Economic Factor #3: Cronyism
Undoubtedly, one of the primary factors of economic performance is the extent to which governments exercise or permit cronyism. Government cronyism is when a government favors some businesses over others, or favors the business sector over other economic sectors, or favors unions over businesses, or vice versa and so forth. Government cronyism steers the focus of the economic participants away from creating wealth and towards competing for government favor.
An acid test of economic cronyism is the extent to which “outsiders” are allowed to enter and compete. For example, can people freely open restaurants, provide services through Uber, utilize Airbnb, and so forth with minimal government fees and delays? Clear indications of government cronyism are the extent to which businesses and other organizations lobby government officials. By that measure, government cronyism in the U.S. is soaring.
An economy is productive when people perceive that the best way to receive the things they want is by creating wealth – providing goods and services that others wish to buy. Simply put, an economy grows when participants cooperate in making the pie bigger. An economy falters to the extent that people focus on trying to use the power of government to assure them a larger piece of a shrinking pie by getting government to grant them favors at the expense of others.
Importance of factor in general: B+
Prospective influence of this factor on the U.S. economy: B-