Crony capitalism, socialism often lead to bad decisions

Crony capitalism, socialism often lead to bad decisions

By Seth Grossman, Political Columnist

(Reprinted from the May 12, 2010 Current-Gazette Newspapers of Atlantic and Cape May Counties,….decisions.html)

?Socialist governments traditionally make a financial mess. They always run out of other people?s money.??

? Margaret Thatcher, Conservative British Prime Minister, 1976.


?Crony capitalism: An allegedly capitalist economy in which success in business depends on close relationships between businesspeople and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth.??

? Wikipedia, 2010

In socialist countries, most large businesses are owned by the government and run by politicians. Here in New Jersey, the government owns New Jersey Transit, New Jersey Public Television, the New Jersey Mortgage Finance Agency, CRDA, the South Jersey Transportation (Airport and Expressway) Authority, the Atlantic County Utilities Authority, golf courses in Egg Harbor Township, Mays Landing and Brigantine, and countless other businesses.
Government-owned businesses don?t pay taxes and don?t play by the same rules as everyone else. Private businesses close if they lose money. They must keep their customers happy with good service and fair prices. None of this matters to government-owned businesses.

?Crony capitalism,? usually called ?public/private partnership? in New Jersey, is just like socialism, except the government indirectly controls private businesses instead of directly owning them. Too many business owners today are willing to let politicians, not customers, dictate how they run their businesses, including what to sell, what price to charge, whom to hire, what charities to support, etc., as long as they get bailouts and guaranteed profits from the government.

But only liberty brings prosperity. Socialism and crony capitalism work only when government can milk enough successful and productive private businesses to support a handful of failing, unproductive government ones. The system crashes when too many successful, private businesses close or move. Here are some of the reasons why:

Where there is liberty, decisions are made by people better qualified to make them. A stupid person is more likely to make a smart decision affecting his own life than a smart person affecting someone else?s life.

Should I install an expensive, energy-efficient light bulb in my basement crawl space, or a cheap old-fashioned one? I only use that light for two minutes twice each year to turn the outside water on and off. Why would a government official in Washington, D.C. force me to use the more expensive bulb? (Look at the political contributions of the companies that make the more expensive bulbs!)

Where there is liberty, people are held accountable for their choices. Good choices are rewarded; bad ones punished.

If someone wants to start a professional sports team, that person, not the government, should pay for the stadium. People are a lot more careful with their own money than other people?s money. In the past, promoters of new teams built new stadiums only after they tested their ideas with inexpensive temporary seating at existing college or high school ball fields.

But our culture of socialism and crony capitalism let politicians like former Atlantic City Mayor Jim Whelan decide to build a new $13 million stadium and force taxpayers to pay for it ?before a single ticket was sold. It was a bad decision. The stadium is an empty wreck. The money was wasted.
If Whelan had to put his personal savings and pension into that venture, he would have been a lot more careful, and he would have built that stadium for a lot less than $13 million. But only Atlantic City taxpayers lost.

Whelan did not lose a nickel of his own money. And many building contractors, unions, lawyers, architects, and Wall Street wizards who dish out lots of campaign cash made big profit from the stadium. This business failure was a political success that helped make Whelan a state senator.

Where there is liberty, people freely decide how much to pay for what they buy. When I freely pay a dollar for a cup of coffee, I personally decide that the coffee I buy is worth the dollar I pay to get it. But that doesn?t happen with socialism or crony capitalism.

Taxpayers just spent $7.6 million to fix up the rundown, obsolete, Landis movie theater in Vineland. Would you invest your 401k retirement fund in a company that put $7.6 million into that dump? Would you invest $300 million of your own money in a company building the new Revel Casino for $2.5 billion if you can invest in a company getting two existing Atlantic City casinos for the same money (less than $150 million or $150,000,000 each)?

Somers Point attorney Seth Grossman appears live on WVLT-92.1FM, heard throughout South Jersey 8-9 a.m. every Saturday. For information see, email or call (609) 927-7333. Breakfast discussions are held 9:30-10:30 a.m. every Saturday at the Athena Diner, 1515 New Road, Northfield.

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