Tag Archives: corruption

Can Congress Change Its Culture?

Cultural change is the recent theme here at Thoughtbasket; I discussed how a company might change its culture, and then how America might change some aspects of its culture. Today I want to look at a particular part of America: Congress. The U.S. Congress seems unable to solve any of the problems facing our country, and consequently has an approval rating of only 11 percent, which is the lowest ever. If a group is unable to complete the sole task it is given (governing, in this case) and thus is held in contempt by its bosses (voters, in this case), then that group probably has a culture problem.

The congressional cultural problem is that the entire institution values reelection instead of service (which is why incumbents are reelected more than 80% of the time). Power is more important than policy. Much like the corporation in my first post on this topic had a culture where everyone thought it was OK to be late for meetings, congress has a culture where everyone thinks that it’s OK to prioritize staying in office over doing the job you were elected to do, which is govern.

We can blame each individual congressman – and believe me, I do – but really, it is the institution and its culture that is truly to blame. Expecting some moronic ex-exterminator who only gets a two-year term to swim against a cultural tide of reelection is probably naïve. So, much like in my efforts to change cultural components in the US as a whole, we need a team approach. John Boehner + Nancy Pelosi = change?

I wrote last year about how John Boehner could be a hero by teaming up with democrats to pass substantive policy that would address the nation’s fiscal problems. Here is another opportunity for heroic action: he could rally all of congress, teaming with his arch enemies, to promote a culture of service instead selfishness.

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Are Businessmen Evil?

Jane Mayer’s article in the New Yorker about David Koch and his brother Charles and their massive funding of right wing political causes is an absolute must read. Regardless of political leaning, I think everyone should be disturbed by the ability of two incredibly wealthy men to so powerfully affect the political discourse in our society, and to do so anonymously.

But the article also made me think about how the Kochs and other businessmen are so determined to lobby government to support “free enterprise,” or at least to quash regulations that might hurt their business. The article discusses how the Kochs are using the same strategy on global warming – fund enough junk science to convince people that there is no scientific consensus – which the tobacco companies used so effectively to stall regulation of nicotine.

The issue I’m contemplating is not one of maximizing profits, but a broader moral issue. What makes a CEO who knows his product is harmful fight so hard against regulation? Does he take his fiduciary duty to maximize shareholder profits that seriously? Is he so focused on his own compensation that he doesn’t care what health problems he causes? The Kochs are nutjob John Birchers, so I expect them to screw over the world, but what about all the other CEOs? What about those who are fighting against environmental regulations even though they know that the global warming science is solid? Or Wall Street CEOs fighting against regulations when they know that their companies caused the financial meltdown? Or coal mining CEOs fighting safety regulation after an explosion in their mine killed 29 workers?

Look, I’m not anti-business. To the contrary, I am solidly pro-business. I’ve worked at companies, I’ve started companies, I consult to companies. My whole life is built on business. I understand the profit motive. What I don’t understand is the willingness to screw over the public in order to make more money. These CEOs would never in a million years think it was OK to stab a man and steal his wallet, but they have no problem poisoning him with industrial waste in order to save money. When do these people have enough? Where is their sense of human decency?

Northern Budgets vs. Southern Corruption

Slate recently ran an article by Anne Applebaum claiming that the division that now matters in Europe is no longer east vs. west, but instead north vs. south. According to Applebaum, communist east vs. capitalist west no longer matters. The important division is austere northern countries that manage their budgets and affairs vs. profligate southern countries that spend like drunken sailors, hoping others will pick up the tab.

As Applebaum puts it:

“The South contains all those countries whose political classes have not been able to balance their national budgets, whose bureaucrats have not been able to reduce their numbers, whose voters have not learned to approve of austerity….The North contains the budget hawks”

After reading the Slate article, I read Michael Lewis’ article in Vanity Fair about the Greek financial crisis. Lewis describes Greece as less of a country than a national pool of corruption in which the entire populace knowingly plunders the government treasury.

Pairing these two articles really made me think about this dichotomy between governance and chaos, between bureaucrats who do their jobs and those whose job is merely a path to a bribe. And it’s really just a small leap from governance vs. corruption to civic good vs. selfishness and then to democracy vs. despotism. But once I started expanding Applebaum’s dichotomy into a broader range of behaviors, I started to wonder whether her north vs. south division could be expanded beyond Europe. I think it can be.

After all, the northern hemisphere is generally a lot better managed than the southern: Canada vs. Venezuela, Estonia vs. Syria. Of course, Russia is really far north, but it acts south. And North Korea vs. South Korea reverses the pattern. But I think if you were to average across the hemispheres, Applebaum’s north vs. south dichotomy holds. Germany is to Greece as Greece is to Zimbabwe? Even within the US, the southern states tend to be far more profligate than the northern, as in this awesome blog entry, or this table showing which states spend more federal dollars than they pay in taxes.

Vote The Bums Out

The NY Times published an article yesterday about how congressmen are still taking fancy trips paid for by corporations, despite ethics rules passed in 2007 to prevent such trips. These congressmen aren’t breaking the rules, but rather exploiting loopholes to get around the rules. James Sensenbrenner, for example, the jowly representative from Wisconsin’s 5th District, took a $15,000 trip to the Alps this year, with his wife, paid for by a “non-profit” funded by Deutsche Bank, Lufthansa and other European corporations.

I would like to think that Congress might tighten up the rules to close the loopholes, but expecting Congress to police itself is like expecting Thierry Henry to report his own soccer violations. So we, the voters, have to do the police work. Regular readers of Thoughtbasket know that I regularly exhort citizens to stay informed and vote accordingly. So members of Wisconsin’s 5th District, living in the lovely Northwestern suburbs of Milwaukee, likely Brewers fans and bratwurst lovers, if you would prefer your congressman to pay attention to your needs, instead of to the needs of large German companies, then vote out James Sensenbrenner. Find a Republican who cares more about grain elevators than about Teutonic castles, who would rather tour a dairy farm than a prince’s castle.  If your congressman does not truly represent you, find one who will.

Rolling Stone Hates Goldman Sachs

If you have the time, I recommend reading this Rolling Stone article. It places Goldman Sachs at the center of every financial bubble since the Great Depression, and details how the firm has profited greatly from the travails of the average investor. I don’t necessarily agree with the author’s focus on Goldman. I think all the big investment banks have been doing this; Goldman just does it biggest and best. But I do think that the banks have been  manipulating prices and selling securities that they knew were crap. And, as mentioned by John Talbott and Simon Johnson in my new favorite article, if there were just one criminal investigation that started to subpoena internal emails, we would see all kinds of nefarious behavior exposed. In fact, just yesterday the Commodity Futures Trading Commission came out with a study that blamed last year’s crazy oil prices on financial speculators, rather than on operating supply and demand.

How Are Bribes Different Than Lobbying?

Reading stories about this year’s massive New Jersey corruption scandal, I almost have to laugh at the ridiculousness of it. The perp walk into the rented bus, the mayor only three weeks into his term, the cereal box (Apple Jacks!) stuffed with cash – the images are straight out of TV. But it brings up an important question: how do we draw the line between bribes and lobbying? When you hand a mayor $5,000 in cash in hopes of getting a building permit approved, you both go to jail. But when Goldman Sachs hands $3M in campaign contributions to congressmen in hopes of getting regulations eased, it’s totally legal. Does that seem right?

Simon Johnson and John Talbott recently published three articles (which I cannot recommend highly enough) in Salon describing the role of corporate lobbying and deregulation in the financial crisis. In their view, this sort of lobbying IS criminal. And when you look at the facts, it’s hard to disagree with them.

Here are some of those facts. In August 2008, as the financial crisis heated up, Goldman hired a famous lobbyist to come in house and focus on regulation. In January 2009, Goldman was one of several firms receiving bailout money that continued to lobby in Washington DC. And how much did they lobby? The chart below (from opensecrets.org) details their official lobbying over the last decade. ABC News reported that since 1989 Goldman and its executives have given $43 million in campaign contributions.

Goldman Sachs annual lobbying expenditures

Goldman Sachs annual lobbying expenditures

Or let’s look at earmarks. A defense spending bill that passed in the House this week contained more than 1,100 earmarks totaling $2.7 billion in spending. The 18 members of the subcommittee that wrote the bill included 148 earmarks totaling $461 million for entities whose employees have given $822,765 in campaign contributions to those congressmen since 2007. John Murtha, the notoriously corrupt earmark slut from Pennsylvania, chaired the subcommittee and wrote $77 million in earmarks. Defense contractor Argon ST and its employees donated $46,600 to Murtha since 2007, and it got an earmark providing $8 million to improve its torpedo-decoy technology. Special thanks to the Wall Street Journal for all of the info above.

So again, let’s make the comparison: a building inspector in New Jersey takes $30,000 to make sure a real estate developer’s projects move forward, and he goes to jail. A congressman takes $46,000 make sure a company gets an $8 million contract and it’s perfectly legal. And we wonder why the federal government is so screwed up.

Modern Corruption: Deny Until the Cell Door Closes

Kwame Kilpatrick, the mayor of Detroit, is caught up in a maelstrom of legal troubles. Accused of firing several police officers because they wouldn’t help cover up his affair with a one of his employees, he denied the affair until text messages revealed his deceit. He has been charged by the Wayne County prosecutor with several felonies, but he refuses to step down. He was just jailed for violating the terms of his bond, and today is being charged with two felony counts of assaulting a police officer. Still he denies all wrongdoing and refuses to resign. It’s hard to imagine that the city is being well run while its mayor is in and out of jail, but Kilpatrick is clearly more interested in his name than in the city he was elected to lead. Does Mayor Kilpatrick have no sense of decency?

But really, Kilpatrick is just an example of a growing trend among corrupt politicians: pretend it isn’t happening, totally reject all claims, and continue your denials until the day you’re in prison.

Senator Larry Craig, so amusingly charged with soliciting gay sex in an airport bathroom, has categorically denied that was his intent, and his famous “wide stance” excuse became the butt (I couldn’t resist) of much humor on the late night shows.

The FBI found $90,000 in marked bills in the refrigerator of Congressman William Jefferson, but he denies all wrongdoing and refuses to resign. Senator Ted Stevens was just indicted for failing to disclose oil company gifts. He claims complete innocence and is planning his reelection campaign. Congressman John Doolittle (what a great name for a modern congressman) was implicated in the Jack Abramoff scandal and admits paying his wife a 15% commission on all campaign contributions, but he denies any mendacity and refused to resign, choosing instead to retire at the end of his term.

Gavin Newsom, the mayor here in San Francisco, had an affair with his best friend’s wife, at a time when both the friend and the wife were on Gavin’s payroll. Mayor Newsom at least admitted the affair, but did so using the popular new excuse of addiction, and immediately went into treatment. There was no talk of him resigning, and in fact Mayor Newsom is gearing up a run for Governor.

The common theme in all these examples is the refusal to resign for the good of the office and its constituency. These politicians declined to admit or take responsibility for their actions and the impact those actions could have. They were all elected to serve, but ultimately they put their own need (to claim innocence) above the need (for effective representation) of the people who elected them. Whatever happened to admitting wrongdoing? It’s not like these guys are going to get away with it; if the accusations are true, they will be convicted and go to jail. But honestly, I don’t care if they keep denying – just get out of office so that somebody effective can come in and serve the public.

Implications? These politicians are really part of a broader evasion of responsibility, which I will have to write about later. But for now, the main beneficiaries of this trend are media companies. If Mayor Kilpatrick and Senator Craig would do the right thing and resign, then media companies (and blogs!) wouldn’t be able to milk the stories for weeks on end.