Political  Calculations

President Obama opened a controversy when he made the following comments during a campaign stop at a fire station in Roanoke, Virginia:

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business. you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

That was news to a lot of business people and entrepreneurs who actually have built their own businesses, many from scratch, many without the benefit of any government research or support. We wondered where President Obama may have gotten the idea businesses were so completely dependent upon the government to even be in business.

And then, it came to us! We remembered that two of the biggest business basket cases of President Obama's tenure in office are represented by General Motors and General Electric! Neither one of these companies is capable of existing without significant government support, as both are highly dependent upon government contracts, subsidies, mandates and special protections for their revenue.

In fact, both businesses are so dependent upon the federal government for their cash flows that they have effectively become junior partners or subsidiaries of the federal government. As a result, rather than recognizing that his proper role as President involves running the federal government and not setting the agendas for America's businesses, President Obama instead views himself as the CEO of America's crony capitalists.

What is crony capitalism? Investopedia explains:

A description of capitalist society as being based on the close relationships between businessmen and the state. Instead of success being determined by a free market and the rule of law, the success of a business is dependent on the favoritism that is shown to it by the ruling government in the form of tax breaks, government grants and other incentives.

Does the progressive worldview behind President Obama's comments seem clearer now?

If it helps bring greater clarity, there is a different word that perhaps better describes the political system that goes hand-in-hand with the economic system of crony capitalism: corporatism:

Corporatism, Italian corporativismo, also called corporativism, the theory and practice of organizing society into "corporations" subordinate to the state. According to corporatist theory, workers and employers would be organized into industrial and professional corporations serving as organs of political representation and controlling to a large extent the persons and activities within their jurisdiction.

In Part 2 of this series, we'll reveal what we suspect will become the modern-day example of why crony capitalism, and the corporatism it entails, is really a destructive economic and political system.


Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

Be the first to read Political Calculation's column. Sign up today and receive Townhall.com delivered each morning to your inbox.