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"This is why existing firms often favor regulations. University of Chicago economist George Stigler won the Nobel Prize in economics for showing that regulatory agencies are routinely “captured” and used by the firms they are supposed to be regulating."

This is occasionally brought up as a critique of pragmatarianism. It's easy to counter though by bringing up the public good concept. If farmers are the only ones who are funding the Dept of Agriculture...then can we truly say that the Dept of Agriculture is providing a public good? If farmers are the only ones who benefit...then it sounds a lot more like a private good.

Generally though, when it comes to regulations and laws, my favorite example is the war against drugs. Clearly enough voters believe that drugs should be illegal. That wouldn't change in a pragmatarian system. What would change would be that voters would have to put their taxes where their mouths were. That means that it would be entirely up to them to fund the DEA.

If drugs are illegal, but there are no funds to enforce this law, then does it matter?

We can imagine that prohibition would have been an entirely different story if taxpayers had been allowed to directly allocate their taxes.

So I really wouldn't say that crony capitalism is a creature of the state. We really need to stop blaming the state. It's not the state's fault that people do not understand the basic relationship between scarcity and choice. It's my fault! I take full responsibility.

Pete:

Do you see the cronyism part as just seeking government favor? There is 'cronyism' where things like nepotism and 'old boy networks' are in play with public and private companies that may or may not be part of your definition (principal-agent problem).

Rob,

For private relationships, if nepotism is ultimately harmful, in any meaningful sense, then it would seem such harm will manifest itself, where there is a clear "profit and loss" framework, by way of losses. Just because someone obtains a cushy position in a private company out of being "connected" does not mean that they will not be successful in the sense of operating a sustainable profit-making enterprise.

The ability for ineptitude as a product of nepotism in the private sector to not show itself, would seem mostly to be a function of "cronyism" defined as government-granted privilege, as such privilege usually distorts the concept of profit and loss- through bailouts, "tax expenditures," and the like, while fending off potential competition eager for similar privileges, by way of erecting insurmountable barriers to entry.

In the public sector, whether such behavior is harmful would seem much more difficult to identify, due to the lack of a profit-and-loss system to signal effective human resource allocation. However, such a practice would seen to fit your stated definition of "seeking government favor," something both individuals and enterprises are more than capable of doing, with the caveat that only by granting such privilege is there actual cronyism- seeking such favors falls short, as not all favors sought are granted, and only the granted ones are harmful.

We will not put up a Christmas tree, because we'll be tneiallvrg to our parents' homes so we wouldn't actually use the tree very much!Over here in Germany & I think all over Europe(?) the tree is only put up on Christmas/Holy Eve/24th of Dec. not before!It's a tradition to do it in the morning of the 24th with your parents & in the evening the kids will be sent to their rooms and are only allowed to return when a little bell rings. This means the Christkind (Little child Christ) was there and left the presents. So we celebrate on the 24th! (;

2011 has proved to be Metrik’s true breakout year, taking him to new heights in the world of drum & bass. Starting with the smash #1 hit collaboration with Futurebound,

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