The Crony Rich Getting Richer

0 Posted by - December 13, 2012 - Career & Business, Economics, Money

 The Crony Rich Getting RicherThere is nothing wrong with businessmen getting rich by providing products and services to others. The more fat cat capitalists we have the better.

There is also nothing wrong with there being a “gap,” between the wealthy and lower incomes. Attempts to reverse income inequality means nothing other than a desire to limit the earnings of the most creative and ambitious to the level of dim wits.

That said, there is another way a gap can result between the rich and lower incomes. That way is through crony capitalism, whereby, crony capitalists connected with government create rules and regulations that prevent competition and make it very difficult for innovators to enter a field. In other words, the crony capitalists create a moat around their industries that keep others out. It means higher incomes through crony corporate profits and lower incomes for those who aren’t part of the connected.

The charts below show the trends for corporate profits and incomes. Again, there is nothing wrong with profits increasing because businessmen are providing better products and services. However, it is becoming increasingly clear that that profits are climbing in many cases for crony capitalists (See the banksters and oligarchs, e.g., Warren Buffett, Goldman Scahs) because they are protected by government built moats that limit others from entry into different sectors of the economy and, thus, also limiting the potential for increased income for upstarts and those who might be paid more by upstarts companies.

Source: Economic Policy Journal. Charts at link.

No comments