Two types of cronyism

 Na sequência de "Promotor da concorrência imperfeita, dos monopólios informais e das rendas excessivas" Erik Reinert traz um tema importante que me deixa arrepios:

"rent-seeking is the basic driving force of capitalism. [Moi ici: De acordo desde que seja através daquilo a que chamo monopólios informais] The question is whether this rent spreads through society in general - in the form of higher profits, higher wages and higher taxable income - or not. The theoretical goal of `perfect competition' is a situation that does not create wealth for the producers. To this rent-seeking argument is now added the related argument that industrial policy creates `cronyism', that money is being made through favouritism shown to friends and associates.

With reference to the two types of economic activities - Malthusian and Schumpeterian ... we also need to separate the two types of cronyism. Consider these examples:

2005: A Filipino sugar producer uses his political influence to get import protection for his products.

2000: Major Daley in Chicago (ignoring the advice of University of Chicago economists) provides subsidies to already wealthy high-tech investors through an incubator.

1950s and 1960s: Swedish industrialist Marcus Wallenberg uses his close contacts with Labour Party Minister of Finance Gunnar Strang, to win political support to carry out his plans for Swedish companies, Volvo and Electrolux.

1877: Steel producers in the United States use their political clout to impose 100 per cent duty on steel rails.17

1485: Woolworkers use their connections to King Henry VII to influence the state to give them subsidies and to impose an export duty on raw wool to increase raw material prices for their competitors on the Continent, slowly strangulating the wool industry elsewhere, for example in Florence.

The above examples all involve crony capitalism and rent-seeking behaviour which mainstream economic theory tends to abhor. However, a crucial difference separates the first example from the rest. The Filipino crony differs from the other cronies in that he gets subsidies for a raw material with diminishing returns that competes in a world market-facing perfect competition. In other words, he is a Malthusian crony, leading his country down the path of diminishing returns (in spite of technological change which counteracts this) in an activity where technical change fails to raise real wages. The others are Schumpeterian cronies, producing under what Schumpeter called historical increasing returns (a combination of both increasing returns and fast technological change). If we couple this with new trade theory, we see that the tilted playing fields of Schumpeterian cronyism produce vastly different results from those of the Filipino crony."

Trecho retirado de "How Rich Countries Got Rich and Why Poor Countries Stay Poor" de Erik S. Reinert.