Daily Adams

Crony Capitalism

Bernie Sanders gets one right 

Democratic presidential candidate Bernie Sanders is one of a kind. He is the only self-proclaimed socialist in Congress, and he is also the only Democratic candidate in the presidential race to oppose crony programs such as the Export-Import Bank of the United States. Hillary Clinton, a big supporter of the bank, and Sanders clashed quite vigorously on the issue during the recent presidential debate in Flint, Michigan.

Via Bernie Sanders Is Right to Trash the Ex-Im Bank: @ Hit & Run : Reason.com.

Eye of the Beholder

When Florida Senator Marco Rubio voted against a transportation funding bill in December, he said one of his main objections was that it “preserves Washington’s power in picking winners and losers in transportation funding, and even revives the crony capitalist Export-Import Bank,” an agency that provides export financing for American goods.

Rubio, however, also likes to pick winners and losers. He supports sugar subsidies, explaining to Chuck Todd on Meet the Press in January, “ I believe agriculture, unlike any other industry, should be treated a little differently…. We are competing against other countries that don’t have our regulations, don’t have our labor laws and subsidize their own industries.… I am prepared to get rid of the sugar program tomorrow if the countries we compete against get rid of theirs.”

Via Crony Capitalism Is Evil…Except for Mine, Say Republicans @ Newsweek.

Coined

John DeMott, a veteran Time writer, wrote the story, and did a good job, and I edited it. But as I read the reports from Burton, I was struck by the Philippine distortion of the capitalist system. This was not capitalism. It was a weird distortion of the free market that benefited a few and kept the masses in poverty. The cronies got rich, and the poor stayed poor. So early that morning I wrote the headline: “A Case of Crony Capitalism.” I have always been a sucker for alliteration. The article appeared in the issue of April 21, 1980.

Via George Taber: The Night I Invented Crony Capitalism @ Penn.edu.

Incumbents at the trough

The Ex-Im Bank didn’t exist to help small businesses — at least not in recent years. Over three-fourths of Ex-Im’s financial assistance went to just ten massive corporations, the top three recipients of which were Boeing, General Electric and Caterpillar. According to a study done by Veronique de Rugy of George Mason’s Mercatus Center, Ex-Im provided support for less than one percent — 0.28 percent, to be exact — of small businesses. Furthermore, in past years Ex-Im has been found doctoring their stats and mischaracterizing businesses with as many as 1,500 employees as a “small business.” Aside from manipulating data, Ex-Im has been plagued with scandal and corruption — with 31 open fraud investigations on bank employees.

Building more for private gain

….it appears NV Energy wants to run short of power on purpose. And the “preferred” solution it wants to pursue is to build a new and costly power plant.

This won’t help its customers. Their bills will go up as a result of the addition of the new power plant built from scratch and the subtraction of those that now supply the power NV Energy sells.

But it will help Warren Buffett and his friends at Berkshire-Hathaway….

Via Crony Capitalism Driving Nevada Energy Controversy @ Human Events.

Chinese Kleptocracy

OK, Politico did not use the exact term, but Charles Davidson and Jeffrey Gedmin make a pretty bold statement in today’s edition. China is a kleptocracy and this encourages instability in the country and in the global economy.

We have argued this pretty much since the founding of this website. A broad system of crony capitalism like the one in China creates distortions in the economy, prices are obfuscated, the connected become wealthy, dishonesty is compounded, until the facade eventually crumbles when the lies become apparent. To some degree that is what we are seeing now with the Chinese downturn.

Via Politico calls out China as the world’s Ultimate Crony Capitalist State @ Against Crony Capitalism.

A New Crony Capitalist for Wisconsin 

Gov. Scott Walker on Thursday appointed banking executive and frequent GOP donor Mark Hogan to lead the state’s troubled job-creation agency…..

M&I Bank faced its own problems several years ago with bad loans and a crashing stock price and ended up being absorbed by BMO Harris of Canada in 2011.

M&I loan losses during the real estate bust — concentrated heavily in Arizona and Florida — totaled $4.8 billion across its portfolio from Dec. 31, 2007, through December 2010, according to a Milwaukee Journal Sentinel review.

Hogan has given $24,125 to Walker’s campaigns for governor since 2009, state records show.

He gave another $10,000 this year to the super PAC backing Walker’s presidential run. His son, Patrick, has worked for Walker’s office and campaign.

Walker spokeswoman Laurel Patrick said the contributions and Hogan’s son’s work for the campaign played no role in Hogan’s appointment.

Scott Walker appoints banking executive to lead state jobs agency @ JSOnline.  

Ex-Im Bank Favors Big & Foreign Over Entrepreneurial and American

“In fact, little of Ex-Im’s money goes to small businesses. In 2013, 93 percent of the loan guarantees benefited five companies. Boeing was the beneficiary of about 20 percent of all commitments. Ex-Im has given hundreds of millions of dollars in loan guarantees to state-owned Russian bank Vnesheconombank (VEB). VEB finances Russian arms exporter Rosoboronexport…

Will Congress Re-Authorize the Ex-Im Bank?

There would be absolute frustration because it will be part of a bigger pattern that keeps recurring over and over: The American people are waiting to see the Republican Party lead on matters important to them and not Wall Street,” said Rep. Dave Brat (R-Va.), a Tea Party darling who upset then-Majority Leader Eric Cantor in a GOP primary last year, clearing the way for McCarthy’s rise.

“It expired,” Brat added in an interview Monday, “So why in the world would you reauthorize something that would slap conservatives upside the head?”

Via Ex-Im vote holds peril for No. 2 House Republican McCarthy @ The Hill.