Crony capitalism targeted after book release, recent reports
With the release of a new book, ongoing protests and recent reports about Congressional insider trading and stimulus corruption, the phrase "crony capitalism" is getting noticed.
When Occupy Memphis members met with tea party members on Nov. 17, the Associated Press reported they found common ground in their opposition to crony capitalism, where ties between lobbyists, businesses and other interests influence government and hurt free-market capitalism.
"We all want the same form of government, which is one that listens to its constituents," protester Tristan Tran told tea party members.
"It sounds to me that you all ought to be joining us," tea party member Jerry Rain said. "You have a lot of the same goals we have."
Crony capitalism is the dark side of American politics and economics, Jeffrey Sachs writes at The Huffington Post.
"The level of corruption in Washington is staggering, growing, and rife in both parties," Sachs says. "The White House and Congress dispense billions of dollars of favors to political supporters like a non-stop vending machine."
Peter Schweizer, author of the New York Times bestselling book "Do As I Say (Not As I Do)", which also inspired a documentary film, recently released a new book, "Throw Them All Out." The book focuses on crony capitalism and insider trading in Washington — trading that Schweizer says is not illegal, but is "highly unethical," "offensive" and "wrong."
"If you are a member of Congress and you sit on the defense committee, you are free to trade defense stock as much as you want to," Schweizer said in a 60 Minutes interview. "If you're on the Senate banking committee you can trade bank stock as much as you want, and that regularly goes on in all these committees."
Brian Baird, a former congressman, told 60 Minutes that one line in a bill in Congress can be worth millions and millions of dollars.
"The town is all about people saying — what do you know that I don't know? This is the currency of Washington D.C. And it's that kind of informational currency that translates into real currency," Baird said. "It's a pretty great system. You feel like an idiot to not take advantage of it."
According to some researchers like business professor Alan Ziobrowski, evidence suggests that members of the House of Representatives see returns that outperform the market by more than 6 percent annually. Members of the Senate beat the market by 10 percent.
"It's fair to suggest that, by and large, members of Congress focus on three things: regulation, taxes and the federal budget," Ziobrowski told the Financial Times. "All three of those things can have a tremendous impact on corporate profitability and if you are the first one to know that the law is about to change, you can make an awful lot of money."
"That Congress has fewer ethical restrictions than either journalists or bankers — neither of whom are held in high public esteem, judging from polls — says something about just how ethically challenged Congress actually is, Zachary Karabell writes at The Daily Beast.
Nasdaq.com published a list of the top favorite stock holdings of Congress. The list includes General Electric, Procter & Gamble, Bank of America, Microsoft, Cisco Systems, Pfizer, Intel, Wells Fargo, AT&T and Exxon Mobil.
In the 60 Minutes show, the trading practices of House Speaker John Boehner, R-Ohio, Minority Leader Nancy Pelosi, D-Calif., House Financial Services Committee Chairman Spencer Bachus, R-Ala., former Speaker Dennis Hastert, R-Ill., and former Sen. Judd Gregg, R-N.H., were discussed.
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