Saturday, January 16, 2010

Stossel on "Crony Capitalism"

I finally watched this weeks episode of Stossel. The theme of this show was “crony capitalism”. I am not sure I agree with the name, there is no trace of capitalism when you are talking about companies getting special deals, favors and bailouts from the government that is fascism. The simplest definition of a capitalist to me is a person or company that seeks to maximize profits by creating and selling products that people desire enough to purchase or trade for. When the profits come from the government and not from a voluntary exchange what you have is corporatism or fascism.

He spent a lot of time focused on a story about a window company called serious materials, that seems to have been unusually favored politically. It turns out that a vice president is married to the chic in charge of some stupid “weatherization policy” the government thinks is a good way to waste our money. So let's see if you want to make money in America the lesson is that you don't need to offer a better product at a lower price, why go through all of that work when you can just hire the husband of a prominent bureaucrat to be your “vice president of policy”, whatever that even means (it sounds to me like a job where his main duty is being married to the person in charge of Obama's “weatherization policy”).

He then went on to talk about other examples of government favoritism.

He mentioned that there used to be laws regarding what color margarine could be sold in and said that there used to be a law pushed by the dairy lobby that required margarine to be pink. I had never heard this before, but my grandmother told me that when she was a kid, it was illegal for margarine to be sold in yellow so when you bought margarine, it would be white and come with a little packet of yellow food dye and then they would mix it together. Of course now all margarine is colored yellow, but to think that something so simple was illegal at one point does illustrate that the government has truly exceeded its initial mandate (whatever that was, I am sure the color of food was not something the founders of the government envisioned).

Stossel closed with the constitution, no, sorry Charlie, but that is not the answer. As Lysander Spooner said about the constitution “it has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist”.

Russ Roberts was on the show this week, Russ has taught me a lot about economics with his podcast econtalk, and I recommend it to anyone even though sometimes it is more statist than I like. He has done some fabulous interviews, my favorite recent one was with Megan McArdle.


Anonymous said...

I looked into this and at least one of his stories, about the window company, left out some critical information.
The company posted some data here:

Fester said...

Ha, ha, ha, I cannot believe serious materials has hired someone to find blogs mentioning how they have used political influence to receive special treatment and post a link to their response blog. I have seen this same comment in 3 other places. What motivated Serious to spend so much money on political lobbying if they expected nothing in return? In any case the company is a tool who either uses the state to fill their own pockets, or goes out of their way to bribe politicians into stealing money from other people to redirect it in some other way (even if they do not directly benefit), so either way serious materials is a corrupt company.