Regular readers know I complain about the army of overpaid bureaucrats in Washington, but that’s just the tip of the iceberg.
The larger problem is that Washington also is filled with hundreds of thousands of other people who get rich thanks to big government. And these politicians, lobbyists, crony capitalists, interest groups, contractors, and influence peddlers almost surely are a bigger net drain on the economy’s productive sector.
When you combine the official bureaucracy with these other over-compensated beneficiaries of big government, it’s easy to understand why Washington, DC, is now the richest region of America, with 10 of the nation’s 15 richest counties.
Reuters did an expose last year on how Washington fat cats are living on Easy Street at our expense, and The Economist also has touched on the issue. But you know the problem has reached epidemic levels when even the local left-wing paper covers the story.
And that’s exactly what is happening. The Washington Post reports on how coerced access to other people’s money has meant boom times for the beltway elite. Here are some excerpts on how your money is creating unearned riches for DC insiders.
The avalanche of cash that made Washington rich in the last decade has transformed the culture of a once staid capital and created a new wave of well-heeled insiders. The winners in the new Washington are not just the former senators, party consiglieri and four-star generals who have always profited from their connections. Now they are also the former bureaucrats, accountants and staff officers for whom unimagined riches are suddenly possible. …They are the lawyers, lobbyists and executives who work for companies that barely had a presence in Washington before the boom.
Here are some depressing stats from the story.
During the past decade, the region added 21,000 households in the nation’s top 1 percent. No other metro area came close. …in 2010, companies based in Rep. James P. Moran’s congressional district in Northern Virginia reaped $43 billion in federal contracts — roughly as much as the state of Texas. At the same time, big companies realized that a few million spent shaping legislation could produce windfall profits. They nearly doubled the cash they poured into the capital. …Essentially, Washington has been the beneficiary of a decade-long, taxpayer-funded stimulus package.
Unfortunately, all this federal largesse is corrupting the business community, with many companies deciding that lobbying for tax dollars is more lucrative than competing for consumer dollars.
The federal government wasn’t the only one pouring buckets of new money into Washington in the 2000s. Big business did it, too. At a time when promising investments were hard to find, corporate America learned that lobbying was one of the most surefire ways of bolstering its bottom line. …Companies spent about $3.5 billion annually on lobbying at the end of the last decade, a nearly 90 percent increase from 1999 after adjusting for inflation… Legal services also boomed, fueled by the growing complexities of federal business regulations. The number of lawyers in the D.C. metro area increased by a third from 2000 to 2012, nearly twice as fast as the growth rate nationwide. And those lawyers have the highest mean salaries in the country, according to George Mason University’s Center for Regional Analysis.
Lobbying isn’t automatically a bad thing, by the way. Sometimes a company needs representation so that the political vultures in Washington don’t descend upon them.
“You know that if a company stopped lobbying, it would get creamed,” Drutman said. “That’s why companies don’t stop lobbying.”
The real moral of the story is that small government and genuinely free markets are the only effective ways to reduce sordid lobbying and political corruption.
The challenge, needless to say, is convincing the Washington establishment to adopt those policies. That’s not an easy task, particularly when it violates my First Theorem of Government.
P.S. Here’s a great video from Reason about Washington’s parasite economy.
P.P.S. Here’s an example of how Obamacare has lined the pockets of some DC insiders.
P.P.P.S. And here are some grating details about how the President is part of the problem.
P.P.P.P.S. You can enjoy some government corruption humor here, here, here, here, and (my personal creation) here.
[…] I feel like I need to take a shower after reading those results. Maybe I’m a political prude, but it galls me that politicians and interest groups have so much ability to fleece the rest of us. […]
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[…] I’m shocked to learn that big government is a racket that lines the pockets of Washington […]
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[…] P.P.S. Switching to a different topic, I’ve written (some would say ad nauseam) about disproportionately generous pay and benefits for government bureaucrats. Particularly for the gilded class in Washington. […]
[…] P.P.S. Switching to a different topic, I’ve written (some would say ad nauseam) about disproportionately generous pay and benefits for government bureaucrats. Particularly for the gilded class in Washington. […]
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When competitors begin to realize the game is rigged, they quit trying to play the game to the best of their ability and, instead, divert their efforts to re-rigging the game. Companies aren’t sending money to DC because they like the attorneys (R’s or D’s or lobbyists) they are sending it to; they send it because they are getting a good ROI. If we can just drop the “crony” from capitalism, it would have the effect of draining that swamp.
ALL THE MORE REASON TO START TO TRY TO FIND A WAY TO CHANGE WASHINGTON
ONE SUGGESTION IS TO IMPLEMENT A WAY TO CHANGE THE SENATE THE HOUSE AND THE PRESIDENT BY REQURING ALL SEATS IN THE SENATE AND HOUSE BE A ONE SX YEAR TERM WITH NO CHANCE OF SITTING THERE AGAIN
THAT WAY THERE IS A LESS LIKELY WAY FOR ALL THE CRONY ISM AND LOBBIST
ALSO……THERE WILL NOT BE ANY LIFETIME RETIREMENT
So, as the country’s growth trendline lags further and further behind average world growth – compounding a relentless trajectory to decline — the stalling prosperity is concentrating more and more on those with political, rather than productive skills, competences and enthusiasm. The voter lemmings are going to sleep in the bed they made when they aspired to ever more collective majoritarian control of ever more business activity and wealth across the USA.
This is because there is a more general “theorem of decline”, to which Mr. Mitchell’s Law of government is a lemma:
“The more bad choices voter-lemmings make away from free markets and multipronged progress, the more they will try to fix the consequences with coercive majoritarian control and dirigisme”.
In essence, once the vicious cycle starts, things unravel fast. Even faster in our ever accelerating twenty first century.
So, as those who become rich, increasingly do so through crony capitalism and political allocation of wealth, the more the electorate will hate the rich, and the more attracted to coercive socialism voter-lemmings will become. The vicious cycle closes, Americans start voting like the French and the Greeks.
All the money flowing to Washington will finance a new wave of propaganda towards more collective majoritarian control and dirigisme of everything. i.e. Prosperity though pitchfork democracy! Good luck.
Most of the companies I’ve worked for in the last few years have newly established Political Advocacy Groups in Washington. They all do it, they all hate it, but bamboozling public opinion with lofty and hypocritical notions of “corporate responsibility” has become standard fare for executive doublespeak, and even internal management meetings. Speaking against the notion has become taboo even in internal meetings, discussions and emails — lest you risk the discussion being brought as evidence in court in even unrelated lawsuits: “on Nov 21, 2013 employee #83772 at your company said: ’Bla, bla, coercive collectivism will sink us…bla bla’. Is this indicative of your company’s attitude towards the government and the pitchfork holding voter-lemmings it represents? I say crucify your corporation!”.
Or, fire one of the many underperforming employees that have settled in your safety and compliance department and then risk the serendipitous coincidence of having an accident involving your products shortly afterwards. The safety and regulatory compliance employees at your company, now become untouchable extensions of the government and the pitchfork holding voter-lemming majorities who implanted them into your business cycle in the first place. They also lobby internally for more and more regulation and control. The bad news? You happen to have international competitors – or soon will. In short, voter-lemmings of a once wealthy country are committing prosperity suicide.
“The people” got, and will continue to get with increasing intensity, the exact opposite of what they myopically sought, when they decided to subject ever larger portions of the economy to dirigistic majoritarian control. When the levers that control wealth allocation become centralized, everyone flocks to influence them, leaving truly productive endeavors behind.
So far, the American voter’s road to serfdom looks the same as the well-travelled road most of his sister western societies across the Atlantic have followed. Nothing exceptional that I notice.
The future looks bright…