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Sunday, February 17, 2013
Political economy attracts me. There is much talk these about crony capitalism, which is the idea that business profits are made through collusion with politicians. But the market is more profound. Instead big profits are being made not simply by collusion with politicians, which has primarily only kept some firms out of bankruptcy. Instead the market is a shark tank where any investment in production invites hedge fund shorts and even eventual acquisition. Everyone is waiting to see which firm will be a chump and put money down for a future that will not exist. This is why today firms fire, not hire. They destroy factories, not build them. They let refineries rot not build new ones. Etc., etc. Chump firms that dare to invest in production are subject to a stock feeding frenzy and shareholder outcry.