Crony Capitalism has been a problem in America since Alexander Hamilton’s unsuccessful attempt to promote the Society for the Establishment of Useful Manufactures in the 1790s. The first really big Crony Capitalism scandal exploded in the 1860s and 1870s, when the Pacific Railway Act sponsored by a Republican Congress and signed by a Republican President enabled a scoundrel by the name of Thomas C. Durant to steal about $23 million from the $56 million the Federal Government loaned the Union Pacific Railroad.
Durant’s scheme was simple. He controlled Union Pacific, the recipient of federal largesse, and also controlled a company called Credit Mobilier, the contracting firm Union Pacific hired to actually build the railroad that extended from Council Bluffs, Iowa to Promontory Point, Utah. Credit Mobilier simply dramatically overcharged Union Pacific for its services, then paid outrageous dividends to its shareholders. It was, of course, a mere coincidence that Durant had been a business client of the attorney who became the Republican President who signed the Pacific Railway Act — Abraham Lincoln.
Fast forward to 2011, where another politically connected operator who reportedly donated over $100,000 to the various Obama campaigns and entitites, just blew through half a billion dollars of Federally Guaranteed loans. David Keene has written a great article describing this Solyndra debacle.
Instead of getting out of the business of picking winners and losers–an economic policy that is clearly unconstitutional–the Obama Administration is doubling down. It’s giving away even more money to politically connected donors who support Obama’s left wing policies.
In light of this continued trend, it’s good to see that the Voices of the Tea Party will be offering a new e-book on another aspect of Crony Capitalism that’s just as bad as the federally subsidized Solyndra fiascos. I speak here of local and state Crony Capitalism, a topic that New Jersey Assembly Member Amy Handlin addresses in her new e-book, Crony Capitalists in Our Backyards, which we will release in October. Handlin specifically describes a set of actions local grassroots organizations can undertake to stop these practices, which makes her e-book especially interesting for those of us in the Tea Party movement who like to fix problems once they’ve been identified.
UPDATE: September 8, 2011
Now comes a report this morning that the FBI raided Solyndra’s offices this morning and that the company’s founders have visited the Obama White House 20 times in the past two years!
Michael Patrick Leahy is the editor of the Voices of the Tea Party e-book series and co-founder of Top Conservatives on Twitter and the Nationwide Tea Party Coalition. His new e-book, I, Light Bulb: A Death Row Testimonial, was published earlier this week. His new book, Covenant of Liberty: The Ideological Origins of the Tea Party Movement, will be published by Broadside Books in spring, 2012. He can be reached on Twitter at @michaelpleahy .