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.
What would you suggest as the proper response to this charge: “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.” ?
I’d suggest they go and market themselves to said governments.
I’ve already said it, they should “suck it in and cope!”
I think Buffett said today something to the effect of “You rubes sit down and shut up.” Berkshire Hathaway must have sent out a talking points memo.
If other countries wish to waste their citizen’s capital on unprofitable ventures then fine, let them. Just don’t make us do it here.
Mr. Immelt should be keel-hauled for trading with Iran while they were providing munitions for use against our troops.
Immelt is just talking his position, which happens to be long alt energy. No different than Bill Gross on CNBC, or any star fund manager. The only problem is his position is not self-sustainable and for the most part can only exist with a politically favorable climate (which I am sure he see’s slipping away daily) that is more than willing to subsidize an uneconomic business model for partisan purposes.
[...] This post was mentioned on Twitter by vv111y and r3publican, Niecie Draper. Niecie Draper said: Crony Capitalist Jeffrey Immelt: If you wonder why the economy is stagnating, one reason is crony capitalism where… http://bit.ly/amHtuR [...]
good story.
didnt we fight AGAINST this philosophy that is defended by “capitalists’ like Immelt and the Trough-feeders like Gross and the rest????????????????????????????
I thought we WON WW2 and the Cold War????
Guess not.
Orwells Oceania and the culture portrayed in it is almost here..
Thanks to the conditioned obliviousness of Americans…and arrogant megalomania and theivery(good description of State Capitalism and its traits and results) of people like Immelt and the Rockefeller/Morgan combine….
Immelt is just one more, of a long list, of high level corporate managers who look to others to solve problems! Whether it’s tax payer handouts, tax breaks, or other public trough measures, “strategic bankruptcy”, etc.; it is just management ineptness that is allowed to exist in our American corporate mentality. To add injury to it all, these same executives then rail against government interference. What a bunch of phonies! Final note: it has little to do with economic philosophy, too.
There is a single word for crony capitalism:
“Fascism.”
Ayn Rand defined fascism as the system based on nominal private ownership but under public control.
What is wrong with America is what has been wrong with the entire world since at least the time of the Medici. Capitalism. Live with it.
RE
Rev:
Why do you read this pro-capitalism blog? I’m curious.
Without capitalism, you wouldn’t likely be alive. The grinding subsistence-level poverty of non-capitalistic societies does not support a large population…
So the Medici family came to rise in the renaissance and were the greatest supporters of the arts – maybe ever.
It was because of the rise capitalist economies that the entire western world flourished. The times when this liberty became violated was when a tyrant (be it a socialist, fascist, or monarch) used the mob to rise to power, create strife and ruin lives.
Every time a capitalist society has been broken by a tyrant the result is poverty, famine, unbelievable bloodshed and the loss of freedom. Not to mention a giant leap backwards in technology and basic human needs. Fortunately, moving toward liberty and capitalism is a far safer direction to travel.
Even Cuba is starting to figure this out.
I don’t understand how you can say otherwise. It’s like you have some kind of perverse ambition to defy common sense and history.
Move to Europe and leave us capitalists alone to either succeed or fail.
You chaps confuse capitalism as it has always existed with the fantasies of the classical political economists. Of course they want gov’t assistance–they’re capitalists in a capitalist state. It has always been thus. Ideologues are, well, ideologues. More interested in ideas than in capital accumulation, which ‘crony capitalists’ do perfectly well thank you very much. Since many of us have shares in these companies I suppose that’s alright, then eh?
Antonio Gramsci. Really? I think you’re on the wrong blog, chap. You’ve failed to grasp the macro message here (or even the micro). I think you really just popped in to hear your own voice. I would suggest sticking around for a while, maybe some of this will rub off on you. Maybe you’ll start playing devil’s advocate with your cuban-revolutionary-hat-wearing-friends. Maybe. I doubt it.