The Rise Of Crony Capitalism

Hoover Institution reports:

Economists have long documented that government corruption is higher in poor countries than in rich countries. The ten least corrupt countries have, on average, a GDP per capita of around $40,000. They include Singapore, Denmark New Zealand, and Switzerland. Meanwhile, the GDP per capita in the ten most corrupt countries—including Sudan, Turkmenistan, and Uzbekistan—hovers at around $5,000. Among the 177 countries evaluated for corruption, the United States is currently number 19 on the list prepared by the NGO Transparency International.

The primary form of corruption in these nations is crony capitalism. In poor countries, businesses cannot be started or maintained without the existence of a close relationship between entrepreneurs and government officials. There is often favoritism in the granting of building and other sorts of permits, government grants, special tax breaks, and other activities of the regulatory state.

Take the case of Vietnam, which ranks in the bottom third on the corruption index at 119. Crony capitalism is rampant there. As the Financial Times observed recently, “Vietnam has gone straight from collectivism to crony capitalism with not much in between.” The primary beneficiaries of crony capitalism in Vietnam are the Communist party and its officials. Crony capitalism in Vietnam takes place both on a wholesale level as well as a retail level, a fact that Americans should pay attention to.

The rent-seeking society is happening here in America, also. Just a reminder.