AT&T’s Tax-Cut ‘Bonus’ Represents Crony Capitalism at Its Worst (Well, kind of but mostly no)


It certainly isn’t crony capitalism at its “worst.” Consider the bailouts. That is crony capitalism at its worst. Consider the Obama “stimulus” green rush. That is crony capitalism at its worst. Consider the long going Quantitative Easing from the Federal Reserve. That was crony capitalism at its worst. Consider all the money flowing to unnecessary wars in the deserted regions of Asia. That is crony capitalism at its worst.

Companies giving out bonuses and tying them rhetorically to the tax deal? That isn’t crony capitalism at all. If however these companies are doing it to curry favor with regulators in a Trump executive branch then it it is indeed a form of crony capitalism. But there’s no guarantee that such a ploy will work, and it’s not like these companies just got a big fat subsidy or something. This time.

The author of the attached article seems to kind of get the crony capitalism critique right. He correctly asserts that companies should make decisions within the market, not to please politicians. This is of course correct. But it is not entirely clear that this is the play here. (Though it very well may be.)

What would the author prefer, the companies NOT give out the bonuses even if the companies have tied them rhetorically to the passage of the new tax law? Perhaps that would have been better. Not for the employees, but perhaps ethically.

The 3 companies in question here are all crony. AT&T was practically born in cronyism and is plenty cozy with the NSA etc. Comcast, though right to have fought “net neutrality” is crony in many other ways, particularly with regard to how it deals with local governments. And Boeing, well Boeing is one of the cronyist companies to have ever existed. It has its own taxpayer backed bank, The Export-Import Bank of the United States, also referred to as “Boeing’s Bank”. These companies should always be scrutinized. Just in this narrow, specific case, we do NOT see crony capitalism at its worse. Not even close. But don’t worry, we’re sure they’ll do something plenty crony soon.

(From Real Clear Markets)

No one wants to be the skunk at the garden party. Nevertheless, it must be said: The decision by large companies like AT&T, Boeing and Comcast to provide employee bonuses as a form of tribute in return for tax cuts and other government favors is an example of crony capitalism at its worst, not market capitalism at its best.

AT&T, facing a Department of Justice suit aimed at blocking its $84.5 billion purchase of Time Warner, greeted the corporate tax cut with an immediate promise to provide a $1,000 bonus to each of its 200,000 employees, and $1 billion in capital expenditures. For all intents and purposes, the DOJ case against AT&T has turned out to be a bill of attainder, aimed at one company. And the bill was paid in full as soon as corporate taxes were cut and the Administration needed to bolster its argument that companies would pass on the savings.

Comcast followed up with its own promise of employee bonuses and capital spending, and explicitly linked that decision not just to the corporate tax cut but also to the FCC decision to scrap net neutrality. Boeing, beneficiary of myriad government loans, Ex-Im Bank funding, and anti-dumping suits against its competitors, is also promising more money for employees and for charities.

Click here for the article.