Category: insider corruption

Categories
free trade & free markets insider corruption national politics & policies too much government

Self-​Interest Wins Every Time

Incentives work. Because people are self-interested.

Even the seemingly altruistic protagonist played by Kevin Costner in the movie Field of Dreams exclaims, “I haven’t once asked what’s in it for me,” only to then ask, “What’s in it for me?”

That line comes to mind when I hear politicians and business folks talk about private-​public partnerships, from subsidies for ethanol to billions in government loans to supposedly spur “green” technology.

The bankruptcy of the solar panel maker Solyndra cost taxpayers more than half a billion dollars. But it’s not merely that government is less than stellar at picking investment winners; it’s that the interests of politicians and businesspeople aren’t “the public interest.”

Never will be.

Sure, Energy Secretary Steven Chu told Congress yesterday, “I did not make any decision based on political considerations.” But internal company emails feature complaints about pressure from the Obama Administration to delay announcing layoffs until after the 2010 elections.

Whose interest did that serve?

Documents also uncover Solyndra executives hiding bad news the better to win additional federal funds and, alternatively, threatening that the company was about to go under hoping the potential bad press for Obama might shake down additional bucks.

Companies have an interest in the big money the federal government dangles before them. Politicians have an interest in appearing to be economic wizards creating jobs and spurring a new world with bright green hues.

Neither incentive promotes sound business behavior nor equates with the public interest.

This is Common Sense. I’m Paul Jacob.

Categories
insider corruption

Is Congress the “One Percent”?

Splitting the country between the “99 percent” and the “1 percent” scapegoats successful people. Being rich is a good thing … unless the wealth is obtained dishonestly.

Which brings me to Congress.

Last Sunday, 60 Minutes featured Peter Schweizer, author of Throw Them All Out, a new book detailing what he calls “soft corruption” — unethical behavior that may not quite qualify as illegal.

Schweizer points out that members of Congress are not covered by laws against insider trading, thus legally able to “leverage” the information they receive to “enrich themselves.” At the cusp of the 2008 financial meltdown, Rep. Spencer Bacchus (R‑Ala.) was receiving special briefings from the Treasury Secretary and the Chairman of the Federal Reserve and “buying option funds that would go up in value if the market went down.”

Bacchus is hardly alone. During the healthcare debate, numerous congressmen traded healthcare stocks.

Then there are IPOs — initial public offerings of stock — which are usually available only to major investors. Somehow Speaker Nancy Pelosi was cut in on a least eight IPOs, including a lucrative one from VISA … at a time major credit card legislation was pending in the House.

None of “our” representatives deigned to openly discuss their amazing financial acumen. But as 60 Minutes correspondent Steve Croft confirmed, “Most former congressmen and senators manage to leave Washington, if they ever leave Washington, with more money in their pockets than they had when they arrived.”

Funny, they haven’t done nearly so well handling the country’s finances.

This is Common Sense. I’m Paul Jacob.

Categories
government transparency insider corruption

Mad About Power

“There’s no such thing as too much power.”

That’s the word from Democrat Herb Wesson, former Speaker of the California Assembly. Wesson was defending the Speaker’s awesome control over the purse strings.

In a story headlined, “The power of one: Perez controls Assembly with money,” the Sacramento Bee reports: “Assembly Speaker John A. Pérez single-​handedly doles out millions in public funds each year to his 80 members: No vote, no committee, no debate.”

The article was vague on details, because the Speaker refused open records requests from the Bee and the Los Angeles Times. In August, the newspapers filed suit to see the legislative records.

Assemblyman Anthony Portantino charges that Speaker Pérez cut his staff as retribution for voting against this year’s state budget — although the state constitution makes it a crime to coerce a member’s vote. Assemblyman Tony Mendoza admitted that his office budget was slashed by $80,000 when the Speaker demoted him from the Rules Committee, but he wouldn’t discuss it with reporters.

Were a special interest group to similarly bribe legislators, Californians would be up in arms. But a politician? We’ll see how this plays out.

“It’s a very difficult house to run,” argues Mr. Wesson, “and you have to have the leverage that the speaker has.” Steve Maviglio, former spokesperson for two Assembly Speakers, echoes that sentiment, claiming that without a healthy bribery power, the legislative chamber would descend into “absolute chaos.”

Extreme. But some “chaos” must be better than the current all-​too-​orderly system of corruption.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets insider corruption too much government video

Saving “Capitalism”

Excellent testimony by Prof. Russ Roberts of George Mason University about the government bailout of the financial sector. Naming Bush, Obama and Congress, Prof. Roberts charges: “You’ve helped risk-​takers continue to expect that the rules that apply to the rest of us don’t apply to people with the right connections. You’ve saved the system, but it’s a system not worth saving. It’s not capitalism; it is crony capitalism.”

Let’s keep this common sense in mind.

Categories
free trade & free markets insider corruption national politics & policies

The Clipping and Culling Crisis

I just came across a paper on an old bout of hyperinflation — the “Kipper- und Wipperzeit” financial crisis in 17th century Germany — worth studying, considering that today’s smart money is on the radical debasement of today’s already-​undermined dollar.

The Kipper- und Wipperzeit hyperinflation started out as a government program to bilk the people of wealth, but got out of hand. It became a free-for-all. 

Back before credit money and fiat money, governments made special deals with miners and minters and the like, to coin money to spec. Those insiders put less metal into the coins than before, but called the coins the same. Debasement, pure and simple: Theft — fraud, to be exact. 

It helped make a few major fortunes, fund some wars and the like.

But apparently moneylenders caught on, and began “clipping” the coins. Minters employed subcontractors to look for better-​quality coins in circulation, paying for them in clipped coins. Soon everyone was clipping coins, and then culling them (hence the term “Kipper- und Wipperzeit” — “clipping and culling time”) to hoard the highest-​value coins (with the most metal) and pawn off into the general circulation the lowest-​value coins (with the least). Gresham’s Law in action led to spiraling prices and the breakdown of trade.

A great example of calculated, “clever” government policy spilling into the general population, leading first to rampant moral corruption and then ruin.

Something to remember, as clever folks contemplate “monetizing” today’s sovereign debt.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets insider corruption too much government

Medallions “Stink of Tyranny”

Not long ago on Townhall​.com I briefly told the tale of two journalists, both arrested for taking pictures at a public meeting. This stunk of tyranny, to me. “Government cameras on citizens? Dangerous. Citizen lenses trained on government? Essential safety devices.”

What I didn’t mention was that the public meeting was for the District of Columbia’s taxi-​cab commission. The commission oversees what was once a remarkably free system of taxis, but has become more regulated while also earning a reputation for corruption. Pete Tucker, one of the reporters, was on the scene to cover a breaking story related to that corruption: The commission’s proposal to regulate the industry using the over-​used and idiotic “medallion” system, familiar to New Yorkers and far too many other city-dwellers.

Well, Tucker’s work has reached the completion stage, now, with Reason TV’s video about the medallion system up on YouTube. It’s an eye-opener.

The gist of the piece may be familiar: Government regulation helps bigger businesses at the expense of smaller ones … as well as consumers. You may have read similar tales from economists such as those in the French Liberal School (Frédéric Bastiat), the Chicago School (Milton Friedman), the Austrian School (Ludwig von Mises), and Public Choice (James Buchanan). Courtesy of the Reason video, now you can see ordinary citizens making the case. One said, “We know tyranny when we smell it.”

The stench is also of corruption, which has driven the politics behind the new regulatory scheme.

This is Common Sense. I’m Paul Jacob.