Tuesday, July 28, 2009

Bechtel and its friends in high places

Reading Laton McCartney's Friends in High Places The Bechtel Story served as a reminder that despite economists pleas that free markets are most efficient, they continue to fail to recognize that as firms grow they begin to recognize that politics are an important component to their growth and hence begin to engage in regulatory capture. Added to this, as a company grows, its competitors begin to cry foul seeking antitrust regulation against it which results in the company lobbying against regulations. (For a parable see here.)

The hue and cry about how Bechtel officials (George Schultz, Caspar Weinberger, Philip Habib among others) are intricately linked to the government and the company is a familiar refrain being heard today about how Goldman Sachs and the U.S. Treasury and government are too cozy.

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