Sunday, December 04, 2016

Crony Capitalism - Why Not?

World Corruption Index 2010 - Source Wikipedia
When I came to this country in 1997, I started to work for a well known Indian American Technologist in Silicon Valley.[1] In 1997, as like any other technology business in USA; my employer utilized 'outsourcing'. Like most such technology companies[2]; it created jobs in USA and jobs in distant places too. Recently that same employer of mine, who had had a fairly successful career as technology entrepreneur in Valley, came out supporting Donald Trump's Carrier plant intervention. When his[3] Facebook post came out endorsing and supporting Trump Policy; it generated lot of heated discussion. Many pushed back the Trumpian crony capitalism. 

What is the explanation for seemingly intelligent people backing Trump style heavy handed "nationalistic intervention"? I cannot say generically, but in this case I can guess that the said technologist is backer of Hindu Nationalism of Narendra Modi and then he finds it very easy to make sense of Trump's interventions. Generically I am suspecting large number of Americans are essentially open for such "crony capitalism". Their response will be "why not crony capitalism if it works"?

That is the answer to Lawrence Summer's criticism of Trump style crony capitalism. Summers is right that going away from "rule based capitalism" is going to cost America eventually. But many Americans, if not majority, don't seem to mind it if it brings money in short term.[4] Unless sufficient number of "losers" are created because of such economic policy and those "losers" are spread in enough states to make difference in American Political System; Trump's "crony capitalism" is just getting started.

It is not that all of Republican Party is falling for this Trumpian policy of intervention. Surprise, surprise; you have Sarah Palin criticizing this policy. When was the last time Liberals ever felt agreeing with Sarah Palin? You have guardian of Capitalism Wall Street Journal rightfully criticizing Trump's intervention in Carrier case

But it seems like overwhelming number of Americans are ready for Trumpian Crony Capitalism. Which means, essentially America is entering into the "class of learning rule based capitalism and globalization" afresh. Global rule based Capitalism established over 7 decades after WWII - it is as if Americans want to shake things up there and relearn those lessons hard way. 

Challenges and contradictions in Trumpian Policy approach are obvious and clear as sky - only if Americans want to understand those and force Trump to change his policy direction. But Donald Trump will think - I defeated the whole Republican field in primaries, I defeated Hillary in general election when the entire Media and Establishment have been against me; so why change now? 

Tighten the belt, the ride is going to be bumpy in  Trump's America. 

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[1] Yah, we are talking Steve Bannon's "too many Asians in Silicon Valley". Not that anyone cares about it, or I care or anyone can stop it constitutionally. It is obvious that for American Technology Industry dominance, Indians and Asians have contributed magnificently and there is nothing wrong in those folks enjoying fruits of their labor or fair share of this industry's success.

[2] The company I worked for was not an outsourcing firm. It was a proper technology product development company with a good chunk of serious intellectual property creation in Valley.

[3] He is a high profile management guru teaching at premium institutes globally.

[4] It is the same way substantial number of Americans did not mind Bush's unwrranted Iraq war. Consequences of that war - America's global credibility - is yet to be repaired meanwhile Donald Trump has already started to "shake the things globally too".

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