Editing Crony capitalism (section)

== In sections of an economy ==
{{See also|Lobbying in the United States|Military–industrial complex}}
[[File:The Bosses of the Senate by Joseph Keppler.jpg|thumb|"The Bosses of the Senate", [[Corporatocracy|corporate interests]] as giant money bags looming over [[United States Senate|U.S. senators]]<ref>[[Joseph Ferdinand Keppler|Joseph Keppler]], ''[[Puck (magazine)|Puck]]'' (January 23, 1889)</ref>]]
[[File:US federal minimum wage if it had kept pace with productivity. Also, the inflation-adjusted minimum wage.png|thumb|350px|[[US federal minimum wage]] if it had kept pace with productivity. Also, the real minimum wage.]]
More direct government involvement in a specific sector can also lead to specific areas of crony capitalism, even if the economy as a whole may be competitive. This is most common in natural resource sectors through the granting of mining or drilling concessions, but it is also possible through a process known as [[regulatory capture]] where the government agencies in charge of regulating an industry come to be controlled by that industry. Governments will often establish in good faith [[regulatory agency|government agencies to regulate an industry]]. However, the members of an industry have a very strong interest in the actions of that regulatory body while the rest of the citizenry are only lightly affected. As a result, it is not uncommon for current industry players to gain control of the watchdog and use it against competitors. This typically takes the form of making it very expensive for a new entrant to enter the market. An [[Gibbons v. Ogden#Background|1824 landmark United States Supreme Court ruling]] overturned a New York State-granted monopoly ("a veritable model of state munificence" facilitated by [[Robert R. Livingston (chancellor)|Robert R. Livingston]], one of the [[Founding Fathers of the United States|Founding Fathers]]) for the then-revolutionary technology of [[North River Steamboat|steamboats]].<ref>{{cite book |first=T.J. |last=Styles |title=The First Tycoon: The Epic Life of Cornelius Vanderbilt|isbn=978-0-375-41542-5|quote=Property requirements for suffrage under New York's constitution of 1777 hardened the culture of rank into law. Two distinct levels of wealth were required to vote, one for state assembly, and a second and higher level for the state senators and governor... [this [[suffrage]] scheme fostered] [[mercantilism]], which in the state empowered private parties to carry out activities thought to serve the public interest. The standard reward for such an undertaking was a monopoly—just what Chancellor Livingston sought when he offered to meet a most pressing public need, the need for steamboats...Livingston maneuvered...the monopoly through the legislature ("a veritable model of state munificence," as legal scholar Maurice G. Baxter writes—that gave him the right to seize steamboats the entered New York waters from other states. But Livingston had overreached. With so many inventors and investors interested in the steamboat, the monopoly on served to limit its adoption.  The new technology was simply too important for the monopoly to remain unchallenged. [pp. 39–42]|year=2009 |publisher=Alfred A. Knopf }}</ref> Leveraging the Supreme Court's establishment of Congressional supremacy over commerce, the [[Interstate Commerce Commission]] was established in 1887 with the intent of regulating railroad [[robber baron (industrialist)|robber barons]]. President [[Grover Cleveland]] appointed [[Thomas M. Cooley]], a railroad ally, as its first chairman and a permit system was used to deny access to new entrants and legalize [[price fixing]].<ref>{{cite news |first=Timothy |last=Lee |title=Entangling the Web |url=https://www.nytimes.com/2006/08/03/opinion/03lee.html |work=[[The New York Times]] |date=August 3, 2006 |access-date=December 13, 2011}}</ref>

The defense industry in the United States is often described as an example of crony capitalism in an industry. Connections with [[United States Department of Defense|the Pentagon]] and lobbyists in Washington are described by critics as more important than actual competition due to the political and secretive nature of defense contracts. In the [[United States–European Union relations#Boeing and Airbus subsidies|Airbus-Boeing WTO dispute]], Airbus (which receives [[subsidy|subsidies]] from European governments) has stated Boeing receives similar subsidies which are hidden as inefficient defense contracts and in the form of federal and tax tax breaks.<ref>{{cite news |title=Pulling Boeing Out of a Tailspin |url=http://www.businessweek.com/magazine/content/03_50/b3862121_mz029.htm |archive-url=https://web.archive.org/web/20040205154139/http://www.businessweek.com/magazine/content/03_50/b3862121_mz029.htm |url-status=dead |archive-date=February 5, 2004 |work=[[Bloomberg BusinessWeek]] |quote=A national treasure, once No. 1 in commercial aviation, Boeing has become a risk-averse company stumbling to compete in the marketplace and dependent on political connections and chicanery to get government contracts. Boeing needs a strong board and a rejuvenated corporate culture based on innovation and competitiveness, not crony capitalism. |date=December 15, 2003 |access-date=December 13, 2011}}</ref> Other American defense companies were put under scrutiny for no-bid contracts for the [[Iraq War]] and [[Hurricane Katrina]] related contracts purportedly due to having cronies in the [[Presidency of George W. Bush|Bush administration]].<ref>{{cite web |first=Peter |last=Dreier |title=Katrina and Power in America |url=http://scholar.oxy.edu/cgi/viewcontent.cgi?article=1235&context=uep_faculty |quote=Three companies—the Shaw Group, [[Kellogg Brown & Root]] (KBR, a subsidiary of Haliburton, whose former CEO is Vice President [[Dick Cheney]]), and Boh Brothers Construction of New Orleans—quickly scooped up no-bid ACE contracts to perform the restoration. [[Bechtel]] and [[Fluor Corporation|Fluor]] (also with close GOP ties) also reaped huge contracts. The Department of Defense has been criticized for awarding Iraq reconstruction contracts to Haliburton and Bechtel without competition (Broder 2005) |publisher=[[Occidental College]] |date=March 2006 |access-date=July 22, 2012 |archive-date=November 9, 2013 |archive-url=https://web.archive.org/web/20131109075140/http://scholar.oxy.edu/cgi/viewcontent.cgi?article=1235&context=uep_faculty |url-status=dead }}</ref>

Gerald P. O'Driscoll, former vice president at the [[Federal Reserve Bank of Dallas]], stated that [[Fannie Mae]] and [[Freddie Mac]] became examples of crony capitalism as government backing let Fannie and Freddie dominate [[mortgage underwriting]], saying: "The politicians created the mortgage giants, which then returned some of the profits to the pols—sometimes directly, as campaign funds; sometimes as "contributions" to favored constituents".<ref>{{cite news |url=http://www.nypost.com/seven/09092008/postopinion/opedcolumnists/fannie_freddie_bailout_baloney_128135.htm |work=New York Post |title=Fannie/Freddie Bailout Baloney |first=Gerald P. |last=O'Driscoll Jr |date=September 9, 2008 |url-status=dead |archive-url=https://web.archive.org/web/20080913195535/http://www.nypost.com/seven/09092008/postopinion/opedcolumnists/fannie_freddie_bailout_baloney_128135.htm |archive-date=September 13, 2008 }}</ref>