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GE & Crony Capitalism

In a January 13, 2010 column posted at Real Clear Politics. John Stossel describes crony capitalism this way:

“What is crony capitalism? It's the economic system in which the marketplace is substantially shaped by a cozy relationship among government, big business and big labor. Under crony capitalism, government bestows a variety of privileges that are simply unattainable in the free market, including import restrictions, bailouts, subsidies and loan guarantees.

“Crony capitalism is as old as the republic itself. Congress' first act in 1789 -- on July 4, no less! -- was a tariff on foreign goods to protect influential domestic business interests.

[ . . . ]

“If free-market capitalism is a private profit-and-loss system, crony capitalism is a private-profit and public-loss system. Companies keep their profits when they succeed but use government to stick the taxpayer with the losses when they fail. Nice work if you can get it.”

At Planet Gore, one of several National Review Online blogs, Henry Payne explains General Electric’s involvement in crony capitalism this way:

“Why are taxpayers giving money to a $156 billion corporate fat cat? To save the planet, of course. GE makes “smart grid technology” where the company — along with utilities — stands to gain from Obama’s market-socialist plans that advance the electrification of the automobile. One piece of that electrification model is the Chevy Volt, a key reason the feds bailed out Government Motors with $50 billion in 2009. Subsidized infrastructure, subsidized cars, and now . . . subsidized alliances.

“The Detroit News reports this week that “General Electric will convert half its 30,000 worldwide fleet of vehicles to electrics, including purchasing 12,000 cars from GM beginning with the 2011 Chevrolet Volt. In all, the Fairfield, Conn.–based company, which makes charging stations, will purchase 25,000 plug-in electric cars by 2015.”

“Yes, those charging stations — GE makes the GE Wattstation — are also subsidized by up to $2,000 of your tax money.

“It is . . . a vote of confidence in the Chevrolet Volt, which we will begin delivering to retail customers by the end of this year,” GM CEO Dan Akerson said of GE’s announcement. “We are pleased that the Volt will play a major role in this program, which will spur innovation and benefit our companies, our customers, and society as a whole.”

“Akerson’s cynical take on GE’s buy assumes ignorance of the Iron Triangle between federal green subsides, GE and GM. Greased by taxpayer dollars, the corporations benefit from this false market.

“GE’s purchase will drive sales to help GM offset the vast investment it made in pioneering technologies.” said Edmunds.com analyst Michelle Krebs.

“Um, yes, And it will also create a market for taxpayer-financed GE chargers. Small world, isn’t it?”

As Stossel pointed out, “crony capitalism is a private-profit and public-loss system!” Seems the first place the President’s deficit commission should start is eliminating corporate welfare.

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