Examining Economic Perspectives on Worker Power and Crony Capitalism in America

Do companies oppress workers through their economic market power?

When we criticized Wall Street caused the financial crisis, investors lost billions; however, bankers in Wall Street still received billions of bonuses. Some experts said that the financial system requires a greater perspective. Wall Street is not only about banks, but also willing to take risks. Venture capital companies that support entrepreneurship and innovation also have the world's most transparent and outstanding stock market, allowing everyone who buys stocks to gain wealth. Please use Economic point of view to support this argument.

One recent trend among economists is to stress a concept known as “monopsony,” a term used to describe when a single company has a good deal of market power over the workers it employs. Think “monopoly” but inverted to be a problem for the worker rather than the customers. However, this has not yet been demonstrated to be a major problem or a significant force behind lower wages. The major reason wage growth has been so slow for decades is relatively slow productivity growth, not the power of employers. One study concludes that even Walmart—for a long time the largest private-sector employer in America—does not have significant monopsony power except in some parts of rural America. Without significant monopsony, the threat of workers leaving—and, more important, the desire to attract new and better workers—can enable and enforce a lot of worker freedoms. In other cases, monopsony may be present but not a problem. Giving evidence to support this argument.  Use an economic point of view to explain the importance of human capital in big companies.

There is indeed plenty of crony capitalism in America today. For instance, the Export-Import Bank subsidizes American exports with guaranteed loans or low-interest loans. The biggest American beneficiary is Boeing, by far, and the biggest foreign beneficiaries are large and sometimes state-owned companies, such as Pemex, the national fossil fuel company of the Mexican government. The Small Business Administration Administration subsidizes small business start-ups, the procurement cycle for defense caters to corporate interests, and the sugar and dairy lobbies still pull in outrageous subsidies and price protection programs, mostly at the expense of ordinary American consumers, including low-income consumers. To these anecdotes you could add overpriced defense contracts, legal barriers to entry for laying cable to households, and cozy contractor arrangements in state and local government, among many, many other examples.

The danger, of course, is that competition for consumers will be replaced by competition for political pull. There are thousands of instances of companies lobbying for tariffs, price supports, subsidies, and restrictions on their competition, all for their own self-interest and profits of course. When such lobbying is successful, capitalism becomes about sucking up to power and cultivating the coercive powers of the state to be on one’s side, rather than about lowering costs, lowering prices, improving quality, and serving consumers.

The footprint of crony capitalism appears especially prominent these days because of President Trump, who is, as I’ve said, a preeminent practitioner of the doctrine. Donald Trump spent his career in business and during the primaries boasted of how he paid off politicians for favors and special access. His main businesses, real estate and casinos, typically rely on getting permission from varying levels of government to build and then open something, whether it be apartment blocks, corporate suites, or a new venue for boxing or gambling. The potential for corruption and influence is obvious, and business is the beneficiary. There are also numerous allegations that Trump and his businesses have violated the Foreign Corrupt Practices Act—in other words, they may have bribed foreign governments in their efforts to expand their businesses globally. Please use economic point of view to explain some advantages of crony capitalism in America today? Use evidences to support your argument.