Capitalism ii additional scenarios
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They may also lobby to counteract lobbying by a rival. Firms may lobby to remove particularly harmful regulations or taxes. However, some regulations are more efficient (or less inefficient) than others. In today’s world, it is virtually impossible for a significant firm to avoid the government. However, there is also a danger from observing individuals who lobby government for benefits. Nonetheless, by forcing us to see the particular cronies involved in shady deals, an emphasis on crony capitalism may be politically more useful than the more standard analysis. However, in either case there are individuals involved, whether named or not, so this difference is more stylistic than substantive. Normal analysis of such legislation is impersonal and bloodless, dealing with faceless “interest groups.” Analysts of crony capitalism are more personal, often naming the particular cronies involved. That is the emphasis on “crony.” Analysts discussing crony capitalism are more likely to focus on the particular individuals involved (the “cronies”) than are analysts discussing special interest legislation in general. There is one difference between the usage of “crony capitalism” and normal special interest regulatory analysis. Guilds persisted in much of the rest of Europe until the 1800s, and may have been in part responsible for the relative lack of economic progress in those areas. Moreover, Ogilvie indicates that guilds lost power first in the “dynamic” European countries, mainly England, Belgium, and the Netherlands. 4 “Guilds in medieval and early modern Europe offered an effective institutional mechanism whereby two powerful groups, guild members and political elites, could collaborate in capturing a larger slice of the economic pie and redistributing it to themselves at the expense of the rest of the economy.” 5 This is merely another statement of crony capitalism. Guilds in medieval and modern times (until about 1800) are another example of what is now called crony capitalism. 3 Olson blamed crony capitalism for the decline of nations. Mancur Olson’s famous work was a discussion of the increasing cronyism of an economy over time. Crony capitalism is another name for rent-seeking. In addition, both the theory of regulation as discussed by Stigler and crony capitalism are subsets of normal special interest legislation, as analyzed by students of public choice. These are essentially the same as the elements of crony capitalism mentioned above. 2 Stigler discusses four classes of benefits a firm can get from the government: direct money transfers, entry prevention (including tariffs), rules affecting substitutes and complements, and direct price controls. Consider the sort of economic regulation analyzed first by George Stigler. Crony capitalism is another term for standard special interest legislation and regulation. One thesis of this Article is that “crony capitalism” is just another name for something that economists already understand.