The Indicator from Planet Money

How close is the US to crony capitalism?

October 2, 2025

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  • Crony capitalism is defined as a system where business success depends on proximity to politicians, contrasting with the US ideal where success is based on entrepreneurial talent and risk-taking. 
  • The Economist's crony capitalism index measures the share of billionaire wealth derived from 'cronyistic sectors' (like mining, construction, oil/gas) as a proxy for state favoritism, noting the US ranked 26th out of 43 countries in a 2023 analysis. 
  • A distinct concern regarding the US under the Trump administration is the shift toward personalized economic policy, where executive orders and tariff exemptions are decided 'instinctively' based on the president's personal dealings rather than broad political processes. 

Segments

Defining Crony Capitalism
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(00:00:27)
  • Key Takeaway: Crony capitalism is characterized by businesses succeeding or failing based on their closeness to political power, contrasting with the free market ideal.
  • Summary: Commentators like Walter Isaacson and Fareed Zakaria are concerned the US is shifting toward crony capitalism. This system is defined as one where businesses rise or fall based on proximity to politicians, rather than entrepreneurial pluck and talent. The US has historically prided itself on being the opposite, rewarding risk-taking.
Historical Origin of Term
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(00:02:29)
  • Key Takeaway: The term ‘crony capitalism’ was coined by Time magazine in 1981 to describe Ferdinand Marcos’s regime in the Philippines, which used state power to enrich associates.
  • Summary: Time magazine first used the term in 1981 regarding the Philippines under Ferdinand Marcos, where associates received illegal logging rights and favorable bank loans. The editor described it as a ‘weird distortion of the free market’ that benefited a few while keeping the masses poor. Since then, the term has become shorthand for economies where political connections outweigh business merit.
Economist’s Crony Index
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(00:03:40)
  • Key Takeaway: The Economist measures cronyism by analyzing the share of billionaire wealth derived from sectors requiring state access, such as mining and construction, which often involves ‘rent seeking.’
  • Summary: Archie Hall of The Economist explains their index ranks economies based on how much billionaire wealth comes from cronyistic sectors like mining, ports, and oil/gas. This wealth often stems from ‘rent seeking’—gaining money without innovation, such as securing exclusive licenses or lobbying for protection. In a 2023 tally, Russia ranked high, while Germany and the US (26th out of 43) were lower.
US Billionaires and Politics
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(00:05:43)
  • Key Takeaway: While early US tech billionaires like Bezos and Musk built wealth independently of close government ties, current dynamics show tech titans feeling obligated to align with the president’s ideology to avoid negative policy impacts.
  • Summary: The initial wealth of top US billionaires like Elon Musk and Jeff Bezos was largely independent of close government relationships. However, current concerns focus on the relationships between tech companies and the political system, evidenced by tech leaders publicly showing deference to the president to avoid heavy tariffs or secure favorable treatment.
Trump Administration Policy Style
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(00:08:22)
  • Key Takeaway: The Trump presidency is distinct because economic policy, particularly tariff exemptions, is often decided personally by the president based on instinct and deal-making, raising stakes for companies.
  • Summary: Archie suggests the US is rising in cronyistic rankings, citing the TikTok deal as potentially rewarding loyalty. The most worrying aspect is the policy crafting style, where executive orders are carved out to favor specific companies based on the president’s ‘gut’ instinct. This dynamic forces companies to seek personal deals with the president to extract better outcomes, which undermines market-based success.