Who Are The Cronies Part II: Bankers


Kris Morgan 2/8/2018

When President Bush and his administration bailed out banks in light of the 2007 housing collapse, the crony nature of banking was at the forefront of all our minds. The New York Times even ran a headline in 2009: “Bankers Reaped Lavish Bonuses During Bailouts.” According to the article, nine of the biggest recipients of bailouts paid about 5,000 people $1mil each in bonuses. So not only does bailing out losers undermine the market’s goal of weeding out those who fail to meet economic demand efficiently, the moral hazard involved is shocking.

CNN posted a special report listing all the banks bailed out as a result of the aforementioned 2007 crash. The list is endless, but the top three were Wells Fargo, JP Morgan Chase & Co., and Citigroup. Each received  $25bn to hold them over. Without further adieu, here is a profile of the top three banks’ CEO during the time.


John Stumpf – Wells Fargo CEO in 2008


In 2008, as Wells Fargo received a $25bn bailout, Stumpf was paid $13.8mil in his first year as CEO. The bank posted a $2.66bn dollar profit in the same year. While Stumpf has had an extensive banking career, Janet Yellen’s final act as Chairman of the Fed in 2016 was to slam Wells Fargo with $185mil fine in light of the fake accounts scandal. Stumpf retired as a result. From Fiscal Year (FY) 2000 to present, Wells Fargo has received $530,481,584 in subsidies (government granted money without demand for repayment).


Jamie Dimon – JP Morgan Chase & Co. in 2008


JP Morgan Chase & Co. received $25bn to remain afloat in 2008. Jamie Dimon was paid $19.7mil that same year (to his credit, in 2007 he made $34mil). What is troubling is the bank received a bailout, but according to Dimon’s bio, in 2008 “he steered the business clear of most of the wreckage and maintained its profitability, while also scooping up ailing Bear Stearns for $2 per share…” However, in 2013 it became apparent JP Morgan misrepresented mortgage securities it was selling prior to 2008 and was forced to pay $13bn in a settlement with regulators. JP Morgan has received $1,577,130,318 in subsidies since FY 2000.

Vikram Pandit – Citigroup in 2008


Like JP Morgan Chase & Co. and Wells Fargo, Citigroup received a $25bn bailout in 2008. Pandit reported a measly $1mil salary to Congress for 2008, however, the Huffington Post reported he made almost $11mil and simply neglected to “mention his sign-on and retention awards, as well as stock and option awards.” Per the story, he originally made closer to $40mil but lost big when the stock price tumbled to under $1 per share. From FY 2000 to present, Citigroup has received $564,762,028 in subsidies.


No proper work on cronyism in the financial sector can even be started without mentioning the two people most in charge: Former Chairman of the Fed Ben Bernanke and Former Treasury Secretary Hank Paulson.


Federal Reserve Chairman Ben Bernanke in 2008


Ben Bernanke began his career in academia. After graduating Summa-Cum-Laude in Economics from Harvard in 1975, he earned a PHD from MIT in 1979. Following that, he taught at Stanford, NYU, MIT, and Princeton. He was appointed to the Federal Reserve Board of Governors in 2002 and Chairman in 2005. Bernanke worked closely with President Bush and Hank Paulson to draft the Emergency Economic Stabilization Act, more commonly known as the 2008 bailout.


Hank Paulson – Treasury Secretary in 2008


Henry Paulson earned a Bachelor’s in English from Dartmouth and an MBA from Harvard before going to work at the Pentagon as staff assistant to the assistant secretary of defense under President Nixon. Just after serving as Domestic Council assistant to President Nixon, he made his way to Goldman Sachs. In 1982 he made partner, in 1988 he made managing partner, and from 1990 – 1994 he operated as President and COO. In 1999 he replaced Jon Corzine as Chairman and CEO, as Corzine worked his way into politics, becoming Governor of New Jersey. In 2006 he was named Treasury Secretary by President Bush.


The 2007 housing crash and subsequent 2008 bank bailouts were a trying time for everyone. Perhaps every person on this list acted admirably, and in spite of that, the media found a way of viewing their actions with a touch of fraud. Even if we believe that unlikely story, do we still want the federal government determining who stays afloat and who drowns every time we enter the bust phase of the cycle? Do we want banks, with a revolving door between the private sector and high levels of government, operating under the impression they will just get bailed out? What is to stop them from approving high-risk high-reward loans to people in desperation?


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Who Are The Cronies Part I: War


Kris Morgan 2/5/2018

Crony capitalism is a catchphrase that crosses all political ideologies. In libertarian circles, one is also exposed to sophisticated sounding jargon like military-industrial complex. Unfortunately the specifics are rarely discussed. Who are these crony capitalists who align themselves with big government to benefit at the expense of the rest of the population? Since we have been at endless war since 2001, the logical place to start is with military suppliers.

According to USA Today, the ten companies which profit the most from war are: Lockheed Martin, Boeing, Bae Systems, General Dynamics, Raytheon, Northrop Grumman, EADS, Finmeccanica, L-3 Communications, and United Technologies. A profile of the top five CEOs is in order.


Marillyn Hewson


Marillyn Hewson became CEO of Lockheed Martin in 2013. According to bizjournals.com she made $25.13million in spite of having a base pay of $1.34 million. “The company bases its CEO’s final salary mostly on meeting long-term goals, and 73 percent of her target salary comes from long-term incentives. Annual incentives are 17 percent of her salary. Her base salary is 10 percent of her pay. Salon.com reported in 2016 Lockheed Martin “received a generous $220 million gift from Connecticut taxpayers to keep its Sikorsky Aircraft division in the city of Stratford.”

Hewson by the numbers:

Base salary: $1.34 million

Stock awards: $8.16 million

Incentive Plan compensation: $5.98 million

Pension earnings: $9.41 million

Other compensation: $238,150

Total: $25.16 million


Dennis Muilenburg


Dennis Muilenburg became CEO of Boeing in 2015 and acquired a base pay of $1.6 million. Boeing makes military aircrafts, including B-52 bombers, F-15 Eagles, H-47 Chinooks, and more, according to their webpage. On top of his base pay he could earn an Annual incentive award of $2.72 million and 18,709 Stock units when he takes over. Subsidy Tracker noted that from 2000 to present, Boeing has received $14,444,913,320 in subsidies awarded.


Phebe Novakovic


Phebe Novakovic is the chief executive at General Dynamics (GD). GD is involved in aviation, land vehicles, marine systems and more. Novakovic has been CEO since 2013 with a higher base salary than Hewson, at $1.5 million. She was able to secure an additional $4 million in bonuses and other long-term compensation which was difficult to quantify. Fiscal Year (FY) 2000 to present, GD received $466,504,107 in awarded subsidies.


Thomas A. Kennedy


Thomas A. Kennedy is in charge at Raytheon. According to Raytheon.com, they provide goods in missile defense, command and control, sensors and imaging, electronic warfare, and precision weapons. Salary.com reported in 2017 Kennedy earned $13,772,854 in base pay, bonuses, and stock awards. Raytheon has received $256,502,031 in subsidies awarded from FY 2000 to present.


Wes Bush


Wes Bush (no relation to the two former U.S. Presidents) has been the big boss at Northrop Grumman since 2010. The company makes B-2 Spirits, B-21 Raiders, and X-47B strikers on top of other products. Bush was able to make over $16 million in 2016, with a $1.53 million base pay, while acting as CEO, Chairman, and President. Northrop Grumman received $1,079,415,526 in subsidies from FY 2000 to present.

As I write this article, I’ve also set aside the time to read Scott Horton’s brilliant book Fool’s Errand: Time to End the War in Afghanistan. I leave the reader to ponder the following quote:

“…then came legions of New York and Washington, D.C. based pressure groups subsidized by America tax dollars that had been laundered through defense firms like Lockheed, Northrop Grumman, Raytheon, and General Dynamics. These companies recycle a small fraction of the money they make from weapons contracts in the form of donations to think tanks and institutions of ‘experts’ from the ‘foreign policy community,’ who write up endless ‘studies,’ rationalizations and justifications for staying the course in the War on Terror.”


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Your Questions Answered: Why Can’t Intervention Fix Capitalism’s Flaws?


Jared Miller May 22, 2017

One of the worst side effects of this conversation is that most often interventionist policies create exactly the conditions which they claim to prevent. One of the other worst is that people begin to assume, at least to some degree, that legal and moral are interchangeable terms. I’ve been studying on my own for several years now, and so far I haven’t seen many examples of capitalism causing more problems than interventionism/crony corporatism.

Of course, interventionism and cronyism do often go by more appealing names, but they are still the same thing. There is a trend in recent years to refer to anything “good” a government does as Socialism. But socialism is not simply the act of paying for services with tax money, nor is it bringing about some broad moral reformation through government intervention. It is something much more specific. Socialism is when the government owns all means of production. There are plenty of examples of government activity that are not socialist in nature. Military and rule of law aren’t socialist. Taxes for national defense and public safety aren’t socialist. Prevention of fraud and exploitation, and even certain kinds of environmental protection, aren’t socialist.

What we really have is not socialism, or even capitalism. What we currently have is crony corporatism; a system whereby businesses are able to lobby government for special treatment. This leads to a lack of competition since it keeps new businesses from entering the market. Competition keeps profit margins thinner, often boosts wages (contrary to popular belief), and diminishes the wealth gap while also increasing income mobility (the ability to increase your income over time). Any policy that prevents or hinders competition damages the lower and middle classes. These policies make the very thing they supposedly claim to be trying to prevent into an absolute certainty.

“But depressions!!”

Our depression was caused by a glut of cheap credit, which made it a common practice to borrow money in order to invest it. That cheap credit was caused by intervention; specifically the federal reserve manipulating interest rates. After the recession began, the fed also started shrinking the money supply, further exacerbating the already delicate situation. Even if they had done everything right, just the existence of the Fed caused some damaging distortions. Before the fed, large banks would intervene on behalf of the smaller banks in order to limit the effects of financial panics and protect their own bottom line. After the fed, the large banks no longer saw this as their responsibility. As a result, more small banks failed, causing a snowball effect that eventually harmed the large banks too. Similar causes can be found for our more recent recessions as well. The dot com bubble and the housing market bubble were both at the very least amplified to disastrous proportions by bad monetary policy and interventionist legislation. Without them, that particular market may have hit hard times, but they would not have become national, systemic failures.


“But child labor!”

Child labor was already by and large a thing of the past when the legislation outlawing it was passed. Don’t get me wrong, if regulation actually had the power to end that kind of thing, then that’s exactly what it should be doing. But in places where child labor happens, it’s because the entire economy is underdeveloped. It’s not a choice between work and school, it’s a choice between work and prostitution, or worse. Kids don’t work because corporations are greedy. Kids work because avoiding homelessness and starvation is more important than education. No law will change that. It just eliminates their only legal means of helping their families survive. And it’s the same with the rest of the labor market. But don’t take my word for it:



(Note: this video isn’t supposed to give the full argument, it’s just an introduction to the topic by someone who has spent most of his career studying this specific subject)

“But Monopolies!”

There are very few, if any, examples of big businesses having that kind of power without getting it from the government. The natural business cycle is such that virtually never does a business accumulate monopolistic power without appealing to organized force to eliminate the competition. Instead, legislators are either manipulated or outright bribed into passing legislation that favors one business over another. Often it is with the best of intentions. Even safety and environmental regulations are often pushed by the industries they are being levied against. Usually, there is some moral or humanitarian motive attached to these new restrictions as a means of gaining support, feeding off of the idea of government as a moral force in order to manipulate the masses into voting against themselves in favor of corporate interest. But here’s the trick: the big guys usually already follow those guidelines, and the startup business has no hope of implementing that kind of infrastructure before they even start production. The manufacturing world is overrun with precisely this style of protectionism. Incidentally this is also one invisible factor that leads to more production overseas, and less domestically. Of course, not all regulation comes from corporate interest or emotional manipulation, but the result is the same nonetheless. We may argue about what level of market distortion we are comfortable with in order to promote the wellbeing of the worker, but we cannot ignore its existence. That is how monopolies happen, and it’s how they stay monopolies.



(Once again, just a brief introduction to the topic.)

When we say markets are self regulating, we don’t mean that abuse cannot happen. What we mean is that in a free market those who do abuse people are not protected from the consequences of that abuse. As long as there is a law or regulation, there will be someone with deep pockets and great lawyers looking for ways to exploit it or modify it to their advantage. There will always be a politician to bribe who can find ways to prevent a corporation’s competition from ever existing. Without organized force to hide behind, having piles of cash can’t make people buy your product, or use your service. It can’t prevent someone else from starting their own business to do it better.

By putting the economy in the hands of government, we are not preventing people from being exploited. We are ensuring it. That is why communist and socialist countries always develop a wealthy ruling class, and the rest of their citizens suffer. We don’t have to debate that fact. It is what has historically happened every single time.

The interventionists are half right though… free markets don’t make people more moral, and they don’t keep rich people from being assholes. But neither does government. It just gives them hired guns (law is force imposed at the point of a gun), and the power and authority to use them. Only with the backing of the law also comes the assumption that their actions are somehow right or just simply because they are executed through the mechanism of the law.

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Wasted Paper


“End the lies! Give responsibility back to the people. The government was not founded to regulate life… only to represent the minorities across this nation on an international scale and to secure freedom for all with limitations to none.”

Donnie Davis, Feb 10, 2017

The American dollar is worth nothing, more or less, when compared to the silver certificates of yesteryear. Our currency is inflated, to this we can all agree, yes?

Ok, so our currency is inflated exponentially over time, during which, we have seen more and more government control of our markets. Since the birth of “controlled monopolization” as I like to call it, or government assured markets, our jobs have been shipped overseas, “minimum wage” has fallen way below where it needs to be (matter of opinion), the price of goods skyrocketed, stock markets crashed, too big to exist corporations falter and fail then are bailed out by our government who now owns them more or less, corrupt bankers give loans, and crashed marketplaces for profit, etc etc etc….. all while under the strict eye of big brother government.

We have seen that more regulations bring about cronyism, the controlled monopolies I was speaking about earlier. This is where lobbyist and politicians band together to not give business licenses to new businesses because it will threaten the profit margins of the already established monopoly that is secured through “law”. Not ending there, we have lobbyist. People that are paid to “persuade” politicians to vote in corporate interest by any means possible, the literal definition of corruption. Yet it’s legalized and nobody’s doing anything about it. We [libertarians] are one of the only parties who have this as a main issue of concern. Moving on, we have the mis-informed public, who have never seen what a free market actually is, that has to suffer the checks and balances of social justice. Meaning that if a corporation is immoral in its business practices that it will suffer profit loss. The common idea that monopolies will be rampant and take over the nation are a fallacy. Child labor is a fallacy. People need to stand up and take responsibility for their society. Personal responsibility goes a long way in libertarian ideas. If someone is willing to shorthand themselves, good for them. Hopefully they will learn that through pride in oneself that they can demand their employer to raise their wage to an acceptable level or find a new occupation. It is literally that easy.

If you wouldn’t send your kids to go work in sweatshops, take a wage that is not worth the job, or support monopolization…. why do you think anyone else will? Probably because they have been lied to their entire lives to believe that this is the best that it can ever be.


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