Senin, 10 September 2012

The dangers of crony capitalism

The Koch brothers are routinely vilified by the left, but they are shining examples of how hard work and informed risk taking have made the U.S. a rich and prosperous nation. They didn't build an empire by being stupid, and they didn't build it by cozying up to government; on the contrary, they built it themselves.

Some years ago I had the great privilege of visiting Koch Industries' headquarters, improbably located in the middle of a corn field outside of Wichita. After spending two hours matching wits with some senior finance people, I came away inspired. This was one of the most intense and gratifying meetings of my career, mainly because the competitive energies of this dynamic organization were palpable, and the people were driven to excel. I've been in similar situations in numerous large corporations in my life, and these folks ranked among the very best I've encountered.

In an article in today's WSJ entitled "Corporate Cronyism Harms America," Charles Koch discusses the problems that arise when businesses seek profits from government, rather than from the free market, and when government is only too happy to oblige. This philosophy ought to transcend partisan politics since it is just simple common sense. Some excerpts follow, but for a great education, do read the whole thing:

Businesses have failed to make the case that government policy—not business greed—has caused many of our current problems. To understand the dreadful condition of our economy, look no further than mandates such as the Fannie Mae and Freddie Mac "affordable housing" quotas, directives such as the Community Reinvestment Act, and the Federal Reserve's artificial, below-market interest-rate policy.
Far too many businesses have been all too eager to lobby for maintaining and increasing subsidies and mandates paid by taxpayers and consumers. This growing partnership between business and government is a destructive force, undermining not just our economy and our political system, but the very foundations of our culture.
The role of business is to provide products and services that make people's lives better—while using fewer resources—and to act lawfully and with integrity. Businesses that do this through voluntary exchanges not only benefit through increased profits, they bring better and more competitively priced goods and services to market. This creates a win-win situation for customers and companies alike.
Trouble begins whenever businesses take their eyes off the needs and wants of consumers—and instead cast longing glances on government and the favors it can bestow. When currying favor with Washington is seen as a much easier way to make money, businesses inevitably begin to compete with rivals in securing government largess, rather than in winning customers.
To end cronyism we must end government's ability to dole out favors and rig the market. Far too many well-connected businesses are feeding at the federal trough. By addressing corporate welfare as well as other forms of welfare, we would add a whole new level of understanding to the notion of entitlement reform.

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