Generally this is a pretty good article. The one big issue I have with it however is that the authors seem to imply that crony capitalism and protectionism are somehow new to this country with the emergence of Trump. This is definitely not the case. Crony capitalism has long infected the USA. In fact our economy is pretty much defined by crony capitalism and long has been. Obama was a hard core crony capitalist for instance, padding the bottom line of Democratic Party big shots with the taxpayer financed “greenrush” for instance. And there were many many other crony Obama programs. (Obamacare was/is deeply crony.) President Bush “abandoned capitalism to save capitalism” and then promptly bailed out the banks that should have been left to die. Nixon disposed of the last vestiges of the gold standard. FDR was practically Mussolini on the economic front. Wilson ushered in the Federal Reserve.
We have a long tradition of crony capitalism. It’s not new.
But crony capitalism and protectionism ARE INDEED the despot’s way. Just ask Xi in China. (Actually don’t ask him. Probably not the best move health wise.)
President Donald Trump has finally figured out a way to make Mexico pay for his border wall: The United States will simply become Mexico, and the ultimate accounting gimmick will finally be complete.
Or, rather, it will become more like Mexico circa last century: An authoritarian country that boasted some of the most protectionist trade policies on earth and where crony capitalism reigned supreme. If this occurs, we would join a notorious club.
Let’s not go crazy. Mexico in many respects is still a deeply crony capitalist country.
At least since World War II, there has been an unholy trinity in which authoritarianism feeds into crony capitalism, and both fuel trade protectionism. All three rely not on the rule of law, which is the linchpin of democracy and well functioning markets, but on the personal discretion of rulers. Rulers with authoritarian tendencies, or who operate in an authoritarian system, use the law to favor their friends and punish their enemies.
To benefit their friends, these rulers dispense favors, exemptions from regulations, provide subsidies and extend cheap loans that may never be repaid, except by taxpayers. They also exempt them from the import tariffs and quotas that everybody else has to abide by.
Yup. That’s crony capitalism for you. And yes, Trump is too enamored with some of these crony tactics. Far too enamored.