Who are the countries championing “crony capitalism”?
An economic rent is the surplus that remains after capital and labor have been paid, which tends to zero in a perfectly competitive environment. Rent-seeking is common in areas of activity close to the state, including banking, construction, real estate and natural resources.
Western sanctions bypassed in Russia
Russia is the country most affected by this crony capitalism. The wealth of its billionaires in the sectors targeted by the index is equivalent to 9% of GDP. In March 2022, the G7, the European Union and Australia established the Russian Elites, Proxies and Oligarchs (REPO) Task Force to isolate “Russian individuals sanctioned and subjected to unprecedented pressure”.
A year later, repo blocked or froze 58 billion in assets, but many oligarchs managed to circumvent the measures taken.
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Tech, the industry of cronyism IUnited States of america?
In the United States, many of the 735 billionaires identified have borne the brunt of last year’s decline in technology stocks. The wealth of renter sectors is equivalent to about 2% of US GDP, compared to 15% for non-renters.
But tech companies are among the most active lobbyists in Washington. If we reclassify tech as a crony industry, the share of renter wealth becomes 6% of GDP.
Rented property in China is now down
Meanwhile, Chinese billionaires are subject to the whims of their government. Ever since Xi Jinping began his campaign against private capital, rentier wealth has fallen from a peak of 4.4% of GDP in 2018 to 2.5% today.
China now has 562 billionaires who together own $2 trillion. Of this total, about a quarter are the tenant capitalists.
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India: On The Way To “Kleptocracy”?
For the Indian leader Narendra Modi, he is the darling of his country’s business leaders. Over the past decade, wealth from the rentier sectors has increased from 5% to nearly 8% of GDP. When an elite becomes so wealthy that it impoverishes its country, we see the formation of a “kleptocracy,” outlines Polish sociologist Stanisław Andreski.
It has taken more than fifty years for Western countries to take interest in its analysis. In March, the United States organized the Summit for Democracy, which brought together 74 countries representing two-thirds of the world’s GDP to “prevent and fight corruption”. The US Treasury Secretary, Janet Yellen, recalled: “Kleptocrats make their kickbacks through anonymous purchases of real estate overseas”.
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an insufficient arsenal
Starting next year, the United States will require companies operating in its territory to reveal their true owners. Thirty-six other countries have followed suit. But you still have to enforce the law.
In February, a report by an anti-corruption body revealed that the owners of 52,000 properties out of 92,000 in Britain remained unidentified amid a new law requiring foreign companies with such assets to identify their true owners .