 This is Mises Weekends with your host Jeff Deist. Ladies and gentlemen, welcome once again to Mises Weekends. We're very pleased to be joined by a good friend of the Mises Institute, Nick Sorrentino. He is the proprietor of a website I'm sure many of you are familiar with, but you ought to be against cronycapitalism.org. And I'd like to mention that one of our board members, Hunter Lewis, is also a proprietor and a founder of that site. Hunter is of course the author of Where Canes Went Wrong. And a new book in the same vein called Where Bernie Went Wrong, which is now available on Amazon. It's also available against cronycapitalism.org. So that said, Nick, welcome. Thanks so much for joining us. It's great to talk to you, Jeff. Well, before we get into your site and what your site is all about, let's just pause for a moment and talk about Trump's infrastructure plan, which is being heralded now. I read a little bit about it this morning. As bad as we might have feared, and as David's talking about, it's supposedly involved some mix of private funding and tax credits as opposed to just naked transportation department funding. But you got to imagine that any kind of broad-based infrastructure boondoggle run by the federal government is going to be wholly politicized. It's going to be like Tennessee Valley Authority. There's going to be winners and losers. And it sounds to me like a deplorable idea. So I'd like to get your take on it. I totally agree. Essentially, when we funnel billions and maybe even trillions over long-term through the federal government for any sort of project, there's just going to be cronycapitalism embedded in it. That's just the nature of things. People are going to get sweetheart deals. Money's going to be siphoned this way and that. Connected are going to get paid. And those who are on the outside are going to remain on the outside. As we were saying before, we went online here. The economic reality is probably going to set in here and curtail a lot of these plans anyway. And frankly, for the country, that's probably a good thing. Well, your site is called Against Cronycapitalism. Let's just get your sort of high-level take. How would you define cronycapitalism for us? Cronycapitalism is when interests and it can be business, but it can also be unions. It can also be people within government. Use the government essentially to line their pockets. It can be sweetheart deals, an infrastructure. It can be defense. It can be just ridiculous pay for people within the government who don't really do much. It takes many, many forms. But what it comes down to is it costs the average taxpayer, the people on the outside, money, and that's not fair. Of course, life is not fair either, though. Yeah, but what's interesting is this idea of people on the outside, which I think by definition is most people, right? In other words, cronyism is limited to a select few, which seems to be the case throughout history. It is indeed the case and it is my opinion that cronyism, cronycapitalism is kind of the default human state of affairs when it comes to a government and society. Going back to Hammurabi, I'm sure there were some guys trying to find a way to benefit from irrigation canals from the Euphrates or something. I mean, it's just the way it is. However, that isn't to say that it shouldn't be and must be fought. It can be reduced and a better, more and in the end more prosperous society can result if we fight this tendency. Well, you ran an article on your site, I guess about a week ago now from CNBC. It's the 52 public companies publicly held that make the most money from the federal government. You mentioned defense contracting, of course. Let me list a few of these for our listeners. Lockheed Martin, Boeing, General Dynamics, Raytheon, Northrop Grumman, BAE system. So a lot of defense contractors are on that list. And this seems to me, this is really the classic, direct, understandable case of cronycapitalism, right? When a big company has lobbyists and builds products directly for the federal government and sells those products to the government, whether the government actually needs them, whether they're any good, whether the price is fair, whether the people who vote for the government want them, and they get money directly from, let's say, the Defense Department. This is sort of your archetypical example of cronycapitalism, like a Lockheed Martin. I would absolutely agree with this. Interestingly, Trump appears to agree with this also, which is interesting. There's a reason why, and let me preface this by saying that I am a child of the defense industry in many respects. I will go into further detail, although I never worked in it. My family has in many capacities. But there's a reason why a Loudoun County, Virginia, is the wealthiest county in the United States. It just is also where the defense industry is largely based. People who say that they are, quote, conservative, this is the kind of spending that many conservatives, and I see it online at our site, this is the type of spending that a lot of conservatives turn a blind eye to. And what's funny is that it really is some of the most crony and biggest spending there is. And frankly, it's something that people who believe in a smaller government, or at least really believe in a smaller government, we need to address this. It is a sacred cow that needs to be slain, as slain as the Washington examiner said two days ago. So Lockheed Martin are general dynamics. We can understand that. Let's take this down to a more micro level, though. What about a small town? I live in a nice college town of Auburn, Alabama, and the town is booming with new developments, new condos, even some small high-rises, lots of new restaurants. You know, crodeism can exist on a smaller scale, right? If somebody in a town like Auburn is friendly with the mayor and the city council and has some advanced knowledge of what might be going on with zoning and building, and that person avails themselves of that knowledge to buy some property, and lo and behold, a couple years later, they sell it at a huge profit because there's a shopping mall that's approved by the city. This is a form of crony capitalism in your hometown, if I'm correct. You are absolutely correct. And I also live in a lovely small college town where we're both pretty fortunate. And yes, in fact, on an everyday level, you know, this kind of cronyism may impact most of your listeners, you know, the most. There are all sorts of inside deals that are being made. Everybody gets a sense of, especially real estate is a very good example. It's good that you bring that up. I look out the window and see a new piece of construction as we speak, and not a crony piece, but in all of that mess and all of that, you know, in development, in bond issuing and so on, there are quiet crony deals to be made, and everybody senses it. The people on the outside again sense it, but there's a sense that there's little one can do. Right. So we're talking about fiscal payments. We're talking about people getting money directly or indirectly from government. What about the monetary policy side? Let me give you an example and see if you agree. You mentioned Loudoun County. Let's say a guy moved into Loudoun County 30 years ago and bought a modest condominium for $100,000. And as a result of both the growth in government sector and housing in the Washington, D.C. area, but also as a result of the Federal Reserve creating a housing bubble through what I would consider artificially low interest rates, that condominium magically becomes worth $600,000. And so 30 years later, he happily sells it for $600,000. Is he, in effect, a crony capitalist himself because he didn't do anything, let's say he put in some granite countertops and pats himself on the back, but he didn't really do anything to make a condo worth five times more. In fact, the condo's 30 years older than when he bought it. So is he an unholy beneficiary of an unholy system? He's probably the beneficiary of an unholy system. However, it is my opinion, and this is a point of debate often, stuff like this. You can't blame somebody for just doing what they're doing. People who are, you know, not political actors, not insiders, they're just going, you know, most people have no concept of monetary policy, really. And they're just doing what they're doing. And you can't blame people for that. I mean, life goes on and we all must operate within the system that exists, and right now we have a very crony system. And yeah, this person has benefited from the crony system, but they're much, much bigger fish to fry. That would be my response. Sure. But the other thing is it makes none of us innocent. What about the guy who just has a furniture store in Loudoun County? And as a result of the housing boom, his furniture store is booming and people, furniture stores are struggling, you know, in West Virginia or Kansas. In fact, he's benefiting, but I guess this is an example of our government taints all of us in a sense. The truth is we have a pervasive crony system. I mean, it defines our economy in many respects. And so, you know, if there's a crony reef built, the fish are going to come. And that's the furniture store guy. You know, now it gets a little different when the furniture store guy starts getting to know the local politicians or maybe that furniture store is a big giant chain and the proprietors know exactly what's going on to start lobbying Congress or they do what they can do to make sure easy money continues. Then that gets different. It really is a matter of what can be done and shipping, you know, going after the little fish there, at least from my perspective, and this is not really your question, is not the most effective way to address the crony system, but you are absolutely correct. They are the beneficiaries of a crony system. That's why we should end the Fed. Right. So maybe at least the sole proprietor furniture owner is innocent in this. Let's go on this idea of monetary policy as cronyism. Let's go to some people who are not so necessarily innocent in their lack of knowledge, and that's Wall Street. So hedge funds and especially private equity funds. If we go back to the mid-2000s, I was working in the M&A world and Alan Greenspan had lowered rates in response to the tech stock crash of 2000 and 2001. So there was an M&A boom going on at the time and there is again today a new M&A boom not as much in the large-cap arena but in the mid-cap arena that's going on sort of under the radar right now. But in the mid-2000s, private equity firms were oftentimes buying companies using only, let's say, one-part equity, their own money, to four, five, or even six parts of debt, sliced and diced amongst a bunch of lenders. And they were oftentimes probably wildly overpaying, paying 10, 11, 12 times earnings for privately held companies. So this resulted in an M&A boom. It was good for people like me, who I was a lawyer in the M&A sector, so I guess that made me a cronyist at the time. But here's a more depressing question. Let's say that the tech kid comes along with a couple other tech kids in his college dorm room and creates a great idea, the next Facebook. And these five or six kids go out and find some venture capitalists to fund it. And they say, we're going to take it over and run it because you guys had the great technology, the great idea, but you're not businessmen. So they buy this company from the tech kids for, let's say, $100 million. But we can never know, given what the Fed has done to pricing those, we can never know if that $100 million is legitimate. Maybe they were brilliant kids. Maybe they should have gotten $10 million, which means that they could have a nice con or something. Maybe they shouldn't have gotten $100 million. Maybe they should have gotten $50 million. It creates this uneasy sense among us of the unjust or undeserving risks that somehow the money they've got is disproportionate the actual value they created for society. And as David Stockman points out, we can never really know. I mean, that's what's so disconcerting about this. It's not always just Lockheed Martin selling a funky aircraft to the Pentagon. You know, it can reveal itself in valuations in the M&A market that don't make sense to us. But boy, that is absolutely correct. And you painted that picture beautifully. No, first, we won't know. That's one of the great crimes of our current monetary regime. And also, to your other point, there is such a thing as the undeserving rich. Obviously, you and I and probably most of your listeners would agree that there is absolutely nothing wrong with being rich and being very, very rich indeed. Especially if one does so in a way that is moral and honest, in a dishonest system, such as the monetary system we live under, the regime we live under, there are lots of people who benefit greatly who I think almost objectively could be said don't deserve to have done as well as they have. We're not going to know. I mean, this really does come down to the question again of what is to be done? There are lots of mistakes. There's lots of blame to go around. There's always a place for contemplation, but sometimes there's a time for action. And we need to begin to seriously unravel the monetary system as it is currently constructed. And that might sound very ambitious, but I believe that we're entering into a time where there may be opportunities that will be presented to us. Well, I agree. The question is the current wave is populist. It's not libertarian. Washington, D.C. and the media like to look down on populism as anti-intellectual and dangerous. But the question becomes if elites became elites or remain elites because of their crony connections to government or the Fed, then it seems to me anti-elitism is perfectly libertarian, that we should applaud this populist trend. Generally speaking, absolutely I agree with that statement. Libertarianism, I argue, is very much a bourgeois way of looking at the world. It benefits the middle class. Those of us who don't necessarily come from wealth, money and connections, a free market is a good thing for us. It's so long as we want to work. Whereas a crony system establishes and protects an aristocracy. And that is what we have today. So in that sense, yes, indeed, we should cheer on much of the populism, not all of it, but much of it that we see today. Well, I think you're so right. I think we do have not a landed aristocracy today, but an equity aristocracy, a stock aristocracy. With that, ladies and gentlemen, we are out of time. Nick's site is against cronycatabolism.org. It's one of about five or 10 sites that I check every day. And I recommend that you do the same. Nick, we thank you so much for your time. And ladies and gentlemen, have a great weekend.