CRONYISM: 3 forms explained.

Crony Capitalism, Crony Socialism, Crony Statism

CERBERUS LIVES AS CRONYISM

      In Greek mythology, Cerberus was a ferocious three-headed dog that guarded the gate to Hades. 

      As an Economics student, I learned that there are only three categories of economic actor: the producer, the consumer and the state. In life, I have observed that people, more often than not, will make choices that serve their own interests first over the interests of others. We all transact exchanges with others in the economy, sometimes under coerced conditions and sometimes on a voluntary basis. 

      Voluntary exchanges are generally associated with laissez-faire capitalism, a system of trade in which each participant completes an trade motivated by obtaining an acceptable gain or advantage. Genuine capitalism is rare in today’s “official” economy because virtually all exchanges are subject to taxation or regulations imposed by the state. An “unofficial” economy also exists in so-called “underground economy” in which barter and/or cash transactions are not reported to government authorities. 

      Coerced exchanges are conducted only in the “official” economy and are subject to many rules and conditions that have been legislated by the state as laws and regulations. The state’s ‘revenue’ usually involves exchanges of wealth confiscation which take the form taxes, levies, fines, permits, certificates and more. Since the state owns and operates all enforcement resources, the coerced collection of these revenue sources takes place without much fuss from an obedient, law-abiding public. The state’s ‘expenditures’ are mainly exchanges involving payments towards operating costs and the various programs that usually exist to fulfill past election promises that have kept Cerberus well fed (more on that coming). 

       Cronyism is another term for ‘government lobbying’. It is carried out by groups in an effort to secure self-serving financial gains or power advantages. All of the three ‘economic actors’ named above employ their unique form of cronyism. Each can be identified by the actors involved and the specific benefits sought by a successful lobbying effort.

      Crony-Capitalism is the first Cerberus head to discuss. It is a term commonly understood to represent a collusion between Big Business and Big Government enjoined for the purpose of achieving mutual gains.  These gains often come at a cost or disadvantage to others. An excellent example of Crony-Capitalism is the cozy relationship often seen between a major political party and a public sector labour union such as a teachers union. Consider the fact that a union is a privately-owned business whose stakeholders gain financially by specific powers and protections conferred upon them by legislation. These legal statutes enable them to exercise monopoly powers and get away with harmful business tactics that enable them to grow their business profitably. Those who are disadvantaged by this arrangement are the affected students, their parents and all taxpayers in the case of a teachers’ strike. In return for supporting these union privileges, the politicians can count on extensive financial, advertising and election campaign support from the unions. No other group in society enjoys the degree of influence that public sector unions can exert on elections outcomes. This Cerberus head is allowed to chew unrestrained at the bowels of a democracy which would otherwise operate truly democratic institutions that would serve all citizens equally under fair, unbiased legislation. 

      Crony-Socialism is the second Cerberus head to address. It is a term rarely heard or seen in public but is a very common form of cronyism.   Crony-Socialism refers to the mutually beneficial relationships that exist between Big Government and influential Special Interest Groups whose members aggressively seek funding and/or the passage of public policies to support a cause that is of paramount importance to their members. Taxation and wealth distribution payments to certain groups are common goals. Other goals can be ideological. This type of cronyism is easily identified by who benefits and how. For example, there are many NGOs, often registered as “charities” for tax advantages, that are devoted to the alleged Climate Change threat. Their leaders, members and wealthy benefactors are united in the goal to eliminate the use of fossil fuels as a source of energy and promote a “green energy economy” that serves the interests of providers of green technologies. These lobbyists pursue mutually beneficial relationships with politicians and state officials who have the powers and authority to employ the tools of taxation, laws and regulations to leverage a market shift that favours wind, solar and biofuel providers at the expense of the legacy fossil fuel economy. Of course, such Climate Change lobbyists can be counted on to financially and publicly support the government officials who are willing “to play ball”. There are many more examples of Crony-Socialism if you just take just a few moments to think about it. 

      Crony-Statism is the third Cerberus head and it is likely more hungry and ferocious than the other two. The beneficiaries Crony-Statism are the employees of the state. Given that at least a third of all working age citizens are employed by a public institution, this group is huge. Consider that we have three levels of government in Canada plus many public agencies, boards, commissions and crown corporations that employ people who share common livelihood priorities. These folks will necessarily consider their electoral options through the lens of their primary source of financial prosperity - their jobs. As such, public servants can be viewed as a very large, uniquely-motivated “special interest” community that represents millions of potential votes. 

      Long ago, as an IBM Systems Engineering Representative assigned to the Ontario Government account, a customer at the Director level told me something that I have never forgotten: “The currency of politics is votes.  Money simply serves as a means to buy votes.” Needless to say, it is considered ‘smart politics’ for an ambitious and well-placed politician to promise and then make improvements to public service employment packages. Few would pass up this opportunity to woo and acquire ‘truck loads’ of votes from this community.

     The Crony-Statist community is also uniquely privileged because it benefits directly from its close relationship with public service labour unions.   Over 70% of all public servants in Canada are also members of a union. Their objectives are synergistically aligned with the Crony-Capitalist goals of union owners. This explains why the millions of people employed in the public sector are able to exert such a large and powerful influence on the outcome of every election and especially considering the promotional and organization efforts carried out by the union leaders. With this in mind, the phrase “acting in solidarity” takes on a broader and more sinister meaning than is commonly understood by the public when expressed by picket line strikers and during elections. It actually means that union owners and members have joined forces to carry out actions that only benefit them while inflicting harm on others. During strikes, for example, the public services that taxpayers rely upon are curtailed, yet taxpayers must continue to pay. So-called “collective bargaining” tactics should never exist in a democratic society in which every citizen expects to be treated equally and fairly under just and unbiased legislation. 

      Cronyism in all its forms is an abuse of state power and authority. Decades of state propaganda and citizen complacency have lulled the majority of our populace to accept it as “normal” and many even go so far as to claim it justified as “the price of democracy”. A growing number of citizens, however, are recognizing cronyism as a dangerous political sword that powerful politicians wield in order to carve up societies into competing tribes. In this “divide and conquer” strategy, these same politicians enjoy a ring-side seat like bystanders at a cock fight as they witness us fighting among ourselves to gain access to the spoils of an autocratic state that we have allowed to take the fruits of our labour with impunity. We have not paid attention to the fact that the state has incrementally eroded our personal financial resources and our liberties with each passing year. It’s no accident that the average Canadian wage earner remits 53% of every dollar earned today to all levels of governments as compared to 38% in 1961. 

      This essay was written to shed light on the Cerberus dog that feeds on our lives and livelihoods like the public parasite that it is. I hope that each reader will learn to recognize Cerberus in their daily lives and commit to vote in every future election for politicians and parties who will steadfastly stop and even reverse the progress of cronyism. I pray it’s not too late and we are not already “past the point of no return”.