Big Government and Corruption Are Inextricably Intertwined
February 12, 2015 by Dan Mitchell
I’m trying to make a very serious point about the way in which big government enables immoral behavior by both elected officials and various interest groups.
Heck, in many ways, government has morphed into a racket designed to enrich the lobbyists, insiders, contractors, bureaucrats, and politicians.
They play, we pay.
A comprehensive strategy to boost the middle class has to include an aggressive assault on political corruption. Every year, the government wastes an obscene amount of money through corrupt public policies.
He makes the key point that corruption isn’t just about illegal behavior in Washington.
If we think of corruption merely as illegal activity, we’re defining it too narrowly. …the better way to understand it is as James Madison might have. In Federalist 10, he worried about the “violence of faction,” which he defined as a group “united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community.” This is all too common in public policy. From farm subsidies to Medicare, regulatory policy to the tax code, and highway spending to corporate welfare, our government does violence to the public interest by rewarding the interest groups that lobby it aggressively.
Cost then explains that this corruption-fueled expansion of government is very damaging for the middle class.
…corruption is a loser for the middle class. Middle-class Americans do not have the money to pay for lobbyists to make sure they are getting a piece of the action. They don’t usually contribute to political candidates, and when they do, it is typically for a presidential candidate whose ideas they think are sound. They do not subsidize the otherwise obscure subcommittee chairman with oversight on a critical policy. And, of course, they cannot offer politicians seven-figure employment opportunities for post-government life. And yet the middle class foots the bill. Average Americans pay higher taxes to subsidize this misbehavior… But beyond that, corruption distorts the economy and limits the nation’s potential for growth. For instance, any time Congress creates a tax loophole, it shifts the flow of capital from some otherwise productive outlet to the tax-preferred end. And this is true not just of tax policy; any dollar spent by the government corruptly is a dollar better spent somewhere else. There are, in other words, substantial opportunity costs to be paid, mostly by the middle class.
While I definitely agree with the thrust of Cost’s analysis, I might quibble with the last part of this excerpt.
To be sure, I agree that the middle class foots the majority of the overall bill, but I actually wonder whether the poor suffer the most. At least on an individual basis. After all, the people on the bottom rungs of the economic ladder presumably have the most to lose if growth is sluggish or non-existent.
But enough nit-picking and digressing.
Cost’s column is right on the mark, particularly his point about properly defining corruption to capture what’s immoral as well as what’s illegal.
That’s one of the main points I made in this video from the Center for Freedom and Prosperity.
Now let’s take this analysis, both from Cost’s article and my video, and apply it to Obama’s new budget.
Professor Jeffrey Dorfman, an economist at the University of Georgia, has a column for Real Clear Markets entitled, “Obama’s Budget Is All About Whom You Know.”
He starts by citing some examples of how Obama wants government to manipulate our choices.
President Obama wants to control everyone’s behavior using the federal government as both his carrot and stick. …the President is in favor of both parents working and either strangers or government employees raising children as much as possible. …The President proposed nothing to help people save for college or to make it more affordable in any manner other than a government handout. …All of these higher education policies suggest government is your friend and personal responsibility is a bad idea.
Dorfman doesn’t explicitly state that this micro-management by big government is corrupt, but what he’s describing fits in perfectly with Cost’s analysis about average people suffering as D.C. insiders keep expanding government and getting more power over our lives.
If you put this all together, the President is clearly stating that increasing government dependence is a priority. People are offered more financial assistance through the government so as to build support for larger government. …President Obama is only interested in helping some Americans, in rewarding the Americans who behave the way he thinks they should. He believes that the government, that he, should have the power to pick winners and losers. His vision is not one in which everyone wins, rather it is one where those he favors gain at the expense of those he seeks to punish for either their success or their actions. …government is now taking sides.
Needless to say, when government is taking sides and picking winners and losers, that is a process that inevitably and necessarily favors the politically well-connected insiders.
P.S. Some folks in Louisiana have a pretty good suggestion for dealing with political corruption.
P.P.S. By the way, you don’t solve the problem of government-facilitated corruption by restricting the 1st Amendment rights of people to petition their government and participate in the political process.
P.P.P.S. While this column focuses mostly on the immoral corruption of Washington rather than the illegal variety, there’s also plenty of the latter form of corruption in programs such as Medicare, Medicaid, welfare, job training, food stamps, disability, etc.