and the quality of your produce/meat/milk.
Suddenly a number of corporate agribusiness farms (i.e. concentrated animal feeding operations—CAFO) spring up nearby where thousands of pigs/cows are crammed into huge barns and the operation is run like a factory, enabling the CAFO to produce meat or milk at a significantly cheaper cost or production.
What’s left out of the equation is the pollution to the environment and any associated health costs and damages to the values of the neighboring properties (Of course, these CAFOs are never sited near an affluent neighborhood).
In addition, the quality of the meat is suspect, as all the potential disease outbreaks that come with monoculture practices and crowded conditions can only be suppressed with constant, massive quantities of antibiotics. This is the perfect condition—animals packed together, plentiful manure, constant use of antibiotics—to create super-bugs that are resistant to antibiotics. Life being what it is, opportunistic and adaptive, eventually these resistant bacteria find a new and unprotected host, human beings.
A small family farm cannot duplicate these risk factors; only CAFOs can generate this kind of bacteriological danger to the populace.
These kinds of systemic costs created by the CAFOs are transferred to the taxpayer, including the local farmer who has to compete with the CAFO.
Since government in the U.S. is always for sale, and since the revolving door between the legislative and regulatory agencies and the lobbying industry is always spinning, it’s straightforward to hire “the right people” and “express your concerns” to the corrupt politicos.
Here are some examples of the crony-capitalist favors corporate lobbying and campaign contributions can buy: