RealClearMarkets - Exactly What Is Crony Capitalism, Anyway?

Bill Frezza explains...

Some defenders of capitalism draw a sharp distinction between those who obtained their wealth through government favors and those who created their wealth by satisfying willing customers through free exchange. The former are called Crony Capitalists. The latter, interestingly enough, don't have a name. Let's call them Market Capitalists. 

All capitalism is driven by... the desire to not only achieve economic security, but to amass pools of capital beyond one's basic needs. This capital can fuel the kind of conspicuous consumption that offends egalitarians. But it also finances investments in new products and businesses, without which the economy cannot grow. More on that later. 

What makes Crony Capitalists different is their willingness to use the coercive powers of government to gain an advantage they could not earn in the market. This can come in the form of regulations that favor them while hindering competitors, laws that restrict entry into their markets, and government-sponsored cartels that fix prices, grant monopolies, or both. 

Crony Capitalists are also more than happy to help themselves to money from the public treasury. This can come from wasteful or unnecessary spending programs that turn government into a captive customer, subsidies that flow directly into their coffers, or mandates that force consumers to buy their products.