Crony Capitalism

Here’s an article in the WSJ about crony capitalism.

Crony capitalism has long been the case in Italy and Greece. 20 years ago in Greece, if you joined the Church you lost your job and your family disowned you. Not much concern for religious merit.

I think the author misses the root of the problem. Tax code? Loop holes? There is something bigger going on here. Doesn’t everyone want to give jobs to their friends and family? Doesn’t everyone want to transfer their losses to someone else and have their failed business models propped up by someone else’s money? What was it that stopped us from doing what is rampant in Italy and Greece? Was it the fact that your property was more protected here so cronyism was much less lucrative? Now that we’ve put the whole economy up for auction does it surprise anyone that we behave like the Greeks and Italians?

Besides, I think the argument in favor of merit is not “self evident”. If you want to hire your friends and family…fine. As long as I’m protected from your losses, I don’t care what business model you adopt, or what your attitude is toward merit. Of course, merit will win the day, but that’s because the meritorious and the crony will be equally protected.

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