BRC News, June 28, 2010

The Gulf Spill: This ( “Beyond Pathetic”) is an absolutely not-to-be-missed article by Andrew B. Wilson, published in The Weekly Standard. He presents with much more evidence the thesis that I was trying to develop in an earlier blog post about the coporate culture of BP under John Browne.

And there is a larger issue here: the dividing line does not run between corporations and government, but between pro-capitalists (businessmen and politicians) and--something else. My friend Rob Bradley calls them “political capitalists,” but I refuse to use that term because it was made popular in the 1960s by the infinitely odious Gabriel Kolko. Many people use the term “crony capitalists,” but that is wrong also--because it implies that a kind of capitalism involved. As a commenter on Ira Stoll’s blog “The Future of Capitalism” wrote: “Quit calling it crony capitalism. Just call it Cronyism—it's shorter, deletes the unimportant word, focuses on the important one. It is just the same as crony socialism or crony pflugerism. The issue is the cronyism, and it's the cronyism that causes all the rules of equal justice to break down.”

And yet I think that is not quite right either. Cronyism is not quite yet a new political-economic system that has emerged out of capitalism. But I believe it is heading toward a new political-economic system. What that is, I shall be trying to determine.

The PEEKABOO Decision

The Supreme Court decision in the case of Free Enterprise Fund v. PCAOB  turned out to be damp squib. And yet, Professor Stephen Bainbridge points out, there was a passage--penned by the Chief Justice--that could become a sad memorial to the year 2010.

One can have a government that functions without being ruled by functionaries, and a government that benefits from expertise without being ruled by experts. Our Constitution was adopted to enable the people to govern themselves, through their elected leaders. The growth of the Executive Branch, which now wields vast power and touches almost every aspect of daily life, heightens the concern that it may slip from the Executive’s control, and thus from that of the people.

As for the possible economic impact of the Peekaboo case, Nathan Vardi suggests in Fobres more law means less entrepreneurialism: ( “Peekaboo: I See No IPOs")

SEC Loses an Insider Trading Case!

Kara Scannell writes in the Wall Street Journal ( “SEC Loss Shows Difficulty of Insider-Trading Cases ") that a U. S. District Judge, John Koeltl, has dismissed an SEC lawsuit against Jon-Paul Rorech of Duetsche Bank and Renato Negrim, a manager of the Millenium hedge fund. “Judge Koeltl rejected every point of the SEC's theory. He said the changes in the bond structure weren't material and that Mr. Rorech didn't possess inside information or violate any duty to Deutsche Bank to keep information confidential.” Scannell quotes Donald Langwood, a securities-law professor at Georgetown University’s law school as saying that the SEC has to "build a case where the communications really are nefarious rather than what goes on every day on Wall Street."

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