Cronyism

Political corruption
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Cronyism is partiality to long-standing friends, especially by appointing them to positions of authority, regardless of their qualifications. Hence, cronyism is contrary in practice and principle to meritocracy.

Cronyism exists when the appointer and the beneficiary are in social contact; often, the appointer is inadequate to hold his or her own job or position of authority, and for this reason the appointer appoints individuals who will not try to weaken him or her, or express views contrary to those of the appointer. Politically, "cronyism" is derogatorily used.

Etymology

The word "crony" first appeared in 18th century London, according to the Oxford English Dictionary to be derived from the Greek word χρόνιος (chronios), meaning "long-term".^[1]

The word crony also appears in the 1811 edition of Grose's Vulgar Tongue with a decidedly non-collegiate definition, placing it firmly in the cant of the underworld.^[2] A less likely source is the Irish term Comh-Roghna [koˈronə], which translates to "close pals", or mutual friends.

Concept

Governments are particularly susceptible to accusations of cronyism, as they spend public money. Many democratic governments are encouraged to practice administrative transparency in accounting and contracting, however, there often is no clear delineation of when an appointment to government office is "cronyism".

It is not unusual for a politician to surround him- or herself with highly-qualified subordinates, and to develop social, business, or political friendships leading to the appointment to office of friends, likewise in granting government contracts. In fact, the counsel of such friends is why the officeholder successfully obtained his or her powerful position — therefore, cronyism usually is easier to perceive than to demonstrate and prove.

In the private sector, cronyism exists in organizations, often termed 'the old boys club' or 'the golden circle', again the boundary between cronyism and 'networking' is difficult to delineate.

Moreover, cronyism describes relationships existing among mutual acquaintances in private organizations where business, business information, and social interaction are exchanged among influential personnel. This is termed crony capitalism, and is an ethical breach of the principles of the market economy; in advanced economies, crony capitalism is a breach of market regulations, e.g., the Enron fraud is an extreme example of crony capitalism.

Given crony capitalism's nature, these dishonest business practices are frequently (yet not exclusively) found in societies with ineffective legal systems. Resultantly, there is an impetus upon the legislative branch of a government to ensure enforcement of the legal code capable of addressing and redressing private party manipulation of the economy by the involved businessmen and their government cronies.

The economic and social costs of cronyism are paid by society. Those costs are in the form of reduced business opportunity for the majority of the population, reduced competition in the market place, inflated consumer goods prices, decreased economic performance, inefficient business investment cycles, reduced motivation in affected organizations, and the diminution of economically productive activity. A practical cost of cronyism manifests in the poor workmanship of public and private community projects. Cronyism is self-perpetuating; cronyism then begets a culture of cronyism. This can only be apprehended by a comprehensive, effective, and enforced legal code, with empowered government agencies which can effect prosecutions in the courts.

All appointments that are suspected of being cronyism are controversial. The appointed party may choose to either suppress disquiet or ignore it, depending upon the society's level of freedom of expression and individual personal liberty.

Some instances of cronyism are readily transparent. As to others, it is only in hindsight that the qualifications of the alleged "crony" must be evaluated.

Notable examples

Cronyism can exist anywhere, in both free and not-so-free states. In general, authoritarian and totalitarian regimes are more vulnerable to acts of cronyism simply because the officeholders are not accountable, and all office holders generally come from a similar background (e.g., all members of the ruling party ). Some situations and examples include:

• George Washington was criticized for appointing Alexander Hamilton as the first U.S. Secretary of the Treasury after Hamilton had served as Washington's aide during the American Revolutionary War. Nonetheless, the contributions Hamilton made to stabilizing the currency and securing outside capital for the fledgling democracy are well known. Referring to Hamilton's appointment as cronyism seems particularly disputable in retrospect, although it is only after looking at his accomplishments that this determination can be made.

• Appointing cronies to positions can also be used to advance the agenda of the person making the appointment. And it can also spectacularly fail to do so. In medieval England, King Henry II arranged the appointment of his good friend Thomas Becket to be Archbishop of Canterbury. Henry believed that Becket would promote the king's agenda but was dismayed to see Becket adhere to his own conscience. Becket eventually excommunicated the king and the king allegedly incited three knights to murder Becket in response.

• Examples of cronyism can be found historically in a number of communist states. The cultural revolution in China was initially popular due to the perception that Mao Zedong was ridding the state of a number of officials who had obtained their positions by dint of friendship with communist authorities. The nomenklatura system, which existed throughout the life of the Soviet state and came to prominence in the time of Leonid Brezhnev is another notable example.

• The business and labor community have also seen charges of cronyism. U.S. President Theodore Roosevelt led an attack on the cronyism against the oil, steel, banking and other businesses that had conspired to set prices by maintaining virtual monopolies through cronyism. Through interlocking directorates it was not uncommon to see various corporate boards share members among each other.

• The Warren Harding administration has become a schoolbook case of cronyism. Harding appointed his old college friends as members of his cabinet, resulting in several scandals. The term Harding cabinet has become synonymous for rotten and corrupt administration.

• One of the highest level cases of cronyism occurred during the Kennedy administration in the United States. Robert S. McNamara was appointed by President John F. Kennedy without any experience, a point that McNamara made clear in the 2003 documentary The Fog of War. McNamara's role in the disastrous Vietnam War was crucial and he is often considered "the architect of the Vietnam War". Kennedy originally offered him a job as United States Secretary of Treasury and when McNamara admitted to having no experience he gave him Secretary of Defense. Even though McNamara confessed no experience in defense, Kennedy insisted he accept the position.

• Former US President George W. Bush was accused of cronyism after the nomination of Harriet Miers to the US Supreme Court.^[3] Miers had no previous judicial experience and demonstrated little knowledge of constitutional law, and her selection was rejected by many conservatives and liberals. The appointment of Michael D. Brown to the head of the Federal Emergency Management Agency (FEMA) would also be considered a case of cronyism, as Brown had no experience pertaining to his job.^[4][5] The administration has also been accused of cronyism for reducing Scooter Libby's sentence in the Plame Affair.^[6]

• Paul Wolfowitz was mentioned^[7] in connection with cronyism after the World Bank committee charged him with violation of ethical and governance rules as bank president by showing favoritism to his companion in 2005. The report noted that Mr Wolfowitz broke bank rules and the ethical obligations in his contract, and that he tried to hide the salary and promotion package awarded to Shaha Riza, his companion and a bank employee, from top legal and ethics officials in the months after he became bank president in 2005.

Bibliography

• Begley, T., Khatri, N., Tsang, EWK. 2010. Networks and cronyism: A social exchange analysis. Asia Pacific Journal of Management, 27:281-297

• Khatri, N., Tsang, E.W.K., & Begley, T. 2006. Cronyism: A cross-cultural analysis. Journal of International Business Studies, 37(1): 61-75. [Also in T. G. Andrews and R. Mead (Eds.), Cross Cultural Management, Volume 2 -The Impact of Culture 1: 126-150. Routledge, UK.]

• Khatri, N., Tsang, E.W.K., & Begley, T. 2003. Cronyism: The downside of social networking. The Best Papers Proceedings of the Academy of Management, Seattle

• Khatri, N. & Tsang, E.W.K. 2003. Antecedents and consequences of cronyism in organizations. Journal of Business Ethics, 43: 289-303.

See also

Nepotism Meritocracy Oligarchy Crony capitalism Cartel Collective narcissism

Ingroup bias Price fixing Political scandals in the United Kingdom Cash for Honours Political corruption Spoils system

References

1. ^ Compact Oxford English Dictionary: Crony
2. ^ "Crony: An intimate companion, a camrade; also a confederate in a robbery" - Classical Dictionary of the Vulgar Tongue, 1785 [1811]. Grose
3. ^ BillOReilly.com: The O'Reilly Factor Flash
4. ^ Cronyism
5. ^ Adam Bellow on Nepotism, Cronyism & Harriet Miers on National Review Online
6. ^ BBC NEWS | Americas | Bush not ruling out Libby pardon
7. ^ The Guardian - Wolfowitz under fire after partner receives promotion and pay rise

External links

• SuperNews: Hurricane Katrina - A political flash cartoon about the cronyism surrounding Michael D. Brown and Hurricane Katrina.
• Cronies - Robert Bryce's 2004 book, "Cronies: Oil, The Bushes, And The Rise of Texas, America's Superstate"