Wednesday, December 23, 2020


People talk a lot about corruption, but what is it, really?  And why does it go on?

People talk a lot about corruption, but most folks have no idea what it means, even as it goes on all around us.  From petty little scams in small towns, to nationwide deals that go down (such as all the pork stuffed into the latest 5,500-page stimulus bill) it is everywhere and nowhere at the same time.  It is complicated, and people can't follow complicated narratives, so they give up trying to understand.  Besides, they are more easily distracted by some Tweet or manufactured controversy.  The news promotes the latter as it generates clicks. Complicated five-part articles about a big scam going down don't get read.

In the neighboring city of Jacksonville - the largest city in the State of Florida, in terms of square miles - two recent scams have been exposed, and one is in the process of going down.  Jacksonville has its own electrical utility, and from most reports, it works pretty well.  Regardless of that, the managers of the utility, in concert with some outside investors, pitched the idea of selling the utility to outside investors, as it was so poorly run that the only thing to do was privatize it!

As you can see, this dovetails into a popular narrative on the right - that the government is inept and corrupt and can't run things properly and the only solution is the invisible hand of capitalism. Privatize!  That will solve all our problems!  It will bring rates down, too, as we can cut the salary of the janitor by outsourcing his job to contracting company run by a crony for $30 an hour, who in turn will pay the janitor $15 an hour - with no pesky benefits.  We'll save even more money by paying interest on billions of dollars of bond debt, and save even more by paying dividends to shareholders.  Given all that, it has to be cheaper than a "gubment-run" utility, right?

The sarcasm light is lit - bright red.

Well, they pitched this idea and it seemed like a go, until it came to light that the officers of the company would make millions of dollars out of the deal and that apparently the Mayor was in on it, too.  The investigation is ongoing.... and likely you never heard of this, unless you live in or near North Florida.

Even though that scam was caught before it could be consummated, another one appears to be going down.  Jacksonville has a professional football team (no, really) called the "Jaguars" owned by Shahid Khan, who appeared in a Star Trek episode, who is related to the Aga Khan, who is just a really rich guy from Pakistan.  He is an odd fellow, in that he has been trying (pre-pandemic) to bring American football to the UK by having games played in London, much to the distress of local fans, who cannot afford to fly there.  They ain't missing much, from what I hear - the team is always near the bottom of the rankings.

Anyway, like most sports team owners, the Khan has squeezed the city for concessions in order to build a stadium and whatnot, and the latest deal to go down involves "Lot J" which is a parking lot he wants to turn into condominiums, a parking garage, and retail space and an event space.  The punchline is, he wants the city to pay for a huge portion of the construction costs, loan money, waive property and other taxes for many, many years, and allow him to collect the revenue from much of the venue - largely tax-free - for quite a long time (almost beyond the service life of the buildings).  For example, the city will build and own the parking garage, and thus collect no property taxes from it, but the Khan will operate it and pocket the profits.  I mean, what's not to like?  For the Khan, that is.

There are economic arguments to be made for such projects. Some argue that without incentives, developers would not build in many cities, and nothing would get done.   Others argue that such projects will create jobs and bring in revenue for the city in other forms - the condo owners will pay property taxes and the restaurants will pay sales taxes - and so on and so forth.  It is a trickle-down argument.

But the way the project is being rammed-through the City Council is alarming.  Usually, such projects are negotiated through the city's development commission, but this one did an end-run on that, which raised more than a few alarm bells.  It is now going back through the development commission, which  has recommend some changes to the plan - making it less generous.   Still, such "deals" stick in the craw of the small-business owner, who gets no tax breaks or co-payments to build his small business, and in fact is harassed by city regulations and even annoying taxes, like the "gross receipts" tax, the City of Alexandria tried to levy on me (I closed my business and became a contractor - so there!).

Is the "Lot J" deal corrupt?  Well, you could say yes or no.  It is corrupt in my mind in that a really, really rich guy is getting a sweetheart of a deal that benefits him greatly, at taxpayer expense.  Maybe it isn't as odious as the JEA sale deal, but it still smacks of small-town corruption and back-scratching, and perhaps a little self-dealing.   You can be sure the Khan contributes to local campaigns and PACs!.

But such back-scratching deals go on at all levels.  I mentioned before how the judge in the small town I grew up in took cash bribes in cahoots with a corrupt local police officer.  The Mayor got the village council to "annex" a huge lot of land he had bought to be part of the village (and thus have village water and sewer connections) so he could build a low-income apartments.  I go back 40 years later and his son is now mayor and trying to - get this - annex a lot of land he owns to the village, so he can put in low-income apartments.  Not very imaginative, but I guess you go with what works.

I mentioned before an inventor I wrote a Patent for, abandoned the application after it was allowed, as the invention required the use of FCC-assigned frequencies.  When Clinton won office, he dropped the project because, as he put it, "I don't know any Demmy-crats!  How am I supposed to get my frequencies?"

Now, the general public thinks that "corruption" involves people taking cash bribes - the vaunted "briefcase full of cash" that the movies like to show.  And sometimes this does happen - usually to the boobs who are so stupid as to be caught at it.   There are other ways, however, and the people bribing or being bribed might not even consider what they do to be "corruption" at all  You donate to a "foundation" run by a politician, and you get invited to their annual party, where you can buttonhole them about a bill before Congress.  Or you pay them $50,000 to give a speech.  You book an entire floor of suites in their hotel - for a week or two.   There are so many "legitimate" ways to exchange money that are far easier to use and far less likely to get you caught.  Some of it may not even be illegal.

The Obamas and the Clintons left the White House with hardly any money, but within a few years, had tens of millions of dollars.  Trump is leaving with a $200M war chest, even as his businesses have arguably suffered during his tenure as President.  Of course, being Commander-in-Chief has made it easier to get loans and whatnot - Jared Kushner managed to get the Saudis to refinance his 666 Park Avenue albatross.

For example, a recent story online tells about Trump campaign leaders who claimed to be working for free, and yet their "consulting firms" were paid huge amounts of money, from which they drew a salary.  Was this illegal, or just some sort of accounting measure?  Hard to say for sure - to the lay person, what's the difference?  If you want to pay your campaign manager $400,000 a year or pay his consulting firm $500,000 a year instead, does it really make much of a difference?  Maybe from a tax law perspective, but to us plebes, it is just money changing hands, either way.  On the other hand, if this technique is being used to put money into the pocket of the candidate and his family... Hey, I said it before, running for President can be a lucrative gig.  Hell, even losing is a lucrative gig.  I need to set up one of these PACs of my own!

A reader writes that the same sort of nonsense goes on in Europe, and Britons, distracted by Brexit and the Pandemic, might not realize that cronyism is diverting pandemic funds to friends and family of those in power.  Not Boris!  Act shocked!  Maybe he can use some of that ill-gotten gains to buy some hair gel.

There are other ancillary ways of raking in cash.  If you have access to insider information - as Karen Loeffler and David "Chicken" Perdue have, you can short-sale stocks or sell them off before they tank - and then buy them back later on.  Again, it might not even be illegal, unless the insider information was specific to a particular stock.  The SEC is playing whack-a-mole as it is, and often the worst that can happen is you pay a small fine that is less than the money you made in the deal.

The list goes on and on.  Books could be written about all the grifts that Trump is pulling - charging his own campaign for supplies through shell companies his kids run - marking-up the costs 100% while doing nothing but preparing invoices.  The problem is, it is hard to explain even these simple cons to people.   You would think the folks who sent $25 or $50 to the Trump campaign would be pissed-off to know that some of that cash went into Eric's pocket.   But then again, if you tried to explain this to them, their eyes would glaze over and they would chant, "Fake News!" in your face.

Speaking of books, writing a book is another way to legally be bribed. Write some boring political tome and a political action committee can buy 50,000 copies of it to hand out as gifts and indirectly line your pockets.  Legal, too!

Of course, all hope is not lost.  It may seem like the world is an evil and vile place.  But even with all these forms of corruption and malfeasance, the earth continues to rotate on its axis.  Politicians stay in office by getting things done, and they know if they loot the treasury too badly, they will get tossed out, eventually.  Even "honest" politicians like Harry Truman end up associated with a political "machine" at one time or another, as he was in Kansas City.  But from Truman's perspective, so long as he wasn't the one taking the bribes, what was wrong with rewarding supporters with political jobs or government contracts?  You want to give them to your political enemies?  And if the roads are getting paved and work is getting done, does it matter that the "boss" got a bit of a taste of the action?

Maybe that sounds scandalous, but this Spring, they will publish the "Plum Book" which is plum-colored and lists all the political "plums" there for the asking. It's a freaking government publication!  You want to be Commission of Patents?  Just a suggestion, but it would be helpful if you donated a lot of dough to the Biden campaign as well as a number of Democratic PACs.  You want to be an ambassador?  You'd better be connected - and it would be helpful (but not strictly necessary) to be qualified, too.

So you see, "corruption" is a relative term, and it is, in part, codified into the law.   The President can appoint his friends and supporters to various government positions, and that is his right under the law.  If there is a bit of a quid pro quo going on, so be it.  It becomes more glaringly obvious, for example, during the Trump administration, when the people being appointed to these positions are utterly lacking in any qualification other than blind obedience and cash contributions.   Better Presidents at least try to nominate qualified friends.

"People get the government they deserve" - a quote attributed to Will Rodgers among others.  Simply stated, folks who don't pay attention to what is really going on, end up getting ripped-off.  It is true in your personal life as well as your political life.

"You can fool some of the people all of the time, and all of the people some of the time" is another quote, attributed to Abraham Lincoln.  Again, simply stated, we all are going to be snookered at least some of the time in our lives, and some folks will be continually snookered.  Low-level corruption may be frustrating, but expecting 100% efficiency from any human endeavor is irrational.  On the other hand, the smart con-man or politician (am I being redundant?) knows when to pull back and knows when a grab is too bold.  You want to leave town before you are run out of town on a rail.

Trump wasn't very smart, it seems.