CRONY CAPITALISM: Not the Way to Make America — and Liberty — Work

One of the many reasons why I love America is here, like no other country, you are as wealthy as you choose to be.

Let that sink in, especially if you don’t currently have the money you would like to have. Regardless of what you do for a living right now, because of the freedom granted to each and every American, you can start making the necessary choices to put yourself on the path to immense, monetary wealth. You simply need sweat and persistence behind even the most average idea. Pet rock, anyone?

A word of warning, however. The great truth of the American dream is becoming increasingly less true. A practicing hair stylist couldn’t continue to support her family due to lack of a “cosmetology license” which required expensive schooling. Florists, bakers, and photographers are threatened both by government and activist mobs for not catering to same-sex ceremonies. Move quickly, my fellow Clashmates. That sound you hear is our freedoms circling the drain.

One cancer killing the American dream is crony capitalism, defined as follows:

A description of capitalist society as being based on the close relationships between businessmen and the state. Instead of success being determined by a free market and the rule of law, the success of a business is dependent on the favoritism that is shown to it by the ruling government in the form of tax breaks, government grants and other incentives.

Most people look down on crony capitalism but since it’s often hidden behind white noise like “grants”, “subsidies”, and “loan guarantees”, we don’t see it for what it is — taking money from one taxpayer and giving it to another person or group.

So when I see tech billionaires like Elon Musk get fawned at by the media, my stomach turns. Look for any tech or mainstream media publication, if Musk is interviewed you’re sure to see an unctuous gusher like this:

He is sitting at his desk, at the headquarters of his company — of one of his companies — SpaceX. He is eating. He is eating a plate of food that his personal assistant gave him. It is late, and he is eating to stay on schedule. He is a man of scrupulously developed politesse, and he worries that eating his scheduled dinner while completing his scheduled interview might give offense. It does not, because although he eats hungrily, he never succeeds in making his food look appetizing. On his white plate is a turkey leg, a sad bouquet of broccoli, a mound of black beans, and he eats them like an astronaut might eat his rations, with an air of hurried functionality, while talking about going to Mars.

Musk is the CEO of Tesla Motors, manufacturer of the sleek, all-electric cars jetting down the road at golf cart volume levels, with a price range of about $70,000 to $100,000. If you’re rich and don’t care if your car doesn’t make it to your next spa treatment, go for it. I mean it. They’re very cool, and fast (0-60 in 5.2)

However, Tesla has been working a somewhat behind-the-scenes green credit swap that makes companies like Honda its source of revenue, not consumers actually paying for their overpriced vehicles:

Tesla didn’t generate a profit by selling sexy cars, but rather by selling sleazy emissions “credits”, mandated by the state of California’s electric vehicle requirements. The competition, like Honda, doesn’t have a mass market plug-in to meet the mandate and therefore must buy the credits from Tesla, the only company that does. The bill for last quarter was $68 million. Absent this shakedown of potential car buyers, Tesla would have lost $57 million, or $11,400 per car. As the company sold 5,000 cars in the quarter, though, $13,600 per car was paid by other manufacturers, who are going to pass at least some of that cost on to buyers of their products.

In that same Esquire interview, Elon’s sister, Tosca, said of her family’s success: “We risk more.” Perhaps, but you’re not risking your money but that of the American taxpayer.

Enough.

Most of us are guilty of this in some fashion or degree. Are you buying solar panels for your house with no money down? Your purchase is only possible because companies like Solar City, another one run by Elon Musk, is being paid by local, state, or federal energy grants. Are you insulating your attic with a higher R-value and receiving a “rebate”? Chances are you can thank the American taxpayer (cough).

Elon Musk is not a bad man. He’s a brilliant entrepreneur who co-founded PayPal and other tech companies, and paid off the half-billion dollar loan from the federal government. He deserves a good share of his estimated $12B fortune, just not the part that takes millions from the government.

My point is he’s not alone in his crony capitalism. If this practice isn’t reined in we will no longer be the place Americans will want to start and maintain their businesses — which happens to be the primary source of government’s money.

If a for-profit, private organization can’t survive without assistance from the American taxpayer, it should not survive. Rinse, repeat.

Image: https://www.flickr.com/photos/jurvetson/5788585632/