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Showing posts from November, 2015

Capitalism Is Never Cronyism

I hear the phrase “crony capitalism” all the time. To me this is a classic oxymoron, and a phrase likely created by manipulative political operatives seeking to obfuscate matters.  Linking the two words – “capitalism” and “cronyism” – is in fact idiotic.  Capitalism is an economic system based on private ownership of the means of production and the creation of goods and services for profit as contrasted with governmental control.  Cronyism is the practice of favoring one’s close friends.  A capitalist system allocates resources according the maximization of profit, while a cronyism system does so based upon favoring certain people, without regard to maximizing profits.  These two concepts are irreconcilably incompatible.

Is Risk Necessary?

I teach a class at USC’s Marshall Graduate Business School, where we explore some pretty interesting discussions.  Last week I prodded the class to explore whether risk was valuable, or even necessary.  I mean, who really likes to lose?  If risk could somehow be removed from markets wouldn’t everyone be better off?