Spitzer in Salon.com on cronyism rather than capitalism in America

[Muttocracy]

http://www.slate.com/id/2209396

America's Fear of CompetitionHow cronyism and rent-seeking replaced "creative destruction."
By Eliot SpitzerPosted Thursday, Jan. 22, 2009, at 6:51 AM ET

Although everybody claims to love the market, nobody really likes the rough-and-tumble of competition that produces the essential "creative destruction" of capitalism. At bottom, this abhorrence of competition and change are the common theme that binds together the near death of the American car industry, the collapse of the credit market, the implosion of the housing market, the SEC's disastrous negligence, the Madoff Ponzi scheme, and the other economic catastrophes of recent months.

Consider the examples of the SEC and GM, which would appear to have nothing to do with each other. The traditional critiques of the SEC have been that it was underfunded and didn't have up-to-date laws needed to regulate sophisticated financial transactions in evolving markets. That's not accurate. The SEC is a gargantuan bureaucracy of 3,500 employees and a budget of $900 million—vast compared with the offices that actually did ferret out fraud in the marketplace. And the general investigative powers of the SEC are so broad that it needs no additional statutory power to delve into virtually any market activity that it suspects is improper, fraudulent, or deceptive. After each business scandal (Enron, Wall Street analysts, Madoff …), the SEC claims a need for more money and statutory power, yet those don't help. The SEC has all the money and people and laws it needs. For ideological reasons, it just didn't want to do its job, and on the rare occasions when it did, it didn't know how.

GM's excuses—that its UAW contract and health care costs make it too top heavy to compete—are partially true but ignore a simple reality: These are the self-inflicted wounds of a company that chose a path of least resistance rather than confront the need for dynamism and innovation. GM and its brethren forged a partnership with the UAW that avoided difficult choices on legacy costs, because the world seemed to permit it. Similarly, they opposed meaningful reform in health care. While this approach may have been tolerable in the '50s and '60s, it made no sense over the past 30 years. The auto industry preferred protection to competition. And when it had to compete, it wasn't up to the task.


continues at link...

http://www.slate.com/id/2209396

[GOPNotForMe]

1. Psst, it's Slate.com ;)

[Muttocracy]

2. D'oh!

:banghead: and too late to edit