In fairness The Economist readily identifies its shortcomings with regard to the index. They explain that they are missing huge pieces of data, can’t exactly define what industries are “crony heavy” and which are not in a particular country, and miss the largest amount of cronies because the magazine focuses on billionaires. (The vast majority of cronies, like everyone else aren’t billionaires.)
It also defers a bit too much on the “good governance” factor. Sure, some governments are better than others but it appears that this has been weighted too heavily in our opinion. One gets the sense that the The Economist was afraid to go completely down the (anti) cronyism path because if one really examines cronyism it is tied in deeply with modern government. One then must question some institutions which are held dear by the more economically “moderate” folks who edit the magazine.
Is for instance the Military Industrial Complex in the USA chock full of cronyism? I think it can be said, and we have shown many times that it is. Yet this kind of cronyism – which is broad and mostly middle class and upper middle class appears not to be reflected in the index.
Same with “green” endeavors like Solyndra – a classic case of crony capitalism, but one which doesn’t have many billionaires in the equation.
Even so we have to give The Economist credit for the attempt, and it is a first attempt (as far as we know). Hopefully they will be able to get a better handle on crony capitalism data and perhaps even what crony capitalism actually is (again it’s mostly NOT billionaires) in the future.
Covering crony capitalism day in and day out we fully recognize the complexities of trying to quantify the phenomenon. We also respect that the magazine identified the limitations of the index right from the outset. That said, we look forward to version 2.0.