Is This Capitalism or Cronyism?

While the federal government usually gets most of the attention when it comes to lobbying and doling out favors to big corporations, it happens just as much with state and local governments.

It was recently reported that Motorola controls about 80% of the emergency telecommunications in the U.S.  There are cities and states across the country handing out noncompetitive contracts to the company.

Of course, it is not surprising that Motorola spends millions of dollars on lobbying, along with donations to various groups associated with police and firefighters, as well as, of course, politicians.

The so-called left in this country likes to rail against big business.  Think about the Occupy Wall Street group.  In some ways, they have a point.  But they are trying to blame capitalism when what we have isn’t capitalism.  It is cronyism.  In some ways, it is the economic system of fascism.  It is an alliance between big government and big business.

In a capitalist society, the government wouldn’t be doling out favors to big business.  In a true capitalist system, the government would be there to protect people and their property from encroachment and to enforce contracts.  In our current world, the government instead takes people’s property and hands it out to those with political connections, while throwing a few scraps back at the lower and middle classes.

It is ironic that some people justify government regulations and interference in the marketplace because they say that we need protection from big business.  But consumers can protect themselves from big business by refusing to buy their products in a free market, if they don’t like the products or they are too expensive.

Instead, government interference gives us what we have today.  It ensures the success of big business by forcing us to buy things (via taxation) that we wouldn’t otherwise purchase.  Government interference also tends to set up rules and regulations that make it impossible for the little guy to compete.

We also hear about the threat of monopolies if the government didn’t step in and regulate and control the business environment.  Yet, it is the government that is creating the monopolies where we have no choice in the matter.  As mentioned, Motorola has 80% of the market in this one category because of government contracts at various levels.

A company that obtains an 80% market share in a truly free market would really have to deliver a superior product at a superior price.  Even giant companies such as Walmart cannot control 80% of the market.  There is almost always competition.  And if Walmart did achieve this without government help, then it would be a result of delivering consumers what they want at low prices.

Motorola is just one example of a big company that relies on government for its business instead of relying strictly on its innovation and quality.  I guess you could say that they rely on their marketing, but it is marketing by lining the pockets of politicians to use your tax money to buy its products.  In this case, the company is not profitable because of consumers voluntarily purchasing its products.