Christopher MarkowskiArticle, Politics & LifeLeave a Comment

APRIL 2013


Politicians love to stand in front of cameras and microphones, pat themselves on the back and tell us tales of jobs creation and innovation when government and private business work together.  The phrase “public-private partnership” gets politicians more excited then a teenage boy at the Victoria’s Secret Fashion Show


The phrase “public-private partnership” is a narcotic for the uniformed masses as well.  Ignoramuses feel that if we could only get government and private business working together-singing Kumbaya, we would all have six-figure jobs that have eight weeks vacation and serve free beer at the end of the day.   The reality is that public-private partnerships divert capital to the undeserving and stifle innovation and productivity.  Another phrase to describe public-private partnerships is crony capitalists or crony socialists.  In my opinion they are one in the same.  We described many years ago the nefarious relationship between the politicians, big business, and mainstream media as an axis of evil.  As the years have gone by, their influence continues to grow.  We have often highlighted the deplorable relationship between government and Wall Street and how working at one of the “too big to fail” firms gives one a lifetime supply of “Get Out Of Jail Free Cards,” coupled with a license to steal.  A recent study highlights another example of how the axis is now dipping into your tax dollars.


A shocking report was released by Good Jobs First, a nonprofit watchdog organization, discovered that at least 2,700 companies all across the country are collecting state income taxes from hundreds of thousands of workers and ARE KEEPING THE MONEY WITH THE APPROVAL OF THE STATE!


Sixteen states currently allow certain “special” companies to steal some or all of the state income taxes deducted from workers paychecks.  Added bonus: None of the states requires informing the workers, whose withholdings are treated as taxes they paid.  Here are a few of the companies: General Electric, Goldman Sachs, Procter & Gamble, Chrysler, Ford, general Motors, AMC Theaters, Nissan, Toyota, and Electrolux to name a few.


We often rail against the fact that certain companies get preferred treatment when it comes to property taxes or breaks due to their size and influence.  These practices make us unequal under the law, which is the antithesis of everything this country was supposed to stand for.  In the study by Good Jobs First, they have found that over $5.5 billion has been diverted over the past twenty years, with more than $700 million last year alone.


Luigi Zingales, professor at The University of Chicago points out in his book A Capitalism For The People how we are on the path of Europe in crony ways.


“High deficits, high debt and unsustainable entitlements are symptoms of a common disease infecting Southern Europe and the U.S. That’s crony capitalism, a problem with which I, having lived in Italy, am unfortunately familiar.”


“Between 2001 and 2011, Italian per capita GDP dropped 4%.  A low, or in Italy’s case, negative growth rate makes it difficult to meet basic social obligations.  When growth is high, it’s much easier to satisfy everyone without burdening future generations.  But when the pie shrinks, the temptation to shift the burden onto someone else is irresistible hence growing future entitlements and expanding budget deficits.  During the 10 years of negative growth, the Italian debt-to-GDP ratio increased to 120% from 109%.”


The worst consequences of crony capitalism are political.  The more a system is dominated by cronies, the more it generates resentment.  To maintain consensus, the insiders must distribute privileges and subsidies and the more they dole out, the greater the demand becomes.”


Traditionally, the U.S. has enjoyed a relatively honest democracy and transparent form of capitalism, which encouraged robust economic growth and contained the hunger for entitlements.  This is less and less true.  The U.S. tax code is filled with loopholes and special exemptions.  Political connections increasingly count more than innovative ideas; young entrepreneurs often learn to lobby before they learn how to run a business.”


Seven out of the 10 richest counties in the U.S. are in the suburbs of Washington D.C., which produces little except rules and regulations.  Even worse slow growth and decreased social mobility of the last decade have damaged the free market’s reputation as a creator of prosperity.  The hundreds of millions of dollars awarded for disastrous economic performance, from Robert Rubin’s salary as chairman of almost-bankrupt Citigroup to government loans for the actually bankrupt solar company Solyndra have in turn weakened public belief in the system’s fairness.”


“For the U.S. the moment to act is now, before the cancer of crony capitalism metastasizes.”



Johnson David Cay Taxed by the Boss Bloomberg 4/12/12

Zingales Luigi Crony Capitalism And The Crisis Of The West Wall Street Journal 6/6/12

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