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You Don’t Hate ‘Crony Capitalists,’ Rather You Hate Big Government

By News Creatives Authors , in Business , at November 7, 2021

“I refuse to apologize for my ability—I refuse to apologize for my success—I refuse to apologize for my money.”  – Hank Rearden

The view here about Ayn Rand’s Atlas Shrugged is that the story is timeless. No matter when you read it, it’s hard not to feel that the story is presently ripped from the headlines.

This came to mind in 2008, certainly in 2020, but also in the late 1990s as Bill Gates stared in the face the possibility that his creation (Microsoft

MSFT
) would be broken up for the alleged crime of being too dominant. Shame on Gates for including Internet Explorer – for free – in Microsoft’s software bundle. To the political class, Gates erred by providing his customers with too much of what they wanted.

Most notable about the embarrassing bit of economic history was that it came out about how Gates didn’t “have a man in Washington.” More than a few were puzzled, but it seems Gates was the most puzzled. Why would a software developer in Seattle have a Washington operation, or a Washington “strategy”? Hank Rearden wondered something similar in Atlas Shrugged. The very notion vandalized reason. The fictional Rearden and the very real Gates weren’t political figures, so why waste resources trying to influence politics?

Oh well, as readers know, Rearden’s lack of a Washington strategy proved problematic. So did it for Gates. The Microsoft of today has quite the Washington operation. If you’re successful, you must kowtow to the politicians. Gates, it seems, learned his lesson.

So, it seems, did Amazon

AMZN
founder Jeff Bezos learn Gates’s lesson. It’s as though he knew long ago that Amazon would be much bigger, richer and consequential than Washington thought it would be. Bezos knew something that the markets surely didn’t know. If anyone doubts the previous assertion, all they need to do is follow the share price of the Seattle internet retailer (and more) through the first twenty years of its public-company existence. At least once during 17 of those 20 years, Amazon’s shares plunged at least 20 percent. In other words investors, seemingly like Washington, didn’t know what to make of Amazon.

But Bezos could see. He’s never said it, and logically would never acknowledge it, but it would be extraordinarily naïve to presume politics never entered Bezos’s mind when he purchased the Washington Post in 2013. The bet here is that politics were top of mind. Bezos was never a big seller of his company’s shares, and he wasn’t because he saw a brilliant future that investors weren’t as clear about. Bezos’s net worth today is a certain consequence of him seeing what others didn’t.

And having looked well beyond what most were capable of, the speculation is that Bezos saw what a bargain the Post would be. For $250 million he could essentially buy protection from a ravenous Washington mob when Amazon eventually reached the top. What a wise acquisition. Maybe Bezos’s best acquisition. Bezos must still occasionally explain his genius and ability to politicians not fit to be in the same room as him, but imagine the harassment he would have and would be receiving absent his newspaper purchase, not to mention the placement of substantial Amazon headquarter space in northern Virginia.

All of which brings us to a basic question: is Bezos a “crony capitalist”? Many think so. Unlike the once naïve Gates, Bezos most certainly has a “Washington strategy.” Big time.

So does Elon Musk. Though he didn’t create the $7,500 federal tax credit for the buyers of his Teslas, he’s not calling for the abolishment of a credit enjoyed by all electric vehicle makers. That Musk isn’t pure on the matter means he’s a “crony” to all-too-many. Instead of just doing business and creating wealth, Musk, like Gates and Bezos, has a Washington strategy.

Again though, is he a “crony.” Is Bezos a “crony”? Was Gates? The view here is a resounding “no” all around.

More realistically all three are capitalists mugged by reality. And the reality that’s intruded on their love of creating is that a lack of a Washington strategy is the certain path to being mugged by Washington. In order to be capitalists, they must be “cronies.”

Really, does anyone think three men so brilliant when it comes to creating exciting commercial concepts have actually been subsuming a political animal side all this time? Does anyone seriously think that Gates, Bezos and Musk thrill at playing the Washington game in addition to crafting transformative market goods? The question answers itself. But for those who need the question answered, these guys aren’t or weren’t crony capitalists as much as a burning desire to meet our needs meant they had to pursue what was and is of little interest to them.

As for the ankle biting, self-proclaimed free-market “purists” so eager to besmirch the achievements of the men mentioned, their criticism reveals a lot more about them than it does about Gates, Bezos and Musk. In reality, they’re the political animals, and as such it seems they’re ascribing their all-consuming interest in politics to men who likely couldn’t care less.

The problem is that politics has found them. A government as big as our federal government, one that collects trillions a year while borrowing trillions more, is a government with the means to crush or muzzle the biggest of the big in the commercial space. Since it can, since the federal government’s size renders it a formidable threat to the commercially brilliant, the commercially brilliant must work with it, or at least around it.

Here’s hoping the self-proclaimed free market purists recognize this truth as they bathe in their own enormously high self-regard. Do they really hate, or at least lightly disdain three men who a la Rearden don’t much think of them at all, or do they actually loathe a government so large that true capitalists must play nice with it?

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