Trump and crony capitalism: When state power meets corporate favouritism
The entire economy becomes less productive when businesses succeed through political manoeuvring rather than innovation and efficiency
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IN AMERICAN capitalism, political power and business interests have always existed in a delicate balance. Under President Donald Trump’s current administration, however, this balance appears to be shifting towards what economists and critics increasingly characterise as crony capitalism – a system where business success depends more on favourable government ties than on competitive market performance.
Crony capitalism represents a departure from the competitive free-market ideals that theoretically underpin the US economy.
In a truly competitive system, businesses succeed or fail based on their ability to serve consumers efficiently and innovatively. By contrast, crony capitalism fosters an environment where political connections, favourable regulations and government subsidies become the primary drivers of success.
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