How close is the US to crony capitalism?

Summary

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Podcast Summary: “How close is the US to crony capitalism?”

Podcast: The Indicator from Planet Money
Date: October 2, 2025
Hosts: Darian Woods & Adrienne Ma
Episode Runtime: ~10 minutes

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Main Theme & Purpose

This episode examines the growing fears that the United States is drifting from its free market roots toward “crony capitalism”—an economic system in which business success hinges more on proximity to political power than on innovation or market competition. Inspired by recent high-profile political-business entanglements, notably under President Trump and the TikTok-Oracle deal, the hosts break down what crony capitalism means, how experts measure it, and where the U.S. currently stands compared to other major economies.

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Key Discussion Points & Insights

1. Defining Crony Capitalism

• What it is:
  Businesses succeed or fail based on their political connections, not economic merit.
  “Crony capitalism is when businesses rise or fall based on their proximity to politicians.” — Host (00:48)
• Historical context:
  Time Magazine coined the term in 1981 to describe the Marcos regime in the Philippines, where friends of those in power received lucrative loans and business advantages.

2. Global Perspective and Measurement

• The Economist’s Crony Capitalism Index:
  Archie Hall from The Economist explains how they rank countries by billionaire wealth from crony-prone sectors like mining, construction, oil, and ports.

  • “We’re kind of looking at sort of billionaire wealth...comparing how those different ranks look.” — Darian Woods (03:41)
  • Sectors with close ties to the state are more prone to cronyism, e.g., mining or construction (03:52)
  • The U.S. was ranked 26th out of 43 in cronyism, with Germany at the very bottom—seen as a model for ‘Adam Smith’ capitalism (05:15).
  • “In the US…you look at the top billionaires, and you’ve got people who have largely built companies: Elon Musk, Jeff Bezos, Mark Zuckerberg, Larry Ellison.” — Narrator/Host (05:25)

3. United States: Not a Crony Capitalist Yet—But Risks Are Rising

• Past and present: Historically, US billionaires made their fortunes in genuinely entrepreneurial ways (05:39).

• Warning signs:
  Hostility to free markets arises when tech leaders attend White House dinners, publicly praise the president, and seem to “kiss the ring.” (06:49–07:06)

  • “They are kind of kissing the ring. That’s kind of the blunt way to put it.” — Narrator/Host (07:06)

• Changing dynamics:
  Increased focus on direct relationships with the president, rather than general political lobbying. Stakes are much higher with policies like tariffs becoming unpredictable and subject to personal whims (07:18–08:14).

  • “The tariff regime can either be incredibly damaging or incredibly accommodating to your company…which one…is mostly at win with the president.” — Darian Woods (07:56)

4. Concrete Examples: TikTok & Executive Favors

• The TikTok-Oracle deal: Investor groups involved have shown loyalty to Trump, raising questions about whether business opportunities are being parceled out as rewards (08:32).
• Trump-era policy crafting:
  • Executive orders are “chipped away at and carved out” for favored companies.
    • “The president is willing and happy and excited to make that deal.” — Darian Woods (09:23)
  • Tariff exemptions are decided “just instinctively, more than anything else…his gut,” according to Trump (09:12).
  • “That sort of dynamic is quite novel to this presidency, is substantially worse, I’d argue, than what we’ve seen before and is pretty worrying.” — Darian Woods (09:39)

5. Lessons and Cautionary Tales

• The US is not as corrupt as the Marcos-era Philippines or Russia, but the “slippery slope” toward cronyism is real.
• Crony capitalism can fuel inequality and economic instability (10:00).

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Notable Quotes & Memorable Moments

• On the U.S. image of economic merit:
  “The US has prided itself on being…a place where entrepreneur pluck and talent and risk taking gets the rewards.” — Narrator/Host (00:48)
• On measuring cronyism:
  “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.” — Adrienne Ma (04:55)
• Humorous take:
  “Yeah, you know, just small bribes and kickbacks as a treat.” — Adrienne Ma (05:20)
• On policy unpredictability:
  “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…” — Darian Woods (07:50)
• On current risk:
  “That sort of dynamic is quite novel to this presidency, is substantially worse, I'd argue, than what we’ve seen before and is pretty worrying.” — Darian Woods (09:39)

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Important Segment Timestamps

| Timestamp | Segment | |-----------|---------------------------------------------------------------------| | 00:48 | Definition and history of crony capitalism | | 03:41 | Introduction to The Economist’s crony capitalism index | | 05:15 | The US ranking and billionaire origins | | 06:44 | President Trump’s dinner with tech leaders; “kissing the ring” | | 07:18 | Shift from lobbying to personal political relationships | | 08:32 | TikTok-Oracle deal and rent-seeking critique | | 09:02 | Executive orders and policy carve-outs under Trump | | 09:12 | Trump’s “gut” decisions on tariff exemptions | | 09:39 | Why today’s cronyism risk is worse than before | | 10:00 | Lessons from global crony capitalism and warnings for the US |

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Conclusion

While America currently escapes the worst rankings for crony capitalism, the episode highlights a clear drift in the business-political dynamic under President Trump, signaled by coordinated favors for allies, policy unpredictability, and a real risk of normalizing practices that undermine fair competition. The hosts caution that the U.S. can still learn from more corrupt economies’ fates—and that vigilance against cronyism is urgently needed if genuine capitalism is to prevail.

Transcript

[Darian Woods]

Npr.

[Narrator/Host]

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 Andreessen Horowitz. Both firms include people with ties to Trump. Writer Walter Isaacson, hedge fund manager Ken Griffin and political commentator Fareed Zakaria are ringing the alarm bells.

[Adrienne Ma]

State Capitalism it often evolves into crony capitalism.

[Darian Woods]

Free slope towards cronyism Capital from the leading free market in the world to the leading example of crony capitalism.

[Narrator/Host]

Crony capitalism is when businesses rise or fall based on their proximity to politicians. The US has prided itself on being the opposite. A place where entrepreneur pluck and talent and risk taking gets the rewards. But a number of political commentators are warning that the US 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 Darian woods.

[Adrienne Ma]

And I'm Adrienne Ma. Today on the show, is the U.S. turning into a crony capitalist economy? We crunch the numbers to find out.

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[Narrator/Host]

The term crony capitalism was first coined by time magazine in 1981. Time's 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.

[Adrienne Ma]

An associates logging company was allowed to cut down hundreds of thousands of hectares of trees, which would have been illegal for everyone else.

[Narrator/Host]

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.

[Adrienne Ma]

The Time Magazine editor later reflected on why he used crony capitalism to describe the Philippines.

[Narrator/Host]

And.

[Adrienne Ma]

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.

[Narrator/Host]

And since then, the term has taken off. Crony capitalism is now shorthand for any economy where political powers are more important than business partners. Archie hall is the US Economics editor for the Economist magazine. And the Economist has put out a crony capitalism index. Every few years.

[Darian Woods]

We're kind of looking at sort of billionaire wealth, as in that kind of looking at more kind of cronyistic sectors and less cronyistic sectors and comparing how those different ranks look.

[Adrienne Ma]

Archie says sectors like mining and construction are particularly cronyistic when they're producing billionaires.

[Darian Woods]

Often that means things like kind of proximity to the state. So, you know, do you have access to land, you have 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?

[Narrator/Host]

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.

[Adrienne Ma]

Rude.

[Narrator/Host]

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 croniest sectors, like mining.

[Darian Woods]

At that point, if you look somewhere like Russia, which was kind of right at the top of our ranking there, then the billionaires were mostly making their money in those kind of classically cronyistic sectors.

[Adrienne Ma]

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.

[Narrator/Host]

And actually, the US wasn't too cronyistic. It was 26th out of 43 countries.

[Adrienne Ma]

Yeah, you know, just small bribes and kickbacks as a treat.

[Narrator/Host]

So in the us, you look at the top billionaires, and you've got people who have largely built companies. Elon Musk, Jeff Bezos, Mark Zuckerberg, Larry Ellison. So does this mean the US Is not a crony capitalist economy?

[Darian Woods]

No. And I mean, I think all of those companies you listed, I mean, Absolutely. It'd be very hard to say that the money they came to initially kind of came from close knit relationships with the government. Jeff Bezos was started getting richer in the 90s. I think few people would say that him and Bill Clinton were really kind of best of friends. It was that reason that Amazon did really well. I mean, that's sort of a ludicrous thing to say. Now, whether that could be true of the US Forward looking. And then also, of course, as people kind of have already become billionaires, we now look at the relationships with 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 simpatico, at least to a degree, with the ideological program of the President. You've seen things like, for instance, the intervention in intel or, you know, 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 competitors.

[Narrator/Host]

Yeah, there are scenes like this dinner party that Donald Trump recently hosted with.

[Adrienne Ma]

A lot of tech leaders, which included Microsoft's Satya Nadella, Apple's Tim Cook and Bill Gates.

[Narrator/Host]

Mr. President, thank you so much, obviously for bringing us all together and the policies that you have put in place.

[Darian Woods]

I want to thank you for setting the tone.

[Narrator/Host]

Thank you for incredible leadership. They are kind of kissing the ring. That's kind of the blunt way to put it. And it's a scene that perhaps we're not used to in the US recently.

[Darian Woods]

No, exactly. I mean, there's always been lobbying in the U.S. there's always been some sense businesses will have what they'll sometimes euphemistically call government affairs offices or things like that that try to make sure that they're on the right side of reg. And if there are particular things they're keen on, that they push for those on Capitol Hill. And 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 or which one of those two worlds we live in is mostly at 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.

[Adrienne Ma]

Now, again, the economist's analysis was done in 2023. Archie says that his guess would be that the US would still be far less cronyistic than countries like Russia or Malaysia. But he thinks the US Might be rising up the ranks of crony capitalistic countries under President Trump.

[Narrator/Host]

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.

[Adrienne Ma]

But beyond the TikTok deal and the spectacles of Trump hawking Teslas at the White House, Archie reckons there is a real risk with one particular way policy tends to be crafted under Trump, the.

[Darian Woods]

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.

[Adrienne Ma]

When a reporter asked how Trump would decide on tariff exemptions, this was his reply. Just instinctively, more than anything else, instinctively his gut.

[Darian Woods]

What's really distinct about 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 quite novel to this presidency, is substantially worse, I'd argue, than what we've seen before and is pretty worrying.

[Narrator/Host]

We reached out to the White House for comment, but didn't get a response. The US 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.

[Adrienne Ma]

This episode was produced by Cooper Katz McKim and engineered by Gilly Moon. It was fact checked by Sierra Juarez. Cancun Cannon edits the show and the indicators of production of npr.

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