The Indicator from Planet Money - How close is the US to crony capitalism?

Episode Date: October 2, 2025

We have seen a blurring of boundaries between government and business under President Trump. It has some political commentators ringing the alarm bell over something called “crony capitalism" — a corrupt system where political power meets big business. Today on the show, is the Trump administration nudging the U.S. further down the road toward crony capitalism? Related episodes: China’s trade war perspective For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org. Fact-checking by Sierra Juarez. Music by Drop Electric. Find us: TikTok, Instagram, Facebook, Newsletter. See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

NPR. We have seen a blurring of boundaries between government and business under President Trump. His administration has been brokering a TikTok deal involving Oracle and Andresen Horowitz. Both firms include people with ties to Trump. Writer Walter Isaacson, hedge fund manager Ken Griffin, and political commentator Farid Zakaria are ringing the alarm bells. The type of state capitalism, it often evolves into crony capitalism. Slipery slope towards crony-chronism capital. From the leading free market in the world to the leading example of crony capitalism.

Crony capitalism is when businesses rise or fall based on their proximity to politicians. The U.S. has prided itself on being the opposite, a place where entrepreneurial pluck and talent and risk-taking gets the rewards. But a number of political commentators are warning that the U.S. is turning into a place where it's not about, what you know, but about who you know. This is the indicator from Planet Money. I'm Darien Woods. And I'm Adrian Ma. Today on the show, is the U.S. turning into a crony capitalist economy? We crunch the numbers to find out. The term crony capitalism was first coined by Time magazine in 1981.

Times article described the Filipino government under Ferdinand Marcos as a case of crony capitalism. Essentially, Marcos used the levers of the state to help his buddies dominate the business world. An associate's logging company was allowed to cut down hundreds of thousands of hectares of trees, which would have been illegal for everyone else. Marcos also appointed his former classmate and fraternity brother to the chief of the Philippine National Bank. That friend used the bank to lend money to his own businesses. Through a mix of grants, cheap loans, licenses, and straight up dipping into, government funds. Marcos helped him and his friends grow rich. The Time Magazine editor later

reflected on why he used crony capitalism to describe the Philippines. And he said that this was not capitalism. It was a weird distortion of the free market that benefited a few and kept the masses in poverty. And since then, the term has taken off. Crony capitalism is now shorthand for any economy where political pals are more important than business partners. Archie Hawley is the US economics editor for The Economist magazine. And the economist has put out a crony capitalism index every few years. We're kind of looking at sort of billionaire wealth as a, in that kind of looking at more kind of cronyistic sectors and less cronyistic sectors and comparing how those different

ranks look. Archie says sectors like mining and construction are particularly cronyistic when they're producing billionaires. Often that means things like kind of proximity to the state. So, you know, do you have access to land? access to licenses, resources, and are you able to kind of limit competition, either kind of, you know, directly or by lobbying the government to step in for you. In economics, this is known as rent-seeking. There's a stream of rents, a steady flow of

money to be made that's not earned because of innovation or entrepreneurship. It's basically just taking a bigger slice of a pie without growing that pie, or maybe even smashing bits of the remaining pie. Rude. And so two years ago, the Economist magazine tallied up all the big economies onto this table, and they looked at their billionaires. And they showed which country's billionaires had the highest share of their wealth through cronyistic sectors like mining. At that point, if you looked somewhere like Russia, which was kind of right at the top far ranking there, then the billionaires were mostly making their money in those kind of classically cronyistic sectors. It's a simple measure, and it doesn't capture everything, of course,

but by measuring how much of billionaire wealth was made in industries like casinos and ports and oil and gas, you can get a sense of whether the government is likely to be helping out its buddies. Right near the bottom, Germany. Capitalism, the way Adam Smith would have wanted. Yes, and actually the U.S. wasn't too cronyistic. It was 26th out of 43 countries. Yeah, you know, just small bribes and kickbacks as a treat. So in the U.S., you look at the top billionaires, and you got,

people who have largely built companies, Elon Marx, Jeff Bezos, Mark Zuckerberg, Larry Ellison. So does this mean the U.S. is not a crony capitalist economy? No, and I mean, I think all of those companies you listed, I mean, absolutely would be very hard to say that the money they came to initially kind of came from, you know, close-knit relationships with the government. You know, Jeff Bezos was started getting rich in the 90s. I think few people would say that him and Bill Clinton were really kind of, you know, best to friends. It was that reason that Amazon did really well. I mean, that's sort of a ludicrous thing to say. Now,

whether that would be true with the U.S. forward-looking, and then also, of course, as people kind of have already become billionaires, we now look at the relationships with, you know, a lot of the tech companies, let's say, and the political system in America, you can certainly see reasons for concern. You can see the fact that a lot of the tech titans felt such an obligation to kind of declare themselves to be kind of sympathetic, at least to a degree with the ideological program and the president. You've seen things like, for instance, the intervention in Intel or the lengths Apple had to go to in order to avoid getting hit with some of the very heavy tariffs. Again, those are all the sorts of things that would raise more concern that the business

is feeling a need to get close to politics in order to stay ahead of their capacities. Yeah, there are scenes like this dinner party that Donald Trump recently hosted with a lot of tech leaders, which included Microsoft's Satya Nadella, Apple's Tim Cook, and Bill Gates. Mr. President, thank you so much, obviously, for bringing us all together and the policies that you have put in place. I want to thank you for setting the tone. So thank you for incredible leadership. They are kind of kissing the ring. That's the kind of the blunt way to put it.

And it's a scene that perhaps we're not used to in the U.S. recently. No, exactly. I mean, there's always been lobbying in the U.S. So there's always been some sense, you know, businesses will have what they'll sometimes euphemistically call kind of government affairs offices or things like that that, that try to make sure that they're on the right side of regulation. And if they're particular things, they're keen on, that they push for those on Capitol Hill. That's been true forever in the US is true in every democracy.

The degree to which that's now both focused on kind of personalistically staying on the right side of Donald Trump as a person, rather than engaging with a broad amorphous political process and also the sense in which that the stakes of doing so become so, so much higher. I mean, the tariff regime can either be incredibly damaging or incredibly accommodating to your company, which one of those two worlds we live in is mostly at the win with the president. And in a context where we want companies to win and fail based on whether they do well in the marketplace, whether people like the things they produce, that's a pretty worrying place to be. Now, again, the economist's analysis was done in 2023.

Archie says that his guess would be that the U.S. would still be far less cronyistic than countries like Russia or Malaysia. But he thinks the U.S. might be rising up the ranks of crony capitalistic countries under President Trump. Take that TikTok deal we mentioned at the start of the show. Our colleagues at NPR have reported on how the investor group does seem to be composed of people who have shown sustained loyalty to Trump and that this looks like a reward. Overall, critics say it smells of rent-seeking. But beyond the TikTok deal and the spectacles of Trump hawking Tesla's at the White House, Archie reckons there is a real risk with one particular way policy tends to be crafted under Trump. The notion that you have executive orders issued that explicitly then get chipped away at and carved out

in order to favor particular companies, so we've seen that with the tariffs. When a reporter asked how Trump would decide on tariff exemptions, this was his reply. Just instinctively. More than anything else. Instinctively, his gut. What's really instinctive at this presidency is the notion that kind of

in almost every bit of economic policy, if there's a deal to be made, the president is willing and happy and excited to make that deal. And so as a company, there's the notion of can we give Donald Trump something he wants and can we extract a better deal

for our particular company and carve out an exemption. And that sort of dynamic is, is quite novel to this. presidency is substantially worse, I'd argue, than what we've seen before and is pretty worrying. We reached out to the White House for comment, but didn't get a response. The U.S. has nowhere near the level of corruption of a country like the Philippines in the 1970s and 80s. But it serves as a cautionary tale. Along with fueling huge inequality, crony capitalism

also contributed to the economy's deep crash in the early 1980s. This episode was produced by Cooper Katz McKim and engineered. by Gilly Moon. It was fact-checked by Sierra Juarez. Kakin Canon edits the show and the indicators of production of NPR.