David R. Henderson  

The Aristocracy of Pull

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Where Are All the Jerks in My ... Financial Panic...

One of Ayn Rand's best scenes in Atlas Shrugged has her hero Francisco d'Anconia complete the statement of one of her villains with a surprise ending. Villain James Taggart states:

We will liberate our culture from the stranglehold of the profit-chasers. We will build a society dedicated to higher ideals, and we will replace the aristocracy of money by--

"the aristocracy of pull," interjects d'Anconia.

I thought of that as I followed the brouhaha over the antics of the current governor of Illinois, Rod Blagojevich.

Rand points out that when voluntary commerce (profit chasing) is replaced with coercion, there will be an aristocracy of pull. And Blagojevich's crass exchange of government favors for money is a stark illustration.

Interestingly, what most people have objected to is its starkness rather than its essence. Blagojevich's behavior can be divided up into three elements:

1. The exchange of political favors for personal payoffs.
2. The explicit discussion of #1.
3. His foul language.

While many people seem to object to all three, many of these same people really object only to #2 and #3. In other words, they don't really object to #1.

Why do I say that? Consider a case of #1 that received little objection. In 2005, shortly after her husband became a U.S. Senator, Michelle Obama was promoted to vice-president of the University of Chicago Hospitals, with a salary increase from $121,910 to $316,962. One of her bosses said she was "worth her weight in gold." In 2006, Obama requested a $1 million earmark for his wife's employer. How upset have people got about this? But take away the explicit exchange and the crass language and she and her husband did what he Illinois Governor did. Yet where's the outrage?



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CATEGORIES: Public Choice Theory



COMMENTS (26 to date)
Gary Rogers writes:

Or Hillary Clinton being offered a partnership at the Rose Law Firm right after Bill Clinton is elected governer. I think the Clinton net worth is now estimated at something aroung $126,000,000, all "earned" while leading their life as "public servants". Nobody likes it, but it happens all the time.

Thanks for the observation.

El Presidente writes:

We are disinclined to object to symbiotic exchanges of influence if they occur within the formally acknowledged boundaries of the law. We can thank the libertarian tradition for that. Maybe we should think it is wrong, but we tend not to.

One problem in Blagojevich's case is that he was breaking the law, blatantly, repeatedly, defiantly. What's more, he lied about it. That suggests not only knowledge that what he was doing would be perceived by others as wrong, but also willingness to objectify those others by withholding information he believed would change their opinion of him and possibly their consent to be governed by him. Doing so, he held his own office in contempt on two accounts: his duty to execute the law, and his purpose of protecting the interests of the people he governed. This was a breach of public trust, not a difference of opinion or judgement. The material outcome is not the only issue.

I think there is quite a bit of daylight between Obama and Blagojevich. The difference is what changes a series of events into a prosecutable offense: intent. We can prove it in Blagojevich's case because he unwittingly confessed. I'm not persuaded by your case against Obama.

Jacob Oost writes:

Not to defend Obama or his wife's actions but you are comparing things that aren't exactly the same, not that I'm happy about it.

In one case you have an explicit, taped conversation of a person explicitly laying out plans for something that is not only criminal but is also

A) Criminal on a national level, with wide-ranging implications beyond Illinois interests.
B) Something that is against a law that is actually enforced.

To flesh out B, unfortunately so much of our government's corruption goes largely unnoticed, not because it is illegal but because it has been given de facto legality.

When the Federal government usurps powers from the states that it clearly does not have the right to do, AND the three branches of government, combined with those who actually enforce the laws, abide by this usurpation, it has de facto legality, unfortunately. Yes, it's illegal, yes, it's corrupt, but since virtually everybody in power looks the other way on its illegality and corruption, it has the same standing in practice as something that is truly legal.

IOW if it doesn't seem big enough to the media and it breaks a law that isn't really enforced anyway, you can't expect a huge number of people to make a big deal out of it.

Jacob Oost writes:

BTW, instead of Ayn Rand (did you know she was a personal friend of Alan Greenspan long before he became famous?), I prefer a scene from Seinfeld. The episode with the Pez dispenser, where George is concerned about having the upper hand, or just "hand" in the relationship, so he pre-emptively breaks up with his current girlfriend. She's shocked, thinking things were going well. Later he takes her back (it's all a part of his ploy), and even later when she finds out he wronged her, she publicly breaks up with him.

"But you can't break up with ME, I've got hand!"

"And you're gonna need it!"

Randy writes:

"I'm not persuaded by your case against Obama."

Big surprise there :)

And why would you permit yourself to be persuaded? You benefit from the existance of the aristocracy of pull. Counter propaganda has no value to you.

libfree writes:

lets be honest, political favors are plentiful. Its even discussed openly. I think the part that got everyone is that specific dollar amounts were being offered. If he had gone to Obama and traded a cabinet position for the appointment, I don't think nearly as many people would be mad.

David R. Henderson writes:

I notice that commenters Jacob Oost and "El Presidente" are essentially admitting my point. They do not really object to #1.

Zac writes:

I think the much simpler explanation: that people don't really care about a $1 million earmark but do care about a recently vacated senate seat being sold, is more likely. The former is offensive but forgivable to the average joe who probably never heard about it happening, the latter is a slap in the face of democracy, our society's holy cow. Americans are willing to accept the government has some level of "game" to it, but are not willing to accept that senate seats could be bought and sold.

El Presidente writes:

Randy,

"And why would you permit yourself to be persuaded? You benefit from the existance of the aristocracy of pull. Counter propaganda has no value to you.

I would permit myself because I find that truth is a more productive guide than alternatives to it.

I benefit in what way?

brian writes:

Not to be snarky, but shouldn't Blago's actions be seen as a good thing from a libertarian point of view? He was trying to sell a job to the highest bidder rather than appointing someone. Jobs should go to those who are most willing to pay, not to some random appointee. Imagine if we ran our economy that way.

Really, Blago was acting in enlightened self-interest in benefit of all parties involved, something all Rand-ites can be proud of. I realize that there are externalities, but there are always externalities in any transaction; is any transaction with externalities as wrong?

Jacob Oost writes:

david: What did I say that made you think I don't object to #1? Of course I do, I'm simply explaining what I think is going through other peeps' minds.

brian: Sure, you're not being snarky at all... Nevertheless, if you're trying to mock basic economic principles by applying them to the selling of a Senatorship and revealing some kind of fallacy, you're way off. Private goods and services are in a whole other category from political positions, which are public sector jobs. Nobody here would suggest treating such positions as if they were jobs in the private sector.

ben writes:

Brian... You're not serious right? Do you really think Blago was acting in the benefit of all parties involved, including the people of Illinois to whom he is legally obligated?

RubberCity Rabble writes:

I object to #1 and #2. I expect many people would say the aristocracy of money and the aristocracy of pull (often coterminous) run the world: them that has, gets. What's the surprise there? I think people's sense of offense rises with the directness and personalization of the exchange - the more direct and purely personal the quid pro quo, the greater the offense taken. While it's always objectionable, we're so inured that we only voice objection when it crosses some threshhold.

Some people active in successful presidential campaigns get ambassadorships, Haliburton got contracts for Iraq, Brownie got to (mis)direct FEMA, Harriet Miers got nominated to the Supreme Court... Isn't this what the advantaged call "networking?"

Like the Obama situation, none of these is a clear & simple quid pro quo. The ambassador demonstrated some skills during the political campaign - organizational, PR, etc - that may be useful in furthering our national relationships abroad. Haliburton's expertise at huge construction projects was familiar to the VP so he could vouch for their capabilities. Michael Brown was acquainted with Bush's campaign director; that personal knowledge of Brown's skills probably helped in the determination that his horse club experience would transfer to running a federal agency. Miers wasn't just a Bush crony - as the President said when nominating her, "she has tried cases, and argued appeals that covered a broad range of matters." People in the network have an edge over those with similar qualifications who aren't in it.

Where Blagojevich went too far was his alleged treatment of the senatorial appointment as nothing but a sales transaction. That kicked it up a notch beyond what we're accustomed to.

David R. Henderson writes:

Jacob Oost,
My mistake.
David

David writes:

Why do I say that? Consider a case of #1 that received little objection. In 2005, shortly after her husband became a U.S. Senator, Michelle Obama was promoted to vice-president of the University of Chicago Hospitals, with a salary increase from $121,910 to $316,962. One of her bosses said she was "worth her weight in gold." In 2006, Obama requested a $1 million earmark for his wife's employer. How upset have people got about this? But take away the explicit exchange and the crass language and she and her husband did what he Illinois Governor did. Yet where's the outrage?

The hospital didn't promote her in order to get the earmark, did it?

How is this, then, an exchange of a political favor for a personal payoff?

David writes:

From that NYTimes piece:

"The request for $1 million for the University of Chicago Medical Center was to help pay for construction of a pavilion that could increase its capacity for treating patients by one-third.

Kelly M. Sullivan, the medical center’s vice president for communications and marketing, noted that Mr. Obama had also requested money for a number of other hospitals in Illinois, and she said any lobbying for the money had been handled by the hospital’s government-affairs officials."

And the other piece also lends little evidence to the contention that she was promoted because her husband had become a senator.

Dr. T writes:

Brian said: "Not to be snarky, but shouldn't Blago's actions be seen as a good thing from a libertarian point of view?"

The governor agreed to follow certain rules and regulations while in office. When there is a Senate vacancy, he is required appoint the person who will best represent the citizens of Illinois. The governor is explicitly forbidden to sell the position to the highest bidder. Therefore, Blagojevich's actions violate a legal contract and are non-libertarian.

Brandon Berg writes:

Most people see pull as something too sacred to be bought and sold with money.

Randy writes:

El Presidente,

"I benefit in what way?"

I don't know you well enough to know precisely how you benefit, I just have enough experience with human nature to know that people act in what they believe to be their best interest. People are not rational. They rationalize. The function of the human brain is to obtain what is desired.

Joan of Argghh! writes:

No wonder they hate Sarah Palin. She's not playing along with the assumptions. Which is why good people are doomed in higher levels of politics.

El Presidente writes:

Randy,

I don't know you well enough to know precisely how you benefit, I just have enough experience with human nature to know that people act in what they believe to be their best interest. People are not rational. They rationalize. The function of the human brain is to obtain what is desired.

If you can't know HOW I benefit, then you can't know THAT I benefit. You can only assume it.

I would say it's cynical (and incorrect) to suggest that people, as a rule, are not seeking truth, or that advancing truth is somehow not in a person's best interest. I would say it's realistic (and more often correct) to conclude that people may not find it, or may not recognize it when they have found it.

That is, of course, unless you are referring to people who objectify one another, as perhaps we do from time to time. Then rationalizing is a defense against unpleasant guilt, which can only exist if a person believes that what they are doing is wrong in some way. Rationalizing is not the same as employing bounded rationality. I think we mostly do the latter. But, that's just my opinion.

Jeremy, Alabama writes:

David's (obvious) point is that #1 monetizes political power.

What if somebody produced a taped conversation with Michelle saying "you get me a 6-digit raise, I'll get you a 7-digit earmark."

El Presidente writes:

Jeremy, Alabama

What if somebody produced a taped conversation with Michelle saying "you get me a 6-digit raise, I'll get you a 7-digit earmark."

That's precisely it. We (I) have no reason, except the hairs on the back of our neck, gut feelings, and tendency toward suspicion, to believe that there was a quid pro quo with regard to Michelle Obama, or even that the earmark was based on her employment rather than the merits of the program relative to alternatives. The statement of the employer suggest that they may have been of that mindset, but not that Sen. Obama's conduct was of that ilk. So far as I know, it was the Illinois State Senate who approved the funding, not Sen. Obama alone. He may have requested it, but it was public record and they could have declined.

In contrast, Blagojevich did everything to advertise his graft but spray paint it on the walls of his office.

It's not high-minded, but I have told people before that you don't usually get in trouble for being bad. You get in trouble for being stupid. I hope we wouldn't be bad, but thank goodness that those of us who are bad are frequently stupid too.

El Presidente writes:

Correction: It was Congress, not the Illinois State Senate, and they didn't approve it.

pacific_waters writes:

Don't be stupid Bryan. There is nothing libertarian about selling something that is not yours to sell.

Randy writes:

El Presidente,

"You can only assume it."

I use the word "know" in the popular sense. Obviously our ability to know is limited in time and space. Even the scientific method is pragamatic. So yse, I assume. Value is equivalent to truth and believing that people act in their own interests has value.

"I would say it's cynical..."

Yes, I'm a cynic - especially when it come to the political class and propagandists for the political class. I can't help but notice that, in spite of all their noble words and sentiments, they always take the money up front.


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