The Daily Capitalist is kicking off the first in a monthly series of the Crony Capitalist of the Month. In it we will feature mainline “capitalists” who see government favors to support their businesses. This series starts off with General Electric’s Jeff Immelt.
If you wonder why the economy is stagnating, one reason is crony capitalism whereby businesses align with the government to create policies that are favorable to their industries. Usually benefits such as tax breaks or government contracts are awarded to these government favored industries. Capital is thereby diverted to enterprises that, but for the favors, wouldn’t be economically viable. Thus capital which is needed by businesses that are profitable is reduced, which reduces economic growth.
Crony capitalists use rhetoric that is often high-toned and talk in generalities about certain “essential” industries and ”national goals” that “we” need in America or otherwise “America” will lose out. They favor government handouts because it is in their benefit and because they can’t compete in the open market. ”America” isn’t falling behind the competition, GE is falling behind:
The remarks came as GE is facing tougher competition around the world from rivals in the markets for renewable and nuclear energy that the company believes get more help from their governments.
“The rest of the world is moving 10 times faster than we are,” Mr. Immelt said, referring to the U.S. during a speech at the Gridwise Global Forum. “This is a great country. But, you know, we have to have an energy policy. This is just stupid what we have today.” …
GE has long expressed frustration with what it sees as a lack of government support for new energy technologies in the U.S. and for sales of nuclear power and other technologies overseas. The conglomerate’s nuclear unit has won little business in the current round of reactor development around the world, and its wind-power unit faces heavy competition from Chinese manufacturers.
His example of a country with a good energy policy? China, that bastion of free markets.
He also said China has the right mix of a big local market, innovation in technology, a low-cost supply chain and government policy support. China’s State Grid utility, he said, is larger than nearly all U.S. utilities combined.
Now I am sure that our regulatory system is a mess and it would be a good thing if it were simplified to make entry into energy technology or services easier. But that’s not what he really wants. He wants an edge. That’s not capitalism; it’s crony capitalism.
I don’t recall that the founder of General Electric, Thomas Edison complained about the lack of a national energy policy or the lack of subsidies when he invented the electric light bulb.
You ask what is wrong with America and I say it is folks like Mr. Immelt.