Crony Capitalism

Capitalism is when the capital provider works in the business and wants to CONSTANTLY increase its net-worth by honest means so that he can bequeath it to his children, grand children, great grand children…and all of them take the same view.

However if you have people who are ‘building a business to sell it off’ or run by employees who plan to sell their ESOPs, or VCs who wish to ‘encash’….almost all the rules of capitalism are broken. For those of you old enough to know what is ‘Leveraged Buy Out’ – know what a toxic product it was.

We have seen fiefdom building CEOs, empire building CEOs, ……….when you see many such creatures, you can be sure it is a case of crony capitalism. Sadly Ayn Rand’s theory is only for a HONEST CAPITALISM..sadly it does not exist…

read on…

http://thinkmarkets.wordpress.com/2011/12/11/the-free-market-versus-crony-capitalism/

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4 Responses to “Crony Capitalism”

  1. c’mon -just because leveraged buyouts have been abused by egomaniacal CEO’s doesnt mean it is bad in toto.

    Tatas did a brilliant LBOs of Tetley for one. The KKRs of the world do a great job in turning around many companies using LBOs.ofcourse some fail.but thats business.
    if VCs wouldnt sell or employees dont encash ESOPs..what are they supposed to do? marry the company?.businesses come and go.
    if you really have achieved your goal,why should you hang on to the shares or the company you founded? this is pretty normal to move on in life.

  2. The real goal of capitalism is to take the money, turn it into capital, and generate profits from the usage of that capital.

    So I believe if someone is building a business to sell it off at a good ROI for himself and his investors, the meaning of capitalism isn’t lost. Even employees who plan to sell their ESOPs, or VCs who wish to encash, are all looking at ROIs…and that’s perfectly fine till they don’t break the rules and make someone else worse off.

  3. may be subra sir is trying to differenciate between people who build a company out of interest in seeing it grow and those who do it to just make money. intention matters.those who think of selling it even before starting do different things. i think both types of people exist.

  4. asmi,
    and we cant do anything about it.not all parents are good.some even drink and smoke with their 12 year olds.doesnt mean parenthood is bad.
    people are what people are.

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