Saturday, April 27, 2013

The Harvard Business Review "Explainer": How cronyism is killing American innovation

Take a few minutes to scroll through this nifty little slide show about how cronyism -- "corruption" in the terms of the presentation -- is killing American innovation.

The implication, of course, is that money in politics is the problem. It is, but only because we have expanded the powers of our originally limited government to a degree that allows for all this opportunity for politicians and regulators to pick winners and losers. If government at all levels were more constrained by objective rules, far fewer people would be interested in participating in its process.

There is another problem, though. There are popular disruptive companies -- those named in the slideshow, for example -- and unpopular ones. All over the country, small businesses enlisted local political power to oppose the expansion of Wal-Mart, which was enormously disruptive and equally unpopular. If you oppose cronyism and support disruption in the vein of Netflix and Uber, it becomes much harder to complain about the impact of Wal-Mart, which has been nothing but innovative over a very long period of time.


  1. Walmart innovative? I don't think so. Efficient and ruthless, but nothing new and innovative. They just did normal competitive business practices better than anybody else (for a while).

  2. 1. On this planet you are either predator or prey.

    2. A 40-pound wolverine can chase a 500-pound grizzy bear away from a big piece of meat.

    - DEC (Jungle Trader)

  3. Walmart is astonishingly innovative, particularly in its supply chain practices. Competitors are catching up, but the effect of Walmart's innovation and the ensuing competitive pressure has taken a massive amount of cost out of consumer staples, to the great benefit of people for whom cost is very important.


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