By Letter to the Editor on November 8, 2019.
Crony Capitalism refers to a capitalist society that is based on the close relationships between business people 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 favouritism that is shown to it by the government in the form of tax breaks, government grants, awarding of free natural resources and other incentives.
In practice, this is the dominant form of capitalism worldwide due to the powerful incentives both faced by governments to extract resources by taxing, regulating, and fostering rent-seeking activity, and those faced by capitalist businesses to increase profits by obtaining subsidies, limiting competition, and erecting barriers to entry by others into that wealth. In effect, these forces represent a kind of supply and demand for government intervention [and subsidization of corporations] in the economy, which arises from the economic system itself.
Crony Capitalism is the exact opposite of what capitalism was intended to be. The original rise of capitalism came out of efforts to replace the aristocracy [inherited wealth and privilege] and spread the wealth, allowing industrious people to start and benefit from their own enterprise. After the Second World War and until the 1960s this system worked very well. In my hometown, all the businesses were owned by town citizens. However, more and more, the political system was being used to create special benefits for ever-larger corporate conglomerates, dominating most of the independent businesses. And as new smart individuals emerged with new ideas for new businesses, the conglomerates simply bought the entrepreneurs out.
What must be understood is that these monopolies came into existence in Canada because of the special incentives given to them by our “crony” politicians. Today, two-thirds of our national debt is the result of money being given to the conglomerates by the politicians, an amount in access of $650 billion. We the average citizen must pay the money back plus interest via our income tax and service fees. Our politicians have developed a sophisticated and misleading process of recruiting the mass population into supporting that which is not in their best interest. The primary incentive they use is creating fear of loss of income provided by the conglomerates. Psychologists would call it an unhealthy co-dependence by citizens on the corporate monopoly. In addition to all of the above, politicians are essentially giving away the wealth of the country by selling assets owned by the people at a massive discount. One of many examples of this involves the sale of government-owned Highway 407. This fiasco is easy to research online.
Over time, the real wealth of the average person is shrinking, the children of the billionaires are becoming a new class or aristocracy through their inheritance of wealth. As social services are gobbled up by the conglomerates, the average person must work harder and harder to just keep their current level of income status. The gods of Crony Capitalism are winning. Only you and all your neighbours can win back your rights to free enterprise, and appropriate social services. The small remaining wealth of the populus is about to be swallowed up by the cronies through the use of information technology. Artificial intelligence will hammer the final nail into the coffin of free enterprise.
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