...The opponents of capitalism have succeeded in clouding the minds of many, by failing to distinguish between free-market capitalism and crony capitalism. Crony capitalism exists when politicians and government bureaucrats collude with business people to restrict competition and obtain monopoly advantages. Examples abound with everything from sole source government contracts and special tax treatments to restricting the number of taxicabs through the sale of “medallions.”
The various government restrictions raise prices for consumers and discourage innovation. State and local government officials collude with industry groups to require expensive training for hairdressers, flower arrangers and interior decorators — all in attempts to restrict entry by new potential competitors. Just look at the number of governments that against the desires of their own citizens are trying to prohibit Uber and Lyft from operating, because the politicians are under the control of the taxicab operators and the taxicab unions. It’s pure and simple crony capitalism, aka corruption.
...The father of modern economics, Adam Smith, in his great classic, “Wealth of Nations” published in 1776, had many warnings about the dangers of business people colluding among themselves or with government officials against the interests of the people....
...What is often overlooked is that Smith had a great influence on the American Founding Fathers. They had read his book. Benjamin Franklin was a personal friend of Smith. Smith’s descriptions of how those in business and government collude reinforced the Founders’ belief that a system of limited government with many checks and balances was the best hope to limit corruption (crony capitalism) and ensure liberty.
A government that spends trillions of dollars and controls the fate of tens of millions of businesses and individuals through regulation is nothing more than a gigantic honey pot for those who seek to gain without engaging in productive activity.
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