• 519 days Will The ECB Continue To Hike Rates?
  • 519 days Forbes: Aramco Remains Largest Company In The Middle East
  • 521 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 920 days Could Crypto Overtake Traditional Investment?
  • 925 days Americans Still Quitting Jobs At Record Pace
  • 927 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 930 days Is The Dollar Too Strong?
  • 930 days Big Tech Disappoints Investors on Earnings Calls
  • 931 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 933 days China Is Quietly Trying To Distance Itself From Russia
  • 933 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 937 days Crypto Investors Won Big In 2021
  • 937 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 938 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 941 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 941 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 944 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 945 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 945 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 947 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

America's Terminal Political Dysfunction

Charles Hugh Smith and Gordon T Long continue their discussion on Crony Capitalism in America.


How Crony Capitalism Works

  • Private interests influence government spending and regulations with lobbying and campaign contributions: Governance by the highest bidder.
  • The more successful the cronyism, the more money the corporations have to spend on lobbying, which serves to further protect their profits and share of government spending. This feedback loop rewards crony capitalism and limits classical capitalism's key features: transparent markets and competition.
  • An economy dominated by crony capitalism stagnates as competition is suppressed and government enriches those who are "more equal than others" (to borrow a phrase from Orwell)


Special Interest Veto Power

  • One key dynamic in America's political dysfunction is the veto power extended to special interests: any reform that costs them profits and/or impacts their share of Federal funds is vetoed.
  • Reform that doesn't carry political/financial pain is not real reform
  • When every politically potent entrenched interest can veto unfavorable legislation and regulation, real reform is impossible


Absence of Real Reform

  • Without real reform, the system stagnates and manageable problems become crises.
  • Since entrenched interests refuse to accept any pain, problems fester for years beneath the half-measures and toothless "reforms" passed for public-relations purposes.
  • The problems (unfunded liabilities, explosive financial risks buried in the shadow banking system, etc.) then blossom into full-blown crises that cannot be resolved.
  • Crisis management leads to politically expedient Band-Aids that mitigate the symptoms without addressing, much less solving, the underlying political/financial diseases.


The Crony Tribute System

Gordon argues that Crony Capitalism today closely resembles the Roman "Tribute" System also adopted by the Mafia.Crimes being created today are met with fines. Guilty parties do not go to jail but rather the corporation pays a fine. Billion dollar crimes are assessed Million dollar fines. A percentage that closely mirrors a Tribute System. The government makes money through enforcement but not prevention. Corporations make fortunes with confidence that the government will settle for a piece of the fleecing of the people - and the game continues.

The Crony Tribute System

Gordon believes, as the recent tapes released by Carmen Segarra indicate, the US regulatory system has effectively put the "Fox in charge of the Hen House"

Fox in charge of the Hen House

 


Video: America's Terminal Political Dysfunction - w/ Charles Hugh Smith

Charles Hugh Smith & Gordon T Long, 25 Minutes

 


For more detail on how this distortion is being orchestrated and sustained, signup for your FREE copy of the GordonTLong.com THESIS PAPER: FINANCIAL REPRESSION

Signup for notification of the next MACRO INSIGHTS

Request your FREE TWO MONTH TRIAL subscription of the Global Macro Tipping Points (GMTP) Report at GordonTLong.com

No Obligations. No Credit Card.

 

Back to homepage

Leave a comment

Leave a comment