Posts tagged ‘GE’

The Case Against Cronies and Crony Capitalism

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.”

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Government Ethics and the Revolving Door (cont’d), Crony Capitalism at Work

“Citigroup replaces JP Morgan as White House Chief of Staff”

The revolving door is in large measure how the ruling class, the Leviathan, the Cult of the Philosopher Kings, has turned the Republic into a crony capitalist haven of mutually reinforcing money and power. And the price of admission is often a degree from an Ivy League school.

Michael Paese used to be chief of staff to House Financial Services Committee Chairman Barney Frank, until Paese became a lobbyist. When former Tom Daschle intimate Mark Patterson left Goldman Sachs’ lobby shop to become Tim Geithner’s chief of staff at Treasury, Paese took the helm at Goldman’s lobby shop.
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Crony Capitalism Index

Crony capitalism is another reason we need a Revolving Door Tax (RDT).

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.

Or suppose you wanted to invest in the publicly traded companies whose executives President Obama appointed on July 7, 2010 to the President’s Export Council. Buying UPS, Boeing, Met Life, Disney, Pfizer, Dow Chemical, Ford, Verizon, United Airlines, ADM, and Xerox would have earned a 30% return over a period in which the S&P 500 gained 24%.

So far, it looks like a pretty good way of outperforming the market.

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Walmart is so Déclassé….

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.

New York City Council Wages War on Walmart: The latest dumb idea from politicians in the Big Apple. By Ira Stoll, Reason, March 11, 2013

Shop and your friends never need know. shhhhhhhhhhh

What is especially hilarious about this is that Walmart is a big Obamacare supporter, along with other members of the crony class. Like GE – swoon.


Mockery, truculence, and minimalist living are best, then enjoy the decline. We also need a Revolving Door Tax (RDT) and to prosecute politicians and staff and their “family and friends” who profit from insider trading.

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Government Ethics and the Revolving Door: Tax It = Revolving Door Tax (RDT)

When Obama ran for president in 2008, he promised to “close the revolving door” and clean up both ends of Pennsylvania Avenue, but that hasn’t happened. Which isn’t to say that it shouldn’t happen now. But I don’t think the usual ethics-rules approach is enough.

The problem with ethics rules for this sort of thing is that they tend to be ignored, or distorted. So I say, let’s involve the most effective behavior-control machinery in America: the Internal Revenue Code.
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Bipartisanship at Work and Obamanomics

Crony capitalism is a bipartisan corruption, and another reason why we need a Revolving Door Tax (RDT).

In praising Congress’s huge new tax increase, President Obama said Tuesday that “millionaires and billionaires” will finally “pay their fair share.” That is, unless you are a Nascar track owner, a wind-energy company or the owners of StarKist Tuna, among many others who managed to get their taxes reduced in Congress’s New Year celebration.

There’s plenty to lament about the capital and income tax hikes, but the bill’s seedier underside is the $40 billion or so in tax payoffs to every crony capitalist and special pleader with a lobbyist worth his million-dollar salary. Congress and the White House want everyone to ignore this corporate-welfare blowout, so allow us to shine a light on the merriment.
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The great joke here is that Washington pretends to want to pass “comprehensive tax reform,” even as each year it adds more tax giveaways that distort the tax code and keep tax rates higher than they have to be. Even as he praised the bill full of this stuff, Mr. Obama called Tuesday night for “further reforms to our tax code so that the wealthiest corporations and individuals can’t take advantage of loopholes and deductions that aren’t available to most Americans.”

One of Mr. Obama’s political gifts is that he can sound so plausible describing the opposite of his real intentions.

The costs of all this are far greater than the estimates conjured by the Joint Tax Committee. They include slower economic growth from misallocated capital, lower revenues for the Treasury and thus more pressure to raise rates on everyone, and greater public cynicism that government mainly serves the powerful.

Crony Capitalist Blowout: A tax increase for everyone but the favored wealthy few.


The elephant in the room is the unconstitutional massive growth of the federal government. The power of the special interests grows as the federal government expands. The only way to eliminate their power is to drastically reduce the size of the federal state. Lobbyists never have a bad year. Three of the five richest counties in America border Washington, DC. There is a reason for this: It’s because our political classes have systematically arrogated themselves power and control beyond the worst nightmares of our founders.

Jack Abramoff on America’s bipartisan culture of corruption


“The rich makers are redistributed to the rich takers. That’s basically what Obamanomics is all about.”
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The problem today is not Congress and the administration taking money from you and giving it to shiftless lazy people who don’t work. The problem is Washington taking money from people who are creating value and redistributing it to companies that have the best lobbyist and the coziest connections to government.

Rich makers, corporate takers and Obamanomics


Mockery, truculence, and minimalist living are best, then enjoy the decline. We also need a Revolving Door Tax (RDT).

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