Crony capitalism has long been the driving force behind political shifts in the United States. And while that is usually accepted as an undeniable truth by most, many fail to see crony capitalism on city and state levels as a serious problem.
Recently, real estate developer and political donor-gone-rogue Jona Rechnitz offered testimony before the Manhattan federal court that shed some light on the quid pro quo relationship between businesses and local governments.
After having a New York City Mayor de Blasio operative contact him and ask him for a $102,000 donation so that Senate Democrats would get a boost in their efforts to remain in office, Rechnitz first refused, precisely because he wasn’t getting the favors from the city he had been after.
“All you do is you come here when you need money,” he told the operative.
Rechnitz had been slapped with a series of violations due to the city’s change of policy regarding subletting rooms and whole apartments at the popular lodging app Airbnb.
While Rechnitz had paid the fines, he was still looking for a way to talk to the Housing Department directly to explain why the violations were unfair. And while he had contacted de Blasio’s office to make the meeting happen in the past, he had been ignored.
He also wanted to fast track the process to sell a home that belonged to his friend, and the city was allegedly not helping.
But as soon as he refused to give the mayor any money, things began to change. As a result, Rechnitz made the contribution requested of him. De Blasio even called him in person to thank him and to let him know that the contribution meant a great deal.
In no time, Rechnitz had reportedly gotten a meeting with the city to discuss the Airbnb issue. He also got the answers he needed on the property deal he was trying to make, all thanks to the money he “invested” and the subsequent bribes he allegedly carried out so that friends would invest millions in union pension funds.
Still, the mayor’s spokesperson has denied Rechnitz’s accusations. But regardless of what officials say, we know for a fact that when someone like Rechnitz says he “owns” a politician, it might as well be true.
Men of means who are willing to do anything to bring down competition will do all in their power to have a good relationship with elected officials. Not because that’s in their nature, but because government’s very involvement in businesses through regulation allows for companies and individual businessmen with the cash to pay to keep competitors at bay by influencing policy.
And it’s thanks to this reality that governments will often pass laws implementing policies that often benefit big, powerful companies while hurting small competitors who are still trying to enter the market. That’s how large companies become bigger and stronger, while competitors have a harder time even getting started.
Who loses in the end? The consumer.