Crony Capitalism: Practice (Part 2)

Cronyism differs from industry to industry. That variation depends on the extent to which a field is regulated, on how much those regulations are subject to interpretation, and, especially, on whether government is a major payer (as in medical and hospital care) or can give or withhold the permission literally to exist (as in mining or energy production).
Today, a Wall Street firm will contribute millions to the election of Democrats and Republicans, because it dares not risk lacking “access” to the White House and Congress. The firm’s “investment” has nothing to do with innovation, production, or meeting demands of customers. It may be buying protection against political power in exactly the way a restaurant owner in Brooklyn must buy “protection” when the mob comes seeking a cut of his profits. Or it may be buying the political influence to shape regulations and taxes in ways that give it an advantage over competitors.
There also are corporations virtually built on government influence, for whose executives lobbying is a “core competency.” In 2008, Fannie Mae and Freddie Mac, the biggest mortgage-financing firms in America, were publicly owned, profit-making companies, listed on the New York Stock Exchange.

Read more: http://www.masterresource.org/2012/09/crony-capitalism-practice-2/