Guest AuthorCrony capitalists have been unjustly justifying their crony capitalism under the guise of free-market capitalism to satiate their insatiable greed for quite awhile.
These crony capitalists have control over the government, stock market, mass media and communications with their big money influence. A growing income inequality and economic disparity have been furthered by the practical requirement that candidates for public office have to raise money to finance their campaigns.
This all started when the U.S. Congress passed the Federal Election Campaign Act (FECA) in 1971, which allowed corporations, unions and individuals to contribute an unlimited amount of “non-federal money,” also called “soft money,” to political parties for activities intended to influence state or local elections. This is one of the important reasons free-market capitalism of the 1950s transformed into crony capitalism.
Income inequality in the United States is the highest since the Great Depression. How can it be a fair system when a few people have a lot of money and the majority have very little? This extreme disparity gives an unfair advantage to the rich and powerful, who can influence the outcomes of democratic elections by financing political campaigns.
From its Greek roots, democracy is made of “demos,” meaning people, and “cracy,” meaning government. But as a result of crony capitalism, democracy is no longer a government of the people; it has become a government of wealthy donors who have sufficient money to pay corrupt politicians in order to influence elections.
As a result of crony capitalism, the majority of laws are passed to favor big businesses and corporations, which have increased their mergers and acquisitions and offshoring of manufacturing jobs, which have worsened the problem of trade deficits and unemployment. This has also forced the unemployed to become dependent on government benefits, thereby increasing the budget deficits from falling tax revenues due to unemployment while increasing government expenditures.
This system has benefited a few while creating misery for many. Crony capitalism has also resulted in reduced consumer demand due to falling wages among the majority of working Americans. It has also hurt the same businesses that off-shored manufacturing jobs because external shareholders demanded short-term profits.
In the long run, crony capitalism is not beneficial to anybody in the economy because producers need consumers. Without a healthy consumer demand, goods remain unsold. A solution to this crisis is establishing a true free-market economy, where the real job creators are both producers and consumers. In such an economy, wages naturally coincide with employee productivity.
Today, because of crony capitalism, wages have trailed employee productivity. When this happens, the difference between the goods produced by producer and the real wage paid to the worker constitutes consumer debt. In this system, without luring consumers into borrowing, the goods produced by a producer are unsold.
This process of luring the public into debt to get re-elected in democratic elections is political corruption. It is also corruption because politicians, ever in need of campaign donations, wouldn’t dream of offending the interests of their wealthy donors. With wages trailing productivity since 1981, elected officials have been following a monetary policy tempting people into larger debts. In this way, the elected government also follows a “fiscal policy” to raise its spending and debt constantly. This shows how political corruption creates a legal framework for monopolies to thrive.
If you are sick of crony capitalism and think you want to do something about it, here are a few suggestions.
- Educate your friends that only a true free-market economy can solve their problems. My book, Mass Capitalism: A Blueprint for Economic Revival, will help you understand how to envision such a true free-market economic system.
- Use social media like Twitter, Facebook and LinkedIn to bring about an intellectual revolution in the United States to help reform our democratic system. The masses in Middle Eastern countries were able to bring about a revolution using social media. We don’t need a violent revolution, but can’t we use social media to bring about an intellectual revolution in United States?
- In the mid-term elections on Tuesday, vote out the politicians who do not support reforming our democratic process to eliminate political corruption.
Apek Mulay is CEO of Mulay’s Consultancy Services, a senior analyst and macroeconomist in the United States semiconductor industry and author of the new book, “Mass Capitalism: A Blueprint for Economic Revival,” (www.ApekMulay.com). Column courtesy of Context Florida.
