We’re Barely Capitalists (Part II)

Recently I wrote a post titled “We’re Barely Capitalists” talking about the “crony capitalism” that lies in our midst. Since I live in the city of Chicago examples abound as far as the eye can see.

Let’s say, for example that you want to open up a bar in the City of Chicago. You find an architecturally interesting building in a “hot” location in River North, for instance, such as an antique store. Then you just turn it into a gigantic Wal-Mart sized bar, right?

The City of Chicago officially has been limiting the number of liquor licenses and tavern licenses that are allowed, particularly in residential areas. Per this article in USA Today:

Opening or buying a tavern in Chicago can be complicated, says Mike Costanzo, a real estate broker with Jameson Commercial. Aldermen can seek liquor license moratoriums in areas as small as two blocks, and buyers are required to purchase the corporate entity that owns an existing tavern and license, he says. “Getting a new tavern license issued in a residential neighborhood is brutal,” Costanzo says. “It’s virtually impossible.”

River North today is heavily populated with condos and apartments; there are thousands of residents packed in an area that is overrun with bars, taverns and restaurants that serve lots of booze (I realize that the city differentiates but walking around late at night they are all virtually the same). So if you or I just went over and tried to use one of the supposedly diminishing liquor licenses on an antique store, we’d be laughed right out of the room. And yet that didn’t slow down this company (which also owns bars in Lincoln Park and Wrigleyville) from getting clearance…

And how do you get something like that cleared up with the city? By employing someone like the guy whose license plate on his Mercedes says it all – “CLOUT”. These sorts of connections are like property rights, and you have to partner or utilize contacts from someone in order to get anything done. I find it amazingly brazen that someone would get out of a Mercedes with plates like this and do business, but hey, this is Chicago.

The use of formal and informal intermediaries to accomplish business goals through a bureaucratic maze is the essence of “crony capitalism”, on display before our eyes.

Cross posted at LITGM

6 thoughts on “We’re Barely Capitalists (Part II)”

  1. When I left the Chicago area 40 some years ago I remember thinking that “this is what living in Poland (at the time under USSR’s domination) must be like”.

  2. A few years ago, when there were still Borders bookstores in existence, I saw a book on new forms of “property rights,” involving such things as regulatory permissions, “grandfathering,” etc. Kicking myself I didn’t buy it or at least write down the author/title. Has anyone run into this book?

  3. In the very late 1980’s, (maybe even 1990 or 91?), I remember reading a small AP story in the LA Times about a party apparatchik in the Soviet Union, who was driving a sedan and was involved in an accident. According to the story, a bunch of peasants and commoners ran to this guy’s aid to extricate him from the car and see if he was ok. What they discovered in the car — notable quantities of high quality breads, cheeses and sausage — infuriated these folks to such a degree, that rather than rescue him they ended up beating the crap out of him.

    I was just in High School at the time and didn’t quite understand all the scarcities that the Soviet people had to endure and the repercussions that meant. But I’ve always remembered that story and I imagine the car that the guy was driving looked much like the Mercedes Carl just posted.

    As for Chicago style crony capitalism, I’ve had enough of it thank you. Just two days ago it’s come out that this Chicago bred administration’s Labor Department swept $500k of economic stimulus money to MSNBC’s Olberman and Rachel Maddow.


    We’re barely capitalists indeed!

  4. In fact, this type of system is the hallmark of an authoritarian oligarchy, which is what the current regime and it’s other statist predecessors have been openly building for decades.

    The true motivation for big government is big payoffs. All the rest is rhetoric and general bs used to fool the rubes.

    Next time you wonder at the depth of the opposition to the tea party’s agenda of less spending and smaller state, just remember that license plate.

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