Crony Capitalism-

a fixture in the Obama Administration

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from The Gray Area:

Crony Capitalism, “an economy in which success in business depends on close relationships between business people and government officials”, gets a boost from the poor economic conditions, dysfunction in Congress and with the President and a lack of clarity on many economic issues. Once thought to be a Republican interest group, business executives are now currying specific industry favors from the Democrat establishment.

This article from Bloomberg BusinessWeek, CEOs can’t get enough of the Capital, illustrates how executives are showing up to protect their investments with expert industry insights and to help design government programs that benefit their companies.

A few comments from the article:

At the height of his NBA career, Michael Jordan rebuffed a Democratic candidate for the U.S. Senate who was seeking his endorsement. “Republicans buy sneakers, too,” Jordan famously explained. Chief executives have typically come to the same conclusion: Getting involved in Washington politics is ultimately bad for business. Better to keep your distance and hire a team of lobbyists.

At least that used to be the prevailing opinion. Over the past few weeks, more than 20 CEOs, including Warren Buffett of Berkshire Hathaway (BRK/A), Lloyd Blankfein of Goldman Sachs (GS), Brian Moynihan of Bank of America (BAC), Michael Duke of Wal-Mart Stores (WMT), and Ursula Burns of Xerox (XRX), have visited the White House to press President Obama or his top aides on the urgency of raising the debt ceiling and warn of the economic calamity that will ensue if the U.S. defaults.

CEOs are also showing up more regularly on Capitol Hill. The combination of dysfunction in Congress and increased federal involvement in the economy since the financial crisis has led executives of companies large and small to personally press their case with members and regulators.

A lack of clarity on corporate taxation, regulation, health care, and energy lies behind this change of heart: 82 percent of investors had a negative view of how Washington makes, or doesn’t make, decisions. “In every area I cover, there are industry-specific issues where a CEO could help their company’s bottom line simply by helping to create an environment of stability,” says Andrew Meister, an equity analyst at Thrivent Financial for Lutherans in Appleton, Wis. “The large budgetary and debt-ceiling issues create a terrible climate of uncertainty, but at the micro level of industry structure—Where do you locate a plant? What is the regulatory environment for a fuel like coal going to be?—you have the same thing going on.”

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