Thursday, January 03, 2013

The Fiscal Cliff Deal and Crony Capitalism

Yesterday’s bipartisan last minute “Fiscal Cliff deal” exhibits or signifies an example of the unjust and immoral distribution of political-economic privileges (which favors those with political connections or the political class)

From (hat tip Zero hedge)
The “fiscal cliff” compromise has been heralded as a saving grace for middle class taxpayers, their families and the unemployed.

But buried in the fine print of the 150-page deal are also some lesser-known New Year’s gifts to some of Washington’s favorite industries.
So what industries are these?

From the same article (bold original)
$430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States.  Producers can expense up to $15 million of costs for their projects.

$331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50 percent of the cost to maintain tracks that they own or lease.

$222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.

$70 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”

$59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.

$4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.
Unnamed in Washington’s favorite industries is Warren Buffett’s Burlington Northern Santa Fe who will be one of the major beneficiaries (perhaps compensation for being Obama's mouthpiece).

Add to the above:
Wind farms, motorsports tracks, global banks and other businesses won revived tax breaks in a $75.3 billion package included in a last-minute budget deal Congress passed yesterday… (Bloomberg)
Political power blocks, special interest groups and pet projects of politicians accounts for as the main beneficiaries of the latest fiscal deal.

The above hardly has been about "unregulated capitalism", but about cronyism via state capitalism or participatory fascism

As Professor Thomas DiLorenzo at the Mises Institute aptly described
It is a system of crony capitalism financed by a central bank, government borrowing, and pervasive taxation. It is a system that is of plutocratic elites, for plutocratic elites, and by plutocratic elites (to paraphrase Abraham Lincoln, the true founding father of this system). The massive welfare state is merely used to buy enough votes to maintain the “legitimacy” of the system.

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