Crony Capitalism and the American Left: A Love Story

The American left-wing, mostly comprised of Democrats with some Republican support, often claims to support expansion of the welfare state at the supposed cost of the rich. Politicians such as Elizabeth Warren and Barney Frank claim that they fight for the cause of the little man, and push welfare state programs which will supposedly force the rich to “pay their fair share” and distribute wealth down to the lower classes. According to these leftists, it is the government’s responsibility to even the playing field and force the rich to cough up for the greater good.

This is pure baloney from top to bottom. This is not what happens. Thome’s #1 Rule of Understanding Government: “Follow the money”. Where is the money going? This is the question that must be asked.

This pie chart from the Congressional Budget Office shows how federal spending is allocated for fiscal year 2012:

 

Let us examine this chart. Take a look at the blue; Defense spending. Where is the money going? Into the pockets of a few lucky Defense firms. Ask anyone in the biz with a little know-how, and you’ll discover very quickly that jobs with Defense firms have some of the highest pay in their respective industries. This is no accident. This has been true ever since the military-industrial complex cranked into gear post-World War II.  It is a magnificent example of government spending to line the pockets of the rich at the expense of everyone else.

Of course, that is only the tip of the iceberg. Look at the spending for Medicare/Medicaid and Social Security together: 45%. I lump these together because Medicare is paid for out of funds ostensibly collected for Social Security. Together, they comprise the largest welfare program in the history of mankind. Everyone understands that these are programs designed to steal from the young and give to the old, specifically to the old folks who never bothered to save enough money for their twilight years. The maximum taxable salary cutoff for Social Security is about $110,000. This means that any given person pays about $15,000 to $16,000 per year at max. To the middle class and poorer, Social Security bites a sizable chunk out of their paycheck. This is a pittance to the wealthy. The young are taxed for the sake of the old, but the wealthy feel next to nothing.

Apply Thome’s #1 Rule of Understanding Government to any welfare program, and the true nature of the program instantly becomes obvious. Food stamps: Where does the money go? To large agribusiness firms. The wealth of American taxpayers is forcibly distributed to wealthy agri-businessmen. The famous Obama-phones? Large telecom companies who snag the government contracts benefit. Subsidized student loans? They make colleges and banks filthy rich. Remember Bush’s prescription drug bill of 2003? That was jackpot for large pharmaceutical companies. In every case, it is the same: The federal government is in deep alliance with large, wealthy businesses and the super rich. Together, they hose the middle and poorer classes, they do their darndest to stamp out small businesses and mid-size businesses, and they do it all in the name of social justice. This is not a bug of the system; it is a feature. It is incorrect to say “The American system is broken”, because it is not broken. Quite the contrary, this is exactly how the Crony Capitalist system is meant to operate.

Contrary to what many people believe, large corporations are not ironclad and immune from competition. There is a pervasive notion that when a corporation reaches a certain level of success, they become totally immune to competition and make it impossible for any smaller business to compete. This is not true. Small businesses can indeed compete, and ferociously. In fact, large corporations are so afraid of small upstarts that they turn to the only entity that can protect them: the Federal Government. This is the purpose of 99% of all business legislation: to stamp out competition. The first good example of this in American history was in the railroad industry of the late 1800s: the large railroad firms were seeing new competitors start to eat away at their profits, so the large railroad companies paid off their politician friends to create the Interstate Commerce Commission (ICC). The ICC, which operated under the string-pulling of the large railroad firms, then proceeded to regulate all smaller railroad companies out of existence. Of course, the ICC was claimed to be a watchdog agency and “progressive” measure which would protect consumers from the greedy railroad businessmen. This is certainly not what it was used for. This is classic Crony Capitalism. Thus began the love story between the progressive left and Crony Capitalism.  

Large corporations cannot force small businesses to submit, but the federal government can, because the federal government is allowed to use violence to attain their ends. Contrary to popular notion, most large corporations do not oppose the introduction of new regulations, such as raising the minimum wage or the institution of Obamacare. This is because large corporations and the super rich can afford to comply with these regulations, and they can afford the legal costs to deal with the red tape. The cost is a pittance to them. It is not a pittance to small businesses. These costs drive many small businesses under, and also deter many entrepreneurs from entering the market. This locks in the reigning corporate power structure. Large corporations and the super wealthy cement their fiscal positions with the loving help of the federal government and the agitation of the left wing. The cost of regulation is not seen as a hindrance by large corporations and the rich; rather, they see it as a cost of doing business.

This is one of the greatest shows on earth. The Left wails for the expansion of federal power and welfare programs in the name of the little man against the greed of Wall Street and the 1%. The Federal Government happily complies. Large corporations snag lucrative government contracts and wield increased regulation as a club to beat down smaller competitors. The rich, both businessmen and politicians, get richer. The middle class and the poor do not always get poorer, but they find it much more difficult to accumulate wealth. The very programs that Leftists claim will even the playing field for the poor are actually the very programs that are screwing them over. If it wasn’t such a serious issue, it would be humorous. Every time someone says that government regulation restrains greedy corporations from screwing over the little man, it is a fart in the face to middle class and poor folks everywhere.

This paradigm has a name: Crony Capitalism. The Left has been rife with Crony Capitalism since at least the time of Teddy Roosevelt. The roots can be traced back even further. Franklin Roosevelt really kicked Crony Capitalism into gear with the New Deal in the 1930s, and Lyndon Johnson put it on full throttle about 30 years later. Each ruling Presidential regime has upped the ante in small ways ever since. The bigger the Federal Government becomes, the worse Crony Capitalism becomes. They are intrinsically connected. The American Left boldly agitates for the expansion of welfare programs and government power, and they do so for the ultimate benefit of large corporations and the rich at the expense of everyone else. Some self-proclaimed leftists, namely leftist politicians and businessmen, are well aware of the crooked looting and mass thievery they are engaging in. Many leftists, however, genuinely believe that the government regulation they so enthusiastically support is protecting the little man.  Forgive them, for they know not what they do.

There is only one solution: the power of the Federal Government must be rolled back. The Free Market must be allowed to operate. Regulations must be repealed, so that large corporations can once again be subject to free competition, the struggle for efficiency, and service to the consumer. The forcible redistribution of wealth from the middle and poorer classes to the super rich through government welfare programs must be ended.  Will any of this happen anytime soon? Probably not. Not until the middle class begins to seriously feel the pinch. When this condition is satisfied, then we may have an opportunity to change things for the better.

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