Tag Archives: corruption

Political Corruption, the Bush-Pelosi Bailout, and the Soros Plan

The big-government ‘regulation’ of the mortgage market is a major cause of our current financial crisis. Problems which were known about nearly two-hundred years ago came back again. Bought-off Senators, such as Chris Dodd and Barack Obama, took the ideological easy route of pushing loans on people who could not pay them off, at the risk of a financial crisis such as we are now having.

The first President of the modern Democratic Party, Andrew Jackson, summarized the corrupt Bank of the United States as follows:

By the early 1830s, President Andrew Jackson had come to thoroughly dislike the Second Bank of the United States because of its fraud and corruption. Jackson then had an investigation done on the Bank which he said established “beyond question that this great and powerful institution had been actively engaged in attempting to influence the elections of the public officers by means of its money.” Although its charter was bound to run out in 1836, Jackson wanted to “kill” the Second Bank of the United States even earlier. Jackson is considered primarily responsible for its demise, seeing it as an instrument of political corruption and a threat to American liberties.[5] The head of the Second Bank during Jackson’s presidency was Nicholas Biddle who decided to seek an extension of the bank’s charter four years early, in 1832. Henry Clay helped to steer the bill through Congress. But Jackson vetoed the bill in July.

Now, because in part of Obama’s and Dodd’s actions, we are in the worst financial crisis since the Great Depression.

There are two major approaches being discussed: first, give even more wealth and influence those incompetent investment banks which helped create this mess, or partially nationalize the banks.

Both approaches are ugly, but given the choice between rewarding the stockholders who helped create this mess, or punish them, I say punish.

I’ll take the Soros Plan over the Bush-Pelosi Bailout.

Why we shouldn’t fear the (Muslim) fanatic (in the Muslim world)

Harris, L. 2007. Why we fear ‘fanatic’: The lesson of the red mosque. TCS Daily. July 12, 2007. Available online: http://www.tcsdaily.com/article.aspx?id=071207A (emailed in my Michael DeWitt of Spooky Action).

Joseph Goebbels was proud of being a fanatic. To him, fanaticism was a term of praise, and not abuse. The Hebrew Zealots looked with contempt on those who were unwilling either to die or to slaughter their own families. In the culture of the modern West, however, to call someone a fanatic is to insult, and not commend, him. Yet, as the incident at the Red Mosque makes clear, our own attitude toward fanaticism is simply an example of ethnocentricism. By refusing to use the word fanatic to describe Ghazi and his followers, we are approaching them through the standards and practices that are observed in our culture, but not in theirs.

Indeed. “Extremism in defense of liberty….

At the Boyd Conference, William Lind made the good point that the Arab world has been in a cycle of corruption-internal reform movement-revolutionary-corruption. By supporting corrupt states such as Egypt and Saudi Arabia, we interrupted this cycle, between the generation of the internal reform movement (primarily the Muslim Brothers) and the revolution which would bring on either their corruption… or possibly a way out of the cycle. Assuming the old governments of the Middle East have our, or their own people’s, best interest at heart is foolish.

As I’ve said before, Islam is the answer. The governments of the Muslim world are the problem.

Of course, not all of Lind’s points were so flattering or helpful

The Libby Clemency: Men of Law, Men of Principle, Men of Cash

No comment on the Libby Clemency/potential-pardon other than this: Corrupt Republicans tend to be corrupt out of principle. Corrupt Democrats tend to be corrupt out of greed.

(Which is more dangerous for our Republic?)

Most Republicans who get into trouble did their deeds, like Libby, out of dedication to the Party, the Administration, or some other higher ideal. Most Democrats who get into trouble, like Representative William Jefferson, are looking to cash in.

If Republican officials tend to be men of principles, and Democratic office-holders are men of cash, then who are the men of law?

Corruption versus Zarqawi

Concerning Cruelty And Mercy, And Whether It Is Better To Be Loved Than Feared,” by Nicolo Machiavelli, The Prince, 1513, http://www.drizzle.com/~jcouture/1_world/zzz_the_prince/0405a%20Prince%2016%20to%2018.htm.

Sunnis Working on Iraq Constitution Slain,” by Sameer Yacoub, Associated Press, 19 July 2005, http://news.yahoo.com/news?tmpl=story&u=/ap/20050719/ap_on_re_mi_ea/iraq (from Captain’s Quarters).

Iraq is corrupt. This helps us.

Deaths are tragedies. Murders are monstrosities. But in our souls, we ultimately accept these things as part of the world. God calls people, and they come home.

But money, that’s a different matter. Murders are forgiven. Thefts aren’t.

As Machiavelli wrote centuries ago:


Men more quickly forget the death of their father than the loss of their inheritance


It is this force that is hurting Zarqawi in Iraq.

Take the recent news that two Sunni Arab lawmakers were recently assassinated


Gunmen assassinated two Sunni Arabs involved in the drafting of Iraq’s constitution Tuesday, another blow to U.S. and Iraqi efforts to draw members of the disaffected community away from the insurgency and into the political process.

Mijbil Issa, a committee member, Dhamin Hussein al-Obeidi, an adviser to the group, and their bodyguard died in a hail of gunfire from two vehicles as they left a restaurant in Baghdad’s Karradah district, police said.

Issa, a prominent lawyer, was among 15 Sunni Arabs appointed last month to the 55-member constitutional committee — made up mostly of Shiites and Kurds — to give the Sunni minority a greater voice in building a new Iraq. Ten other Sunnis, including al-Obeidi, were named as advisers to the committee.


In Iraq, a high-ranking government job does not just mean that you are on the people’s payroll. It means work for your brothers and cousins as advisers and senior secretaries, it means work for your smarter nephews as junior secretaries, It means work as bodyguards for your “regular guy” nephews. It means money for their wives and things for their children.

In a non-corrupt Iraq, these murders would be seen merely as murders. Merely a premature departure from the mortal plane by elder statements. But in a corrupt Iraq, murder of government officials means theft from dozens, if not hundreds, of family members.

Zarqawi’s attempt to eliminate Sunni participation in the drawing of the Iraqi Constitution means theft from hundreds, if not thousands, of Iraqis.

Corruption will hurt Zarqawi, and there’s no easier way to “hearts and minds” than that.

Bribery as a Form of Horizontal Control

Side Payments in Marketing,” by John R. Hauser, Duncan I. Simester, and Birger Wernerfelt, Marketing Science Journal, Vol. 16, No. 3, 1997, http://bear.cba.ufl.edu/centers/MKS/abstracts/hausersimesterwernerfelt.html.

In Random Regional Business – Reflexions,” by Collounsbury, Lounsbury on MENA, 19 April 2005.

Collounsbury continues to provide the best arguments in favor of bribery (at least in international markets) that I have heard. After discussing impacts of the Sarbanes-Oxley (anti-corruption) Bill, Col writes

One begins to wonder how publicly listed US firms will be able to compete in emerging markets where … ahem standard and legal practice departs from the increasingly absurdly prissy standards in the United States.

In particular, I draw attention to this observation:
“To those tempted to see this as American smugness, she points, in contrast, to sharply lower prosecution rates across much of Europe for similar international bribery cases. The problem is particularly acute in industries or regions of the world where a degree of modest generosity has always been seen as a polite way of building long-term relationships.”

Indeed, emerging US standards are absurd and cold in the context of where I am at

Bribery is interesting in the context of horizontal controls. It is clearly a form of strong (because money talks) explicit (because it is obvious) horizontal control. Becuase horizontal controls are preferable to vertical controls, it is questionable whether bribery should be a crime. Fortunately, a better solution than Sar-Ox may have been form: good horizontal management

Side payments, known politely as gainsharing and pejoratively as bribery, are prevalent in marketing. Indeed, many management schools have added ethics modules to their basic marketing courses to discuss these issues and there is much discussion of side payments in the literature (e.g., Adams 1995, Borrus 1995, Mauro 1997, Mohl 1996, Murphy 1995, Peterson 1996, and Rose-Ackerman 1996). We seek to provide insight with respect to one class of marketing side payments. We hope that our analyses clarify some of the issues and suggest how these side payments affect marketing activities.

We next show that the firm can anticipate these side payments and design a reward system to factor them out at no loss of profit. The intuition is straightforward. The firm first adjusts the marginal returns in the reward functions for sales support and for the salesforce such that they will each take the “optimal” actions even though they engage in side payments. Then the firm adjusts their fixed compensation so that the firm extracts its full profit. The proof is difficult because we must show that adjusted reward systems exist and we must show that they allow the full profit to be extracted.

Market-based solutions tend to be better than government solutions. Col is onto something.

Update: He comments further

Quickly from an internet cafe: I have no problem with sidepayments that are transparent and subject to disclosure. Obviously there has to be a line between criminal behaviour and greasing the wheels. People are people, and trying to run human interaction without a little grease only ends up criminalizing what should be open.

So long as there is disclosure, that should help keep keep distortion to a minimum, without overloading commerce with wrong headed regulation (and as you know, I am not against regulation per se, regulation is good when it is market making – which is more often than market purists admit, far less often than Big Gov people would have it either.)