There are many components to crony capitalism. And it takes many forms.”Regulatory capture” is one of the most important to understand.
Often business loves being “regulated.”
Consumers enjoying falling prices and growing output were not up on their hind legs demanding the state regulation of utilities, or the antitrust laws, or the regulation of Uber that taxi companies now insist upon. Political elites and well-positioned producers hoping to replace competitive enterprise with favoritism are, though. Renewable energy mandates and autonomous vehicle standards for drones and self-driving cars seem particularly ripe for exploitation by cronies and pressure groups these days. Utility 2.0, you might say; we already got utility regulation for the Internet this year with FCC’s net neutrality rules.
As far as the central review process is concerned, cronyism creates rules for “review” that shouldn’t exist in the first place. And what were once small businesses, when they get big, may look more favorably upon “rent-seeking” and score-settling.