Arnold Kling  

The Banality of Corruption

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The front page of today's Washington Post has two stories on corruption. The main story is a stereotypical "one evil man" story on Jack Abramoff. The other story, on Maryland funeral law, probably explains everyday corruption more clearly.

Maryland's leading mortuary owners say the law guards against an invasion of mega-corporations. But the law also has given those owners a virtual lock on the local trade, which some believe is why the state's funeral costs are among the nation's highest. A 2001 industry survey showed that a funeral in Maryland cost, on average, $166 more than it does elsewhere.

What Brown has discovered in his crusade: A bill that might seem perfectly logical to legislative leaders, the Federal Trade Commission and the state attorney general can be blocked by 59 funeral home owners and deep-sixed by a single delegate -- 77-year-old Hattie N. Harrison. Harrison's resistance demonstrates not only the Democrat's loyalty to an influential constituent in her East Baltimore district but also offers a case study in how power is wielded in Annapolis.

The use of regulation to restrict entry is the oldest trick in the book for suppliers. My guess is that it costs consumers a lot more than Mr. Abramoff's influence-peddling, and yet it rarely makes the front page. Call it the banality of corruption.

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CATEGORIES: Public Choice Theory

COMMENTS (4 to date)
daveg writes:

Yes, influence peddling like this is very costly. Another example is AIPAC, which uses it influence to get the US to send billions to Israel, often against general US interests.

In today's dollars the amount we have spent in Israel must exceed 100 billion dollars. That's about 20,000 per man, woman and child in Israel, with little prospect for peace in the next decade.

Our support for Israel clearly plays a role in our unpopularity in the Middle East and makes us the target, along with other activities for sure, of terrorist attacks. One should also factor in the cost of all the security measures we undertake in response to this threat.

Was the 2nd Iraq war related to our support for Israel? Well, Israel supporters were talking about invading Iraq long before 9/11. See this document

It is also a fact that Israel and its supporters at this very moment are pushing hard for the US to take action against Iran, rather than negotiating peace as we do with virtually every other hostile forign governement seeking to obtain nuclear capabilities (e.g. China, N. Korea).

How much will such action cost us in terms of direct dollars, lives, goodwill and increased oil energy prices? Hundreds of billions to be sure.

Kind of puts the funeral parlor scam in perspective, doesn't it?

Interestingly enough, some of Abramoff's lobbying was on behalf of Israel and/or Israeli companies, so he is part of this problem. See this for example.

Abramoff also has connections to Russin/Israeli/British oligarch interests that appear to be trying to influence American politics as well. See this.

So, the two types of corruption often blend together. But, one man's corruption is another man's political speech, no?

daveg writes:

From the WaPo:

Fredericksburg, Va.: Hi Susan, great stories so far. How is it the Abramoff could be broke? He had zillions of dollars, it seemed. What gives?

Susan Schmidt: I keep wondering the same thing. We do know he spent millions of dollars on his two restaurants, that he bankrolled a religious academy that educated his children, that he was sending money to settlers on the West Bank for a sniper school. He also lived extravagantly, flying by private jet and buying expensive cars. But that's an awful lot of money to go through. And there is hardly anything left for the lawyers!


Robert Prather writes:

Is the Institute for Justice onto this Maryland thing? They've defeated similar rent seeking in TN before, I believe.

Bob Knaus writes:

Arnold - you have labeled this sort of thing "corruption" more than once, but I would say that in most instances it's "culture".

I grew up near a small town that still had Main Street merchants, and still had a culture that thought these folks were the leading lights of the community. There were few regulatory barriers to joining this clique. Who needed them when you had the much stronger barriers of church affiliation, banking relationships, and race? The sad part was that even those outside of the circle admired those within it, and thought the status quo worth keeping. Thank goodness for the big-box stores who did Main Street in!

I observe something similar here in the Bahamas today. The Bahamas are a majority black (85%) commonwealth where whites had historically held the political and economic power. Political reforms leading up to independence in 1973 reulted in majority rule, with white Bahamians largely withdrawing from national politics. Yet, small business ownership remains largely white. These businesses are protected by a web of licensing, regulatory, and tariff barriers. So far as I can tell, the black political establishment considers these barriers beneficial. Why? My conjecture is that the electorate has no desire to destroy a perfectly good rent-seeking system. They might need it themselves someday, and it's exactly what they would do if they had the luck to become business owners.

The notion that admiration of the successful minority perpetuates abuses upon the majority would be the subject of a much longer comment, by someone more qualified than me. I do think it's an idea worth considering.

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