During the 2012 election, the Democratic PAC American Bridge attacked Mitt Romney and other prominent Republicans every time one of them attended a “high-dollar fundraiser” or revealed close ties to Wall Street. Yet there was one group that American Bridge never attacked: Bain Capital.
Why? Because, as Ben Smith and Evan McMorris-Santoro revealed today, Bain Capital executives were bankrolling American Bridge:
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May is shaping up to be a bad month for nonprofit groups run by David Brock. Last week, a few of his allies on the left raked him over the coals after the advocacy arm of Media Matters for America published a memo defending the Justice Department’s crusade against the Associated Press. Today, BuzzFeed drops the hammer with their story about Bain. Being called out as a hypocrite is so embarrassing!
But Brock et al. may actually be the lesser of the two “dark money” offenders to be unmasked today. The other is the Center for American Progress, which is up to its neck in corporate cash, reports The Nation’s Ken Silverstein:
It’s time for a free-market corporate social responsibility. Conservatives who rail against government hand-outs should also blast companies who seek shelter from Washington.
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The Republican attack on President Obama’s economic policy has changed subtly, but significantly, in the last three years. In 2009, he was allegedly a “socialist” and a “Marxist” who lusted for government control of the entire economy. But lately, that has given way to more nuanced charges of “crony capitalism” — of giving special, friendly treatment to certain companies and industries, or allowing powerful corporations to essentially write the laws, themselves.
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Voters despise government officials who get in bed with corporations. But what about corporations who cozy up to government? Are companies who use cronyism to grow their profit acting unethically?
The question makes some free-marketeers uneasy. After all, we not only tolerate the fierce pursuit of profit, but also we defend it against taxes and heavy-handed regulation. Milton Friedman famously said, “The social responsibility of business is to increase its profits.”
But in the age of crony capitalism, libertarians must declare that some means of pursuing profit are immoral and call on executives to reject them. This would create a positive case for capitalism — arguing that the pursuit of profit, in the context of fair and open competition, helps the whole society. The new corporate social responsibility, redefined for libertarians, must stand athwart crony corporatism yelling “stop.”
Crony capitalism is not the same as free markets, it is a politicized economy.
Cronyism diverts resources away from the wants and needs of consumers and toward political purposes. Cronyism occurs when an individual or organization colludes with government officials to create unfair legislation and/or regulations which give them forced benefits they could not have otherwise obtained voluntarily. Those benefits come at the expense of consumers, taxpayers, and everyone working hard to compete in the marketplace.
“My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!”
The top 10 wealthiest men and women in America barely have 250 billion dollars between them. That sounds like a lot of money, until you look at annual Federal budgets which run into the trillions of dollars, and the country’s national debt which approaches 15 trillion dollars. And that’s not taking into account state budgets. Even Rhode Island, the smallest state in the union, with a population of barely a million, has a multi-billion dollar budget.
As the 10th richest man in America, Michael Bloomberg wields a personal fortune of a mere 18 billion dollars, but as the Mayor of the City of New York, he disposes of an annual budget of 63 billion dollars. In a single year, he disposes of three times his own net worth. A sum that would wipe out the net worth of any billionaire in America. That is the difference between the wealth wielded by the 10th wealthiest man in America, and the mayor of a single city. And that is the real concentration of wealth. Not in the hands of individuals, but at every level of government, from the municipal to the state houses to the White House.
Would this be a money-making proposition, allowing an investor a piece of the upside as the companies use the power of the government to their advantage? Or would it be a money-losing proposition, because the companies whose CEOs are spending their time cultivating government relationships are doing so only as a desperate tactic because their firms are otherwise unable to compete successfully in the marketplace on the basis of the value they offer their customers?
So I spent some time running the numbers. Suppose one began this strategy at the beginning of the Obama administration, buying one share of each publicly traded company with an executive appointed by the president on February 6, 2009 to the President’s Economic Recovery Advisory Board. That would be UBS, GE, CAT, and ORCL. In the nearly two years since then (using the Monday February 7 closing prices, and using Yahoo! Finance historical price data that adjusts for splits and dividends), the gain would have been 145% — far outperforming the 52% return of the S&P 500 Index over the same period.
Suppose that later that year, you decided to buy one share of each American publicly traded company that had a top executive attend President Obama’s first state dinner at the White House, in honor of Prime Minister Singh of India. GE and CAT are on the list again, along with Honeywell, Pepsi (CEO Indra Nooyi) and Ethan Allen (ETH) CEO Farooq Kathwari.The return through day’s end February 7, 2011 would have been 46%, versus a 19% gain for the S&P 500 over the same period.
In a city where the unemployment rate is 9.1 percent, above both the statewide and national average, you’d think that mayoral candidates would be competing to attract businesses and jobs.
And in a city where the cost of living is so high that the city pays $3,000 a month for landlords to house the “homeless” in rooms without kitchens or private bathrooms, you’d think that mayoral candidates would be competing to welcome a discount retailer that would allow residents to save money on clothing and groceries.
Yet this is New York City. Instead of laying out a welcome mat for Walmart, the Democratic mayoral candidates are trying to keep the company out of the city. An account in The New York Times recently quoted the speaker of the City Council, Christine Quinn, declaring, “As long as Wal-Mart’s behavior remains the same, they’re not welcome in New York City…New York isn’t changing. Wal-Mart has to change.”
Maybe Quinn can make “New York isn’t changing” the slogan of the mayoral campaign she launched over the weekend. The candidate who would be the city’s first woman and first lesbian mayor turns out to be, on economic development questions, the spokeswoman for stasis.
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Is it that Walmart employees are not represented by a labor union? Neither are most of the workers at Bloomberg News, yet we haven’t yet heard any calls by Quinn to kick the mayor’s financial news and information company out of the city. The New York Post notes that she is endorsed by a union that represents grocery store workers.