Why Crony Capitalism Gives the Free Market a Black Eye - The American Spectator | USA News and Politics
Why Crony Capitalism Gives the Free Market a Black Eye
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I’m torn about the growing divide between the “Haves” and “Have Nots.”

On one hand, our free-market system of rewarding entrepreneurs who create and sell new products and services has helped make us the world’s most innovative country. The U.S. tech economy is strong and healthy.

On the other hand, too much of our national wealth is a result of government largesse based more on lobbying and political contributions than on rational public policy. And rather than uncovering this unethical pilfering from the public treasury, the media is more focused on the Kardashians. Here are three recent examples of crony capitalism and how the wealthy are using government to get even richer:


1. Wireless spectrum license extortion: Driven by our increasing demand for anywhere/anytime connectivity, Congress wisely decided that having ubiquitous wireless broadband is important. This requires freeing up underused broadcaster spectrum — the radio frequencies used to carry everything from TV signals to mobile data — needed for broadband. With support from Congress, the FCC created an incentive spectrum auction whereby broadcasters split the proceeds with the government. Good so far.

Recently, a businessman who has eight-year licenses for two low-power TV stations told me he makes big money leasing time on these stations. He said he would sue to stop the auction, unless Congress changes the law and gives him and other low-power licensees more than $1 billion in special tax credits — a move that smacks of entitlement and greed. He said he sees the need to expand Americans’ access to wireless broadband as an opportunity to get millions from the taxpayers. I say his actions amount to blackmail.

2. Patent troll protections: Patent trolls are companies that buy poorly conceived and overly broad patents, then use them to claim infringement and threaten job-creating businesses with costly lawsuits unless they pay the trolls to go away. This legalized extortion scheme has hurt thousands of businesses and is so egregious that Republicans and Democrats alike — including President Obama — have agreed that the laws must change.

Although legislation passed the House overwhelmingly on a broad, bipartisan basis in late 2013, it was blocked in the Senate by then-Majority Leader Harry Reid (D-NV). Trial lawyers and investors in patent trolls are contributing to campaigns and urging legislators to allow this unethical and extortionate legal scheme to continue. Thankfully, a solution — patent reform legislation — is now within reach in both the House and Senate.

3. Prescription drug swindling: Drug companies have made it illegal for Medicare or Medicaid to consider the price or even relative effectiveness of a drug when paying for it once prescribed. And doctors are encouraged to use the most expensive drug possible through a bizarre system that reimburses them based on a percentage of the drug cost, rather than the cost per dose.

Congress held hearings on this in 2011. The following year, however, while his political action committee was getting $400,000 from the nation’s highest-billing doctor, Salomon Melgen, Reid set up and attended a meeting with the doctor and then-Health and Human Services Secretary Kathleen Sebelius in a bid to stop the government from seeking a return of money Melgen had received from the government. According to Melgen and Sen. Robert Menendez’s (D-NJ) indictment, the doctor charged Medicare three times for each individual dose of the macular degeneration drug Lucentis that he administered.

As head of the Consumer Electronics Association (CEA)®, the nation’s largest technology association, I play in the Washington milieu. But I believe money and politics are a dangerous cocktail. CEA has a policy never to ask the government for money or handouts, and we urge shared sacrifice to slash the federal deficit — a lesson that has helped make CEA one of the strong, clear and honest voices on Capitol Hill. When we talk about “Haves” and “Have Nots” remember — let’s remember this is about more than just our money. It’s about our morals, as well.

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