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Perry 2018
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Crony Capitalism

Stop Crony Capitalism

I agree with Bernie Sanders on practically nothing! However, I am truly grateful to Senator Sanders for one thing: opening my eyes to the prevalence and dangers of crony capitalism. Our Founding Fathers embraced the free market capitalism of Adam Smith, and envisioned an America where business thrived through true competition in the marketplace. The American Dream is built on the premise that individuals, and groups of individuals, can obtain prosperity in the marketplace through innovation, hard work, and offering goods and services at a price that beats their competitors. Some, like Bernie Sanders, see the rise of crony capitalism as the inevitable conclusion of a flawed economic system. They would urge us to adopt socialism or even communism. While I now understand the problem of crony capitalism, I nonetheless believe we can return to the true free market capitalism that our Founders envisioned for North Carolina and for our country.

What is crony capitalism?

It is the system where very large corporations create monopolies (or small cartels, i.e. oligopolies) in their respective industries. They obtain and maintain this status, not through offering better goods and services at a better price, but through the aide of our government. This aide can take several forms:

  • Hyper Regulation - One way to stifle potential competition from small, but emerging businesses is to have government create mountains of unnecessary regulations that apply to a particular industry. This benefits large corporations over new startups. Large corporations have the resources available for a corporate compliance department that will ensure that they comply. Startups do not. Therefore, the cost of gaining entry into the marketplace becomes too great, and the startup simply has no possibility of becoming a future competitor. The kicker is that these large corporations actually do the lionshare of the work in creating the regulations than govern their industry. Political Action Committees are formed by the large corporation(s) that actually write the proposed regulations that the government adopts. Needless to say, regulations are written in a way that favors the existing monopoly or oligopoly. Regulations are often written vague enough so that large and favored corporations are always found in compliance by corrupt officers of the government. However, being vague, these same corrupt government officers can use these regulations to shut down potential rivals to their favored corporation.
  • Sweetheart Deals - Often a favored large corporation needs to purchase or lease public land. Instead of opening this process up to the highest bidder, corrupt government officials ensure that their favored corporation(s) always get the needed land at fraction of what should be paid for it. A prime example is the sweetheart deal Big Oil is getting for leases to drill off our coastal waters. If you owned land that potentially had oil on it, wouldn't you charge a lot of money to a company that wished to lease it? Wouldn't you insist on stringent environmental protections? Wouldn't you insist for a cut of the profits? Of course! But our government is too corrupt to do the sane thing.
  • Uneven Tax Cuts - Libertarians are all about reducing taxes. But this should be across the board, and not just for large favored corporations. However, this is often not the case. The corporate tax rates may be the same, but corrupt government officials create tax loopholes so that their favored corporation(s) pay little to no tax.
  • Corporate Welfare - Why pay for a new factory or corporate headquarters when you can get the taxpayers to at least partially pay for it!? Business incentive grants are becoming more and more prevalent. Here in North Carolina we give $31 million annually to Hollywood film studios. Since Governor Cooper has been in office, he has spent an additional $180 million dollars of your money on corporate giveaways. If Apple or Amazon decide to come to North Carolina, expect even more of your taxpayer dollars to be handed over to these corporate giants. Make no mistake - these are not loans or investments. When you invest in something you expect to not only get your money back if the company does well, but actually make a profit. These incentive grants are NEVER repaid. Furthermore, the grant programs are set up in such a way that only the large and favored corporations can take advantage of them. The minimum size of the project is usually set in the billions, so no local company can actually utilize these grant programs.

Why do politicians go along with this?

  • Money - Politicians will, of course, get campaign contributions from these corporations and their PACs. Often the campaign reporting requirements are vague enugh so that a politican can personally withdraw money from their campaign fund for personal use. Often these expenditures are written down as consulting fees or payment for legal advice. Other times the money comes through back channels. The politican usually owns another business, and somehow their business gets injections of cash from time to time from large "corporate investors." Finally, usually assurances are made between the corporation and the politician that they will receive a high paying executive position or high paying consulting contract with the corporation after they leave public life.
  • Power - The longer a politician can stay in office, the more powerful they can become in government. They might be appointed to head certain influential committees, and things like that. Once they obtain this power they can weed out any politicians that actualy have ethics, and impede their progress. Once a corrupt politician has gained this level of power, they can demand more financial compensation from the corporations that are really running the government.

Is this bad?

Absolutely!!! Not only is our government playing favorites in the marketplace, but its hurting individual citizens. Most citizens are employed by smaller companies. However, if competition is eliminated or stifled, then these companies won't do as well as they should. This effects the bottom line. So instead of being able to reward good employees with the salary increases and bonuses that they deserve, employers have no choice but to offer lower wages just to stay in business at all. Crony capitalism also negatively affects consumers. If no competition exists, monopolies can charge higher prices, with no fear that they will lose market share.

What can we do?

Elect me! I vow that, once elected, I will eliminate all unneeded regulation, sweetheart deals, uneven tax loopholes, and all forms of corporate welfare. Furthermore, I will transform the State Ethics Commission into a vicious watchdog group that will "bite" at the first smell of corruption. I work tirelessly for campaign finance law reform as well. I am not a career politician, and I have no aspirations to be one. I am just a concerned fellow citizen who wants to put our county, state, and country back on the right track.

Paid for by the Committee to Elect David A. Perry

© 2018 - Committee to Elect David A. Perry
235 Silver Sloop Way, Carolina Beach, NC 28428

Direct Legal Inquiries to: Christopher M. Nance, Treasurer
512 Martin Street, Carthage, NC 28327