This afternoon I attended a luncheon hosted by the Heartland Institute, a long-running, Chicago-based libertarian think tank based downtown. They presented Peter Schweizer to discuss his new book 'Throw Them All Out.'
Schweizer's book–which I haven't yet read–discusses the ways federal legislators members of the executive branch profit from public service legally.
Today he spoke of the true evil with earmarks (they allow legislators to support road and transit projects that enhance the value of land they own), special IPO deals members of Congress are offered, huge taxpayer-funded loans and grants to private companies, and insider trading practices among members of Congress.
Here are two examples that hit close to home for Chicagoans.
Schweizer highlighted a few examples of government officials and well-connected fundraisers becoming extremely wealthy through their public service. One example was Obama fundraiser Sanjay Wagle, who served both as co-chairman of Cleantech & Green Business Leaders for Obama and as a principal at VantagePoint Venture Partners. After Obama won the presidency, Wagle joined the administration as an advisor at the Department of Energy, steering grants toward renewable energy firms owned in part by VantagePoint.
Another example was former House Speaker Dennis Hastert who inserted an earmark into a highway bill that funded the Prairie Parkway, which ended running parallel to land Hastert owned with others. This increased the value of that land substantially. Fancy that.
Public officials and those close to them using your money and mine to enrich themselves. This is not free market capitalism. This is crony capitalism.
I mentioned Schweizer spoke on the topic of insider trading. He mentioned a bill that got some attention in last week's State of the Union address that would prohibit members of Congress from engaging in stock trades based on privileged information. I happen to believe any effort to prohibit members of Congress from making money based on regulatory decisions they alone can make is folly and will be as unsuccessful as the McCain-Feingold campaign finance reform bill that was intended to curb the influence of money in politics (and has been entirely ineffective while reducing normal folks' ability to participate in the political process).
Making members of Congress disclose their stock trades immediately would both highlight any improprieties and better inform the normal people trading in the market. If I see Senator So-and-So selling Apple, I might wonder what new legislation is going to be introduced that might harm Apple's business and thus depress its stock price.
The big idea from all of this is, again, the more power the government has to dole out favors and interfere in the economic decisions of people, the more opportunities people in government have to abuse their power.
Contrary to the title of the book, the solution is not throwing every officeholder from office. It's a matter of giving them fewer opportunities to benefit their families and friends at everyone else's expense.
Filed under: Crony capitalism