The Indicator from Planet Money How close is the US to crony capitalism?
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Oct 2, 2025 The podcast delves into the concept of crony capitalism, highlighting how the lines between government and business have blurred. It explores the origins of this phenomenon and the ways it distorts markets, drawing parallels with historical examples. Billionaire wealth is analyzed, revealing insights into government favoritism. Recent political behaviors suggest a growing trend towards cronyism, with specific cases like the TikTok deal raising eyebrows. The hosts caution that unchecked cronyism could lead to greater inequality and economic instability.
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Proximity Trumps Merit
- Crony capitalism means businesses succeed based on proximity to politicians rather than merit.
- Commentators worry the Trump era shows a blurring of business and government that raises that risk.
Origin And Mechanics
- Crony capitalism was coined to describe Marcos-era Philippines where friends gained state favors.
- It involves grants, cheap loans, licenses, and state-enabled rent-seeking rather than market competition.
Measuring Cronyism By Sectors
- The Economist's crony-capitalism index measures billionaire wealth by sector to infer state favoritism.
- Sectors like mining and construction often indicate higher cronyism due to access to land, licenses, and restricted competition.