Wednesday, March 23, 2016

Crony Capitalism and Threefolding: Part 5

Hieronymus Bosch, An Allegory of Intemperance,
ca. 1495-1500, Oil on panel, Yale University Art Gallery

C RONY capitalism is what too often happens when politicians' need of funding to pay for ever more expensive election campaigns comes together with the desire of wealthy donors to get favorable tax-, regulatory-, and spending policies from the government. 

Posts 1, 2, 3, and 4 in this series sketched a few contours of crony capitalism.  The posts -- particularly Part 3 -- also touched on the fact that a significant social reform now underway -- the formation of certified benefit corporations -- is one of the cutting edges of progress in social threefolding. Yet the leaders of B-Lab, the non-profit that helps develop and certify benefit corporations, may never have heard of threefolding.  Or they may have received some information about it from Rudolf Steiner Social Finance, which supports their work.  About B-Lab, see the exciting short video at the end of Part 3 in this series of blog posts.

What reforms are proposed in the Community for Economic Development's 2015 report on Crony Capitalism?  How can a better boundary be raised between economic interests and the political domain, so that the government behaves more impartially instead of being sold to the highest bidders? Such questions are in tune with threefolding concerns, though the CED report does not evince any awareness of threefolding.

The report offers four sets of remedies for crony capitalism (p.32).  Only a few highlights will be given here, as those who wish more detail can read the report itself by clicking on the link in the paragraph above this one.   

The authors suggest that

1) the large size and scope of government today represents an attractive forest of opportunities for infestation with crony capitalism, and that government should therefore be cut back in several ways, (p.32) such as 
  • reducing government spending and simplifying the tax code to get rid of loopholes.  The code has grown to some four million words and thus very few people understand it. (p.23) It has grown that large in part because crony capitalism produces an ongoing series of special tax deals, loopholes, and subsidies. 
  • The authors allow that government regulation is necessary to society.  But they note there are now over 165,000 pages of such regulations (p.22) and that the total continues to grow rapidly, in part because crony capitalism causes special regulatory deals and exemptions to proliferate.   The authors suggest that all regulations should be subject to a cost-benefit analysis, and that major new regulations should have to be approved by Congress and signed by the president.        
2) the financing of electoral campaigns should be reformed (p.34), for example by
  • having the government match the first $250 of every campaign contribution, and match it by a multiple of as much as 4 to 1.  That could make small contributions more valuable than large ones, and allow a politician who relies on small donations to be fully competitive.
3) the lobbying industry should be reformed (p.35), by
  • requiring retired representatives and their congressional staff to wait as long as senators (2 years) before they may seek jobs as lobbyists.
  • strengthening the enforcement of laws and ethics rules that cover members of Congress, their staff, and lobbyists.  Alternatively, by creating an independent authority to police them.   
4) Legislators should improve/comply with the rules of the legislative process (p.36), for example by
  • providing enough time to review legislation before passage, so special interest deals cannot be smuggled into law by being hidden in giant omnibus bills
  • making sure that when House and Senate leaders go into conference committee to reconcile House and Senate versions of a proposed law (a bill), the conference committee does not add provisions unrelated to those publicly discussed during House and Senate debates.  Adding provisions during conference committee meetings has become a way of sneaking public-private deals into a bill while avoiding the normal scrutiny of public hearings.
One might disagree with parts of the CED's report, in particular their supposition that the only good alternative to crony capitalism is the re-establishment of traditional types of capitalism.  As Part 3 of this series explained, it is reasonable to suppose that the spread instead of more cooperative forms of capitalism, such as B-corps, would do more to undermine crony capitalism than a mere re-introduction of the traditional kind of business, since the latter almost inevitably produces crony capitalism as a byproduct.

Nevertheless, if put into practice, the four sets of remedies the CED report offers would on the whole help restrain crony capitalism and also advance social threefolding.

Taking Action
Below are two links you can click on to take actions that will advance social threefolding, though neither organization knows that its projects will have that effect:

Help B-Lab grow the movement for benefit corporations
Help the Center for Responsive Politics increase government transparency

Stay tuned.  

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