by J.R. Dunn –
Crony capitalism is the most serious current danger to the American community, a threat not simply to government or the economy, but to our very way of life. It is the worst such threat since the trusts and monopolies of the early 20th century, and in much the same way. Cronyism is one of the major forces behind the establishment of the corrupt pseudo-aristocracy that has been taking shape in this country over the past two decades, a synthetic privileged class made up in large part of politicians, hustlers, and hangers-on who have become expert in exploiting the rest of us.
The legacy media, for some obscure reason, tends to bury discussions about this group. While the reportage on discrete incidents is there — see the parade of stories on Solyndra, Goldman Sachs, and MF Global for examples — we find little effort to pull it all together. Academics, with the single exception of Angelo Codevilla, who sounded the alarm two years ago in The Ruling Class, appear oblivious, as if they had no idea what’s going on, which may well be the case.
The customary watchdogs having remained asleep, we need to rely on independents. Chief among these in Peter Schweizer, whose latest book Throw Them All Out (Houghton Mifflin Harcourt, 2011) gives us the clearest picture we’ve yet had of the activities of the new crony class.
Schweizer examines the new cronyism through the lens of the old — specifically, the political philosophy of George Washington Plunkett, 19th-century Tammany stalwart who seen his opportunities and took ’em. Plunkett’s modus operandi was based on “honest graft” — rather than fish for bribes or payoffs, Plunkett would discover what contractor was putting up the new schoolhouse and then mosey over to drop a few hints about his cousin’s brick company. It worked every time, and was completely legal. Plunkett was never brought to book on it. The basic axiom of cronyism reads: why break the law when there are plenty of loopholes to use?
Though Schweizer makes an honest attempt to remain bipartisan, the book is dominated by members of a certain political party the name of which I will not mention but which is run by politicians named Kerry, Durbin, and Pelosi among others.
John Kerry specializes in using advance information on upcoming bills to make investments, which Schweizer correctly characterizes as a form of insider trading. During the ObamaCare debate of 2009 Kerry invested $200,000 in the healthcare company ResMed, the value of which shot up over 70%, a tidy little windfall even to a man married into one of the richest families in the United States. At the same time, ObamaCare cut Medicare reimbursements, so Kerry dumped all his shares in United Health, a medical insurance company deeply dependent on Medicare. Kerry, it seems, didn’t have to pass the bill to know what was in it.
(John Boehner also played this little game, though not a shiftily as Kerry, actually waiting until the debate was over to purchase, in December 2009, stock in several large health-related companies.)
Dick Durbin attended the now-famous September 2008 meetings in which Henry Paulson and Ben Bernanke warned members of Congress of imminent and universal financial collapse. He immediately unloaded large chunks of his stock holdings. A natural reaction; he was a little panicky at the time. You’d do it too.
“We despise professional athletes who bet on their own games.” Schweizer tells us. “Why don’t we feel the same way about politicians who bet on the outcome of legislation?”
Another tool of corruption is the IPO (which, according to Schweizer, means “Invest in Politicians Often”). Companies about to go public invite certain strategically-placed politicians to make the first purchases in the offering, before the stockbrokers or anyone else. You can’t really call it a payoff.
Nancy Pelosi is a particularly avid IPO fan. She and her husband made an incredibly large purchase of the Visa IPO amounting to 10% of their stock portfolio, raking off nearly a 50% profit on the original purchase in only two days. (Nancy Pelosi also had a station built on a light rail line in San Francisco near one of her office buildings. Real estate manipulation is yet another tool of the privileged class.)
Schweizer also offers a complete rundown — the first one I’ve seen — of the actual extent of Barack Obama’s “stimulus” program, which he characterizes as the biggest political payoff since the heyday of Boss Tweed. Reading this will make your blood boil. It should be a major topic of discussion in next year’s campaign.
The level of corruption revealed here is breathtaking, even to me, and I take a back seat to no one in political realism. This is worse than Plunkett’s day. In his time, there were limits on behavior put in place by accepted custom and traditional morality. Both of those factors have been relentlessly undermined in the past century. What is left is only a kind of kindergarten positivism — if it’s not explicitly forbidden, then it’s allowed. So Congress, both houses, along with the bureaucracies, and the little layers of government all the way down to Yourtown, are populated by relentless loophole miners. We have not merely returned to the epoch of Tammany and Boss Tweed, we have surpassed it.
(Is there anybody left with clean hands? Well yes — Schweizer identifies James Sensenbrenner of Wisconsin, who, though he owned large amounts of health care-related stocks, made not one sale before or after the health-care debate. It’s a sad thing to have to praise a man for doing what anybody ought to have done, but that’s our situation.)
How do we overcome this? Peter Schweizer’s suggestions include an immediate ban on insider trading, defined as any form of trading involving bills that are or may come before Congress. A prohibition on any business deals involving conflict of interest. A ban on land deals involving political contributors. Full and honest transparency in any financial dealings involving a politician. (Schweizer reveals that those so-called “blind trusts” are actually no such thing.) All this is well and good, and some of it is actually in the works. But as long as we have laws, we will have loopholes, and as long as there are loopholes, they will be mined. What we truly require is a return to ethics on the mass scale. How this is to be done I have no more idea than anyone else.
But the first step is knowledge — read this book and pass it on.
HT: American Thinker