The glory that is human nature..............

Because we specialize in production, our well-being is much more affected by changes in the market for what we produce than it is by changes in the market for any one of the many goods and services that we consume.  That makes us strongly disposed to favor restrictions that restrict competition in the market where we produce.  Although we have a preference for free trade in the markets where we consume, that preference is less focused and less intense.  As a consequence, political lobbyists representing producer interests are more heavily engaged that are lobbyists for consumer interests.  In turn, that difference can lead to a regulatory process that favors incumbent producers to the detriment of consumers and new would-be producers.

-Arnold Kling,  Specialization and Trade:  A Re-Introduction to Economics

The Great Rebellion..................

Its expressions range from Brexit to the Trump phenomena and includes neo-nationalist and unconventional insurgent movement around the world. It shares no single leader, party or ideology. Its very incoherence, combined with the blindness of its elite opposition, has made it hard for the established parties across what’s left of the democratic world to contain it.
 

What holds the rebels together is a single idea: the rejection of the neo-liberal crony capitalist order that has arisen since the fall of the Soviet Union. For two decades, this new ruling class could boast of great successes: rising living standards, limited warfare, rapid technological change and an optimism about the future spread of liberal democracy. Now, that’s all fading or failing.

 

Living standards are stagnating, vicious wars raging, poverty-stricken migrants pouring across borders and class chasms growing. Amidst this, the crony capitalists and their bureaucratic allies have only grown more arrogant and demanding. But the failures of those who occupy what Lenin called “the commanding heights” are obvious to most of the citizens on whose behalf they claim to speak and act.

-Joel Kotkin, as they say, read the whole thing
 

Ouch..................................Part 2

"There is of course much hypocrisy in the theoretical edifice. For example, businessmen argue that the minimum wage constitutes intolerable interference by the government in the conduct of business—meanwhile sending armies of lobbyists to Washington to make the government interfere in the conduct of business. In fact capitalists have no objection to federal meddling. They just want it to be such meddling as puts more money in their pockets. Nothing more. Ever."

"The quest for cheap labor has perhaps caused less misery than war—itself a most profitable business, war—but it is neck and neck. Businessmen imported blacks as slaves to have cheap labor, with disastrous results continuing to this day. Businessmen encourage illegal immigration from the Latin lands so as to have cheap labor. They sent America’s factories to China to have cheap labor.  And now they peer with wet lips and avid gaze at…robots."

-Fred Reed, as extracted from this post worrying about where will people find work, and how will they live when they find it.

Can I comment that the first paragraph probably describes cronyism, more than capitalism?

Here's a radical idea...........................

..............................for fixing our "free enterprise" system.  Let's encourage more competition.

The Economist takes aim at what ails America's economy in this essay.  For my money the three most important paragraphs are as follows:

     Getting bigger is not the only way to squish competitors.  As the mesh of regulation has got denser since the 2007-08 financial crisis, the task of navigating bureaucratic waters has become more central to a firm's success.  Lobbying spending has risen by a third in the past decade, to $3 billion.  A mastery of patent rules has become essential in health care and technology, America's two most profitable industries.  And new regulations do not just fence big banks in:  they keep rivals out.
      Having limited working capital and fewer resources, small companies struggle with all the forms, lobbying, and red tape.  This is one reason why the rate of small-company creation in American has been running at its lowest levels since the 1970s.  The ability of large firms to enter new markets and take on lazy incumbents has been muted by an orthodoxy among institutional investors that companies should focus on one activity and keep margins high.  Warren Buffett, an investor, says he likes companies with "moats" that protect them from competition.  America Inc has dug a giant defensive ditch around itself.
      Most of the remedies dangled by politicians to solve America's economic woes would make things worse.  Higher taxes would deter investment.  Jumps in minimum wages would discourage hiring.  Protectionism would give yet more shelter to dominant firms.  Better to unleash a wave of competition.

If you are unhappy with our current economy, don't blame capitalism or free enterprise.  Without much fanfare, we seemed to have morphed into "crony capitalism," a very different, and not generally friendly, animal.  As The Economist essay says, "Two-thirds of Americans believe the economy is rigged in favour of vested interests."   Can we hope for change?

On reforming class warfare........................

Not "the rich versus the non-rich," but "the workers versus the looters."

-as taken from this blog post

via

Regulation...............................

"Regulation is often the enemy of competition.  Where regulation prescribes the conduct of business in considerable detail, it is inevitable that all firms will behave similarly:  a particular conception of 'best practice' will be shared between regulators and regulatees.  Incumbent firms with close links to agencies may use regulation to resist innovation and raise barriers to new entrants."

-John Kay,  Other People's Money: The Real Business of Finance

Can we get an Amen.............................?

Great Wealth is Bad Only When It Comes from Cronyism Instead of Creating Consumer Value

-Reads the heading of this blog post

Just so you know, I belong to the school of thought that the gravest danger to capitalism comes not from socialism but from crony capitalism.   Crony capitalism is a corruption that, like termites, stealthily destroys the foundation of a great structure.   Just saying.

Cronies..........................

"Both big government and big business like to stack the deck in their favor.  And though they are sometimes adversaries, they are far too often allies.
     "Bureaucrats favor big business over the upstarts.  Large companies are more predictable - and easier to control.  So government tips the scales in their favor, instead of letting competition sort things out.  And big business is a willing accomplice - because regulation keeps the competition out.  Many times, large corporations don't oppose new regulations;  indeed, they help write them.  The point is, crony capitalism isn't a side effect - it's a direct result of big government."
-Paul Ryan, as excerpted from here

A few of my favorite things.............

From Michael Hyatt:   A book review (Essentialism) so good, you probably don't need to buy the book.  One of his seven take-aways:   #7 The liberating possibility of no. Saying no to the many trivial requests, Essentialists are really saying yes to what matters most in their lives: their faith, their family, their health, their calling.

From Kids Prefer Cheese:   Monday's Child is full of links

From Pat Guanciale:  Taking refuge

From Newmark's Door:   The real villain is crony capitalism (which is a vastly different thing than capitalism)

From the View From the Ledge:  A properly placed book can be an effective weapon.

Kay on governmental licensing.......................

Full post is here.  Two wee excerpts here:

Taxi licensing illustrates regulatory capture, the phenomenon by which regulation intended to serve the public is hijacked by industry interests. 

Politicians should beware of policies that are easy to implement and costly to reverse.

That's something you don't see everyday.....

The Washington Post gets a pat on the back from Mark J. Perry.

The Washington Post takes on "Big Sugar" in this editorial.

Perry concludes his post:  "US sugar policy violates the interests of consumers, and by doing so, violates the interests of the human race, in favor of a politically favored special interest group – “Big Sugar.” Kudos to the Washington Post for speaking up on behalf of the hundreds of millions of US consumers who pay about $3 billion in higher prices every year to Big Sugar because of the ongoing government-sanctioned protection that industry receives from more efficient foreign rivals."

Giving capitalism a bad name.................

Dow Chemical publishes this letter suggesting we should stop "unchecked exports" of natural gas.

Mark Perry posts this response as he opts to "re-nominate Dow Chemical for corporate rent-seeker and crony capitalist of the decade century award."

Too big to prosecute......................?

Gretchen Morgenson, at the NYT,  writes:

"We already know that banks of JPMorgan’s size are also too big to be allowed to fail and too big to prosecute. Such banks are too big to regulate and apparently too big to manage. So how much more evidence do we need that banks like JPMorgan are simply too big a risk for taxpayers to bear?"

cartoons here, here, here, and here