Trump’s Crony Capitalism
During his first presidential campaign four years ago, Donald Trump promised to change the way America does business. He has kept that promise: Now more than ever, America resembles the kind of crony-capitalist system that one more commonly associates with developing and post-communist countries.
WASHINGTON, DC – It has taken four years, but US President Donald Trump’s tax avoidance and deep indebtedness are finally being exposed, as are his many acts of self-dealing and efforts to benefit his cronies. Under Trump, the United States has begun to epitomize crony capitalism, whereby political leaders extend benefits and protection to businesses in exchange for political acquiescence and economic favors.
Under such arrangements, which are commonly associated with post-colonial and post-communist states, the “cronies” are the “friends” who support and finance autocratic rulers. In exchange for campaign contributions and other funds, they are awarded monopoly positions, special tax breaks, protection against competing imports, and tariff exemptions that are not extended to their competitors. The term “capitalism” becomes a misnomer: Although economic activity is conducted in the private sector, profitability depends on rewards and penalties from political rulers, not on economic efficiency or customer satisfaction.
A prime example of contemporary crony capitalism can be found in Russia under President Vladimir Putin, where the entire economy operates as a mutual support system for wealthy oligarchs and the Kremlin. But many other countries also fall along the crony-capitalist spectrum, and each stands apart from economies where competition, private-property rights, and a level playing field tend to deliver consistent improvements in living standards and economic growth.