The coffee pitch line “America runs on Dunkin” is what I used to think was the case, at least before the recent Supreme Court ruling that refused to support a limit on monetary contributions to political candidates. This ruling is tantamount to legally bribing politicians in exchange for favoritism. Now, I am convinced that America runs on money.
Of course, the symbiotic relationship between government and wealthy corporations and individuals is not unique to the United States. This kind of relationship is a global phenomenon that is even more evident in emerging countries despite the fact that, according to a report by The Economist magazine, “people want politicians who do not line their pockets and tycoons who compete without favors.” Contrary to the Supreme Court ruling, people want to rid capitalism of the influence of big money.
The recent decades have provided many opportunities for rent-seekers to seize an even greater portion of the economy’s wealth, not by making a better mouse trap so to speak, but by resorting to cronyism. Crony capitalists and oligarchs have been able to grab an increasingly larger share of the nation’s wealth without contributing anything to it. These opportunists have been able to effectively lobby politicians in an effort to seize public properties at cheap prices, obtain government contracts at favorable terms, and benefit from privatization of public entities, especially in those sectors that highly rely on government support or bail outs. Such a trend is not only unfair, but it also curtails the long term growth of the economy because it promotes mediocrity and inefficiency.
The Economist magazine has constructed an index to gauge the extent of crony capitalism in a number of selected countries. This index is “based on the total wealth of those of the word’s billionaires [as the percentage of GDP] who are active mainly in rent seeking heavy industries.” The magazine calls it The Crony Capitalism Index. “The higher this ratio is, the more likely the country suffers from a severe case of crony-capitalism.” Based on the findings of this research, the problem of crony capitalism is worse in emerging countries than it is in industrialized nations. The top ten countries suffering from Crony Capitalism are: Hong Kong, Russia, Malaysia, Ukraine, Singapore, Philippines, Mexico, Taiwan, India, and Indonesia.
While the U.S. is not among these top ten countries, it does rank 17, and according to research findings, it unfortunately has made significant progress in recent years toward obtaining this troubling distinction.
