corruption - American style

Corruption comes in many disguises and there are economic and political effects. There are right wing and left-wing types of corruption as well as garden variety greed-fueled corruption.

Right-wing corruption. The main one is who-you-know and not what-you-know kind of dealings. It occurs when politicians lose their seats or government personnel retire. Former senators or governors may visit their protégés in government positions as lobbyists and retired generals could lock up contracts for their defense firms on military contracts. Political lobbyists could influence legislation against their firms whether in regulation or handouts. The defense department policy of allowing a generous pension after twenty years of military service enables a late thirty-something to early fifty-something military person to have a second career usually in a wealthy defense contractor. The higher the rank he or she achieved the better chances of the person being hired. Is it no wonder that military personnel usually vote Republican? They know which side of the bread is buttered. Since there are only two political parties it is easy and cheap for companies to buy off both parties. If there were three or more parties it would be more difficult to lobby Congress. Programs that benefit the nation are blocked by strategic moves by lobbyists, as they were once politicians. The way would be to ban former politicians and government personnel to approach the government for the first five years of their retirement or loss of their government positions. In five years' time, the protégés would have moved on so the ties are not so strong nor sense of obligation to their former bosses. Economic effects are great. Blocked universal healthcare programs increase the costs for companies to provide extra coverage to their unions and thus put them at a disadvantaged against foreign companies whose countries provide a universal national healthcare system. Legislations were enacted to give corporation more powers and latitude such as rights to hold patents and copyright and at the same time flout safety, health and environmental regulations. Business mergers are allowed thus creating an oligarchy as anti-trust laws are ignored or downplayed. One can see the middle class is under siege and more dollar-stores appearing in the market. Woolworth was the Depression era dollar store. Economic signs show a declining economy or a class society of the super rich and wealthy enclave and a general, powerless, population eking out a living reminiscent of the middle ages.

Left-wing corruption. Unions were formed by violence as a result of company management to break unions to go on paying low wages and have poor working conditions. Unions fought for workers' rights and better working conditions. A further step in creating an industry-wide union was a political move as it gained financial resources and power that no company however big could alone match. The union leadership modus operandi was to obtain yearly raises regardless of a company's performance. Many smaller went bankrupt as a result. The remaining companies grew as their market share increased. Oligarchies are formed in each industry - big business and big labor. To corner the labor market, unions politically favored welfare so the less diligent workers could go on the dole. The effect on the economy was inflation and high cost. Taxes had to be raised to pay for the welfare and neglect of the infrastructure. Shareholders do have gripe in that they are taxed twice in the corporate level in the form of corporate tax and then on the individual level with personal income tax. Politically it was the winner for parties that favored labor as it got the votes of those on welfare as well as union members. The result was stagflation. To counter labor's power, conglomerates were formed by businessmen to have a lot of smaller companies were cobbled together under a holding company. Conglomerates had an advantage over large companies as they had small plants and their many businesses kept their original names so unions could not form. Next, large companies started overseas or across the border branches to escape unions. Free trade was conceived to help companies obtain cheaper labor in third-world countries. These developments definitely did not the ?'free market' economic model envisioned by economist Adam Smith. It is power politics and power economics. It probably led to the two-party system as labor funded the Democrats with money and manpower while businesses funded the Republicans. Businesses have formed industry-wide associations to counter industry-wide union to lobby for their causes. One way out of this power economics is to mandate one union to one company. Ban conglomerates and or force conglomerates to use one name for all its businesses. This could create a closer approximation of a free market model.

Corruption from pure greed. Chief executives from other businesses are hired to become board members. This creating a class of people who give each other higher income even when the business is declining in the form of stock options, golden parachutes. Many chief executives have manipulated stock prices and cashed in their stock options when they quit just before the stock prices begin to fall as the bad news a were delayed or hidden till they left. This abuse can be stopped by banning executives from cashing in their stocks upon their departure. Some have opened branches in tax-sheltered countries and got themselves paid from those branches thus escaping paying taxes.