Monday, January 16, 2006

The System runs on Bribery

Almost all bribery is related to government regulation of the economy or manipulation of the tax code. Yes, you do occasionally find people doing corrupt things for idealistic causes, but not often enough for me to worry about. People risk jail because they want to get rich.
The economist Thomas Sowell made the the point some years ago that, "When legislatures control buying and selling, the first thing to be bought and sold are legislators." When a governmental decision means that someone is going to make (or not make) tens of millions of dollars year, it is very easy to rationalize spending a few hundred thousand dollars to make sure that the government makes the "right" decision.

Sometimes this money is a direct bribe, as with Rep. Duke Cunningham (R-CA), who recently pled guilty to accepting bribes from a defense contractor. More often, and more dangerously, the money is a contribution to someone's election campaign. There is no quid pro quo; Rep. X doesn't ever say, "I'll vote for this change in the law if you give the legal maximum to my election campaign." That would be both illegal and gauche. But because supporters of a particular measure are getting campaign contributions, and opponents are not, that law will change, and while it isn't a bribe, it might as well be.

He also points out a very common situation in legislatures:

This isn't just a problem of special interests going to virtuous politicians and corrupting them. Politicians are sometimes the origin of the problem. Mike Royko's political biography of Mayor Richard Daley, Boss, mentions how in the late 1940s, when Daley was a member of the Illinois state legislature, it was common practice for members to introduce "getter" bills. The legislator had no intention of seeing the bill passed; they were regulatory measures adopted for the purpose of forcing particular industries or businesses to plead for mercy, by contributing money to the legislator--who would then privately ask other legislators to kill the bill.
This still goes on, quite literally on a daily basis. Any state-level political analyst who knows what's going on can tell you which bills are serious and which are not, and why they were submitted. I've had state legislators tell me directly that even though they submitted a certain bill, they have no intention of bringing it up for even a committee hearing, much less a floor vote. Why? Because by submitting the bill, it draws money from the interests that favor the bill and from interests that don't. They also learn quickly not to commit to voting either way on someone else's bill too soon; as long as you're in the undecided column, you get wined and dined by both sides and the money keeps flowing in.

Anyone who really thinks that being a politician is primarily about solving our society's problems is kidding themselves. Lewis Lapham summed up the reality of politics at the Federal level very succinctly in his book The Wish for Kings:

The federal treasury at the moment supplies 45 percent of the nation's income. The politicians dress up the deals in the language of law or policy, but they're in the business of brokering the tax revenue, and what keeps them in office is not their talent for oratory but their skill at redistributing the national income in a way that rewards their clients, patrons, friends and campaign contributors. They trade in every known commodity - school lunches, tax exemptions, water and mineral rights, aluminum siding, dairy subsidies, pension benefits, highway contracts, prison uniforms - and they work the levers of government like gamblers pulling at slot machines. As with the subsidizing of the farms and the defense industry, so also with paying off the bad debt acquired by the savings and loan associations.
Large institutions are self-serving, but they are not stupid. As the government inserts itself every more thoroughly into every imaginable facet of our lives and becomes the gatekeeper to, now, over $2 trillion per year in tax revenues, businesses and unions and other such organizations have learned to manipulate the system to get as big a piece of that pie as possible. The money they spend on lobbying campaigns is an investment and that investment pays off handsomely.

The 2003 energy bill, for example, saw corporations spend $100 million to lobby Congress; in return, the bill contained $22 billion in industry-targeted tax breaks, another $18 billion in loan guarantees, and removal of liability for the makers of MTBE, a gasoline additive that was found to cause major pollution of groundwater around the country (they even made the liability protection retroactive to void several state lawsuits against those businesses). And as if that weren't enough, they gave $2 billion directly to the makers of MTBE to cover the cost of phasing out the production of that chemical. All in all, not a bad return on investment


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