Walter Donway, "Crony Capitalism versus 'Making Money'"
Walter Donway, former editor of Cerebrum: The Dana Forum on Brain Science, has published widely on health-care regulation in Private Practice and Medical World News. He was a long-time trustee of The Atlas Society. In this article, he distinguishes between current corrupt practices of some American businesses and genuinely making money.
Two fundamentally different types of individuals operate in the business world: those who earn their money by their own work and those who get money by means of government favors. It’s the difference between producers and looters, or between capitalists and cronyists.
Both are called “capitalists,” but that classification is mistaken. Producers are capitalists because they make and sell products in a free market. Looters are not capitalists since they operate in a mixed economy — in which governments grant subsidies and favors, give tax breaks, and create asymmetrical regulations, thus making markets not free.
Capitalism is opposed to all such government influences and controls. In capitalism, the worth of a business depends solely on the quality of its product and its value to consumers — not on artificial political means.
The American economy has been plagued by cronyism. One striking example was the Great Recession of 2008, which was caused partly by government-sponsored mortgage firms Fannie Mae and Freddie Mac. Granted special protections by the U.S. government and urged on by political pressure, the two mortgage giants helped create a huge housing bubble that burst eventually.
To get rid of cronyism, which is rightly criticized by people of most political views, we must identify the root problem, which is the belief that the use of government force is justified in economic matters.
Thus, to create a more just society, in which everyone’s success depends on their productivity rather than their connections, we need a Constitutional separation of government and economy.
Read the whole article at The Atlas Society’s website. Summary by Andrei Volkov and Stephen Hicks, 2019.