Tuesday, 7 July 2015

Cronyism Rules OK?

From here:

I quote:

1. Pick a field where you can establish a monopoly – such as Mexican billionaire Carlos Slim who from 2010-2013 was ranked the richest person in the world after taking control of the country’s entire telecommunications market.

2. Expand as quickly as possible – Amazon has eschewed early profitability to becoming the “everything shop” and as a result investors have poured money in.

3. The worst place to do business is really the best – it is easier to dominate emerging markets due to the lack of competition and potential for growth.

4. Take risks with other people’s money – do all you can to encourage investors and then gamble their money rather than your own.

5. To get rich you need to own your own business and property rights – Bill Gates’s Microsoft at one point had a 95 per cent share of the operating systems market, protected by intellectual property rights.

6. Spin complex laws into gold – set up in industries bound by such convoluted regulation – for example agricultural subsidies and banking regulation - that it is easy to bend the rules as nobody understands [them] anyway.

7. Establish business networks – telecoms networks and shipping networks have created a lot of billionaires’ fortunes as they can squeeze out all competition.

No. 6 is my favourite...

Generally that's all about Private Enterprise, not Free Enterprise.


Mark Wadsworth said...

That is a good, if cynical, summary of how it works. Or just do leveraged land speculation.

The Stigler said...

"The book narrows the so-called wealth secrets down to seven, but for Wilkin only two really matter: eradicate the competition and take risks with other people’s money."

Well, yeah, but actually doing either of those is the hard part. And a lot of them did it (like Microsoft) as much by luck as hard work, intelligence or guile. If a search engine had bought Google's Backrub patent, the Google guys would be a couple of multimillionaires that you'll never have heard of. Because no search engine did, Google happened.