Crony Capitalism and Political Corruption - Research Paper Example

?Crony Capitalism and Political Corruption are the Worst Forms of White Collar Crime Table of Contents Table of Contents 2 Introduction 3 Thesis ment 3 Crony Capitalism and the Case of Solyndra 4 Political Corruption and the Case of Bernard Kerik (Former Police Commissioner of New York) 5 Discussion 6 Arguments 7 Conclusion 10 Works Cited 11 Introduction Crony capitalism and political corruption are the two major topics in the recent times that have been among the concerning maters for almost all the nations of the world. The phenomenon of crony capitalism can be linked with an economic system where the profitability of the market economy is particularly reliant on political connections. The concept of crony capitalism has been a recently evolved notion, particularly since the East Asian crisis where it had found a place for itself in the official lexicon of economists (Frankel 119). The arrangement of crony capitalism has increasingly been influencing the legislative and regulatory actions of governments throughout the world. On the other hand, the aspect of political corruption has been imposing serious threat on the integrity of the national democracy. The concept of political corruption can be defined as abuse of public power or right for illegitimately, usually for gaining secret and private benefits. The practice of political corruption often varies depending upon the country and its jurisdiction. Both the concept of crony capitalism and political corruption are associated with white color crime and their practice in various forms has rendered adverse impacts on socio-economic environment of a country. Thesis Statement In the present day context, the role of government and its influence on socio-economic activities have immensely augmented. It has been recognized that crony capitalism and political corruption in the modern day context present worst forms of white collar crime committed by political persons and business organizations. In relation to this, the paper intends to identify the impact of crony capitalism and political corruption on the socio-economic environment of a country and develops arguments favoring the notion that crony capitalism and political corruption are the worst forms of white collar crimes witnessed by the world today. Crony Capitalism and the Case of Solyndra Crony capitalism in general is a way of caricaturizing the relations between the two or more parties in two different spheres in a capitalist economy. The first subject related with crony capitalism may include economy or the market. The economy or the market areas may involve the operations of businessmen who own and manage business organizations engaged in a variety of activities with a prime goal of making profit. The other subject area includes the public authority or the state through which public rules, regulations, policies and laws are made and enforced (Allen 129-139). Contextually, the case of Solyndra that has been witnessed by the United States in the recent times provides evidence about how crony capitalism is being practiced in the country. California based Solyndra, a solar panel manufacturer declared bankruptcy in August 2011 after having received US$528 million as federal loan guarantees. Moreover, its bankruptcy rendered more than 1000 people jobless. It was been observed that the loan guarantee was allowed in 2009 following the pressure from the company itself and the White House. A report issued by House of Energy and Commerce committee argued that the sinking of Obama led government’s US$528 million investment was the result of involvement of Obama Administration Officials and certain key Solyndra players. It has been further argued that despite the risks associated with funding of loan to Solyndra, the federal government did not resist in approving loan guarantee to the company rather it has been involved in backing the company in raising the loan guarantee. The political and government involvement in such scams is one of the worst examples of Obama led Administration’s competence in the history of America (The New York Times, “Solyndra”). The involvement of government officials in such activities has substantial affect on the progress of the country. Political Corruption and the Case of Bernard Kerik (Former Police Commissioner of New York) Political corruption is a very dangerous phenomenon currently existing in different societies in various forms. Political corruption has often been seen as an act that violates the basic tenants of democratic government. In other words, political corruption can be defined as the private wealth seeking behavior of an individual who embodies the state and the public authority or abuses the public properties by public officials for private gains. Political corruption generally occurs at higher echelons of political system (Jain, “Corruption: A Review”). Political corruption often results in misallocation of possessions as well as it affects the way in which the decisions are taken. Corruption in any aspect affects a country’s political and economic environment. Recent studies have postulated that corruption affects the level of investment and implementation of rules and regulations related to accessing of resources and assets within the country. Moreover, the practice of corruption is related with reducing the public trust on federal and government bodies (Issacharoff, “On Political Corruption”). Almost all the countries either developed countries such as the US or developing countries like India are being the victims of corruption since long time. The story of Bernard Kerik in the recent times has been one of the largely debated topics in relation to political corruption. The ex- New York police commissioner, Bernard Kerik was accused on 16 counts of federal corruption charges including bribery and tax fraud. Such instances of corruption are disgraceful indeed. He was accused by the US District Judge for giving information that had been sealed to the trustee of his legal defense fund. Furthermore, he was accused of receiving US$165,000 worth of unpaid construction work to convert two apartments in a luxury building in Riverdale into a huge unit, in a hope hat he would help the company to obtain a city license (Auken, “Bernard Kerik’s Guilty Plea: Corruption Case Underscores Fraud of Homeland Security”). Precisely, the engagement of trusted government officials in such activities can be termed as unethical and a shameful act which needs to be immediately curtailed, otherwise the implication of such activities and dishonest government officials can be far-fetched who may continue to exploit the benefits of their position and status. Discussion It has been recognized that crony capitalism and political corruption have serious socioeconomic impacts. Crony capitalism is ubiquitous across all political systems. It has been observed that whenever a person politically intervenes in economic affairs, he/she often tends to provide incentives for businesses to take crony capitalism or corruption actions to ensure that the political person intervenes or makes decisions in their favor. It should be noted that crony capitalism only emerges when there is political influence over resource allocations. The corrosive effect of crony capitalism on political environment often acts as a major threat to democratic stability. It violates the rights of an individual as advocated by the democratic principles. The correlation of crony capitalism and political corruption has reduced the economic performance worldwide. Fraud in terms of crony capitalism undermines the public confidence at marketplace. The government’s role in an economy should be neutral and its policies, rules and regulations should facilitate the free exchange of goods and services. However, often the government subsidy schemes and other corporate welfare schemes are formulated that benefit a particular company or a group of companies at the costs of other businesses and taxpayers. Such policies and laws initiated by the federal and state government serve as crony capitalism to wealthy companies rather than promoting corporate equality. At the same time, the tendency of crony capitalism and political corruption tends to increase during the financial crisis. In the course of financial crisis, the wealthy companies in order to sustain their business profitability and eliminate the risk of any possible government policies often attempt to influence the government personnel by paying handsome amount of money with a hope that the concerned person will take steps and policies in favor of the organization. Such actions of the political persons may lead to heavy government losses and may also act as a threat to the national integrity and security as in the case of Solyndra and Bernard Kerik. Arguments There have been many arguments which claim that ‘Crony Capitalism and Political Corruption are the worst forms of White Collar Crime’. After the end of Second World War, the USA became the world’s only superpower which aimed to bring the rest of the world under its control and to increase the enormous wealth of its corporations. However, in the recent times, the country itself has been struggling to cope with problems of white color crimes such as crony capitalism and political corruption. It has been argued that crony capitalism often tends to support corruption. Certain sociologists and political scientists have observed that crony capitalism and political corruption are interrelated that have indispensible impacts on the capitalist development. The phenomena of crony capitalism and political corruption tend to deter emergence and growth of new and competitive entrepreneurship activities. The wealthy organizations often are likely to influence the political and economic activities within a country and promote favoritism. Since both crony corruption and political corruption originate at high level functions, thus they are often hard to define and identify. Often both crony and political corruption are related with white collar crimes as these crimes are easy to execute and further it does not require knife or gun to execute it. Crony capitalism causes wide losses on the part of the state and federal governments as observed in the case of Solyndra, which resulted in government bearing the massive loss of US$528 million dollar. In the recent times, white collar crime in the forms of crony capitalism and political corruption have led towards most serious problems confronting law and enforcement authorities in the US (Strader, “Understanding White Collar Crime”). As stated above both crony capitalism and political corruption are often very difficult to detect. Unlike street and common property crimes, these white collar crimes are usually committed with utmost privacy of an office or home. In addition to this, in many cases, there exists no eye witness while such white collar crimes are conducted between the parties who are benefited for their opposite actions only. Consequently, the government’s ability to identify white collar crimes such as crony capitalism and political corruptions are hampered by a lack of resources and witnesses. It is often argued that on several occasions, organizations and political persons are successful in their intention leading towards crony capitalism and political corruption without attracting any legal actions. It has further being argued that such crimes are usually generated due to poor government structure along with because of failing to state firm criteria for accountability. Consequently, it can be stated that crony capitalism and political corruptions are the worst forms of white collar crime currently being prevailing in various countries of the world. Conclusion Government plays an important role in the overall sustainability of a nation and ensures that legitimate transactions occur between entities, thereby ensuring an increasing growth of an economy. However, in recent times the concept of crony capitalism and political corruption as the two vital forms of white collar crime has challenged the role of government and has raised questions against fairness of its decision making. Accordingly, crony capitalism is associated with corruption which acts as an obstacle to the development of an economy. It often results from linkages between political elite and business class. On the other hand, political corruption has also been immensely imposing threat to overall development of an economy. Both forms of crime are associated with white collar crimes. Consequently, these crimes are difficult to measure and identify. In this regard, the cases of Solyndra and Bernard Kerik that have been recently witnessed by the American economy postulate the intensity of the issues related with white collar crime. It can be stated that whosoever are the beneficiaries of such act, ultimately the state and the economy have to bear losses arising from such illegitimate acts. Moreover, such crimes are committed by political elites and wealthy organizations under the privacy of offices and homes. Hence, these crimes are often difficult to detect and prosecute. Strict measures need to be created by the government in order to protect the nation from being severely infested by such crimes which might be harming people physically but are creating equivalent serious consequences. Thus, it can be firmly argued that crony capitalism and political corruption are the worst forms of white collar crime committed in the present socio-economic environment. Works Cited Allen, Kieran. The Celtic Tiger?: The Myth of Social Partnership Out of Print. United Kingdom: Manchester University Press, 2000. Print. Auken, Bil Van. Bernard Kerik’s Guilty Plea: Corruption Case Underscores Fraud of “Homeland Security. The International Committee of the Fourth International (ICFI), 2006. Web. 17 Dec. 2012. Frankel, Hyman. Socialism: Vision and Reality. United States of America: Arena books, 2010. Print. Issacharoff, S. “On Political Corruption”. Harvard Law Review (2012): 118-177. Print. Jain, Arvind K. Corruption: a Review. Determinants of corruption, 2001. Web. 17 Dec. 2012. Strader, J. Kelly. Understanding White Collar Crime. Introduction to White Collar Crime, 2002. Web. 17 Dec. 2012. The New York Times. Solyndra, 2012.Web.17 Dec.2012. Read More