Political Extortion Racket

A little while ago we discussed 'crony capitalism' (as one of our readers helpfully pointed out, it would probably be better to call it crony socialism, so as to avoid sullying the term capitalism), contrasting the system in which we actually live with free market capitalism. It is highly unfortunate that the press continually gets away with characterizing the current system as a version of 'laissez faire' and blaming events like the 2008 crash on the (non-existent) free market.

We noted at the time that it is actually quite difficult to draw the line between lobbying that is aimed at obtaining privileges from the State or pushing it toward enacting regulations designed to keep competition at bay, and lobbying the aimed at averting legislation or regulations that could harm the business concerned – so to speak a legitimate form of self-defense. We wrote:


“It is of course well known that large corporations lobby to obtain privileges from the State; however, in a way many also have little choice in the matter, since they may otherwise become the victims of regulations that could severely hamper their business. It is often difficult to tell where a legitimate attempt to ward off statist intrusion ends and crony capitalism begins. It is certainly a fuzzy line that is separating the two.”


It is clear though that whether lobbying serves to obtain privileges or to ward off harm, it is a result of the existence of the territorial force monopolist known as the State and intersects with the interests of those managing it. The parasitic class that is devoted to the 'organization of the political means for obtaining wealth' as Franz Oppenheimer characterized the State, isn't doing it just for fun.

It very rarely happens that the true nature of this parasitic class is openly discussed in the mainstream press, so we were quite surprised when we came across an op-ed by Peter Schweizer in the NYT entitled “Politicians' Extortion Racket”. Mr. Schweizer has decided to take a closer look at the other side of lobbying – i.e., not those paying the bribes (who are normally the main target of criticism) but those receiving them. Mr Schweizer writes:


“We have long assumed that the infestation of special interest money in Washington is at the root of so much that ails our politics. But what if we’ve had it wrong? What if instead of being bribed by wealthy interests, politicians are engaged in a form of legal extortion designed to extract campaign contributions?

Consider this: of the thousands of bills introduced in Congress each year, only roughly 5 percent become law. Why do legislators bother proposing so many bills? What if many of those bills are written not to be passed but to pressure people into forking over cash? This is exactly what is happening. Politicians have developed a dizzying array of legislative tactics to bring in money.


(emphasis added)

It sure sounds to us like he is on to something. The main question that immediately arises is 'how did he manage to smuggle this past the self-censorship of a leftist mainstream newspaper'? At first we thought that perhaps it was that by citing the example of current house speaker Boehner's apparently highly successful 'tollbooth' maneuvers (designed to extract political contributions by delaying voting on bills important to specific industries), he attacked one the NYT's bête noirs. However, Mr. Schweizer's scorn is not exclusively aimed at prominent conservatives. The president and vice president are named in the same op-ed for introducing what Schweizer colorfully describes as 'milker bills'. In fact, those two seem to be past masters of the 'double milker bill', which are pitting the opposing interests of different industries against each other in order to extract donations from all of them.

So it seems most likely that the publication of this op-ed it is a symptom of a souring social mood. Politicians have rarely been more reviled than today, with  Congress receiving less favorable ratings by the public than cockroaches, lice, toenail fungus, root canals, colonoscopies and Ghengis Khan. Among the few  things Congress managed to still beat quite handily in the popularity sweepstakes were North Korea, Ebola, communism, meth labs and gonorrhea – and even in those instances the margins aren't really as big as one might expect. So the public doesn't really need to be convinced that most politicians are scoundrels, Schweizer merely confirms what people already know. However, he still performs a valuable service by backing his claims with what appears to be quite solid research. Schweizer concludes his op-ed:


To be sure, not all legislative maneuvers are extortive; sincere and conscientious political deeds occur. Still, the idea that Washington gridlock is an outgrowth of rank partisanship and ideological entrenchment misses a more compelling explanation of our political stasis: gridlock, legislative threats and fear help prime the donation pump. The reason these fund-raising extortion tactics succeed is that politicians deploy them while bills are making their way through Congress, when lawmakers possess maximum leverage. That’s why at least 27 state legislatures have put restrictions on allowing state politicians to receive contributions while their legislatures are in session.

Why not do the same in Washington? It would reduce politicians’ penchant for cashing in on manufactured crises. Perhaps it would even compel Congress to be more efficient while in session. We have focused for too long on protecting politicians from special interests. It’s time we stop pitying the poor politicians and start being wary of them — for they play the shakedown game as well as anyone.”


(emphasis added)

It seems not likely that a great many people are 'pitying the poor politicians', but it is true that the focus is usually on lobbyists rather than those they lobby.  The question why there even is someone who can be lobbied definitely deserves more attention than it usually gets. As an aside, Mr. Boehner was apparently not very happy to find himself among those explicitly named as taking part in the rackets described by Mr. Schweizer and his office accused Schweizer of 'sloppy research'. Right, it's a complete coincidence that the flow of donations seems to be timed to coincide perfectly with the enactment of legislation concerning the donors. They are simply all suddenly gripped by donation fever at the most conspicuous moments.


Similar to the Mob

In an interview at the Daily Ticker, Schweizer compares these rackets to the protection money racket of the mob, and provides a few hints how people can track these maneuvers. One could well say that he identifies the State as just another criminal organization, even if he doesn't say that outright. His biggest error is that he seems to believe that the system can be 'reformed'.

The historical record on this is clear. One of the most laudable and well thought out attempts to install limited government was in fact the institution of the independent US government by the founders. They would probably never have imagined that it would one day turn into the socialist leviathan it is today – and yet, here we are.

In this context, we have recently come across an interesting quote by the late Reverend Edmund A. Opitz:


“No one can read our Constitution without concluding that the people who wrote it wanted their government severely limited; the words 'no' and 'not' employed in restraint of government occur 24 times in the first seven articles of the Constitution and 22 more times in the Bill of Rights."


Even if 'no' and 'not' had appeared 48 times or 100 times, we think it would still not have made a difference to the ultimate outcome. Opitz was a lifelong defender of liberty, but he was not an anarchist – he believed that government simply needed to be brought back on the straight and narrow path defined by the constitution. Opitz felt that human nature being what it is, limited government was necessary to ensure that there was law and that it was enforced.

However, one obvious flaw in this argument is that government officials are not magically immune against the failings of human nature. Quite on the contrary, people who find the notion of becoming members of the parasitic class attractive are highly likely to be of dubious character. It seems in fact, that politics is a profession that attracts a large number of psychopaths. Those who would rather serve their fellow men by being productive and engaging in voluntary exchange as a rule find the idea of joining the political class distasteful.

Another flaw in this argument is that it is very much open to question whether a territorial force monopolist is required to provide law and order (as well as defense, the other service often named as one that can only be provided by government). Many libertarian thinkers have concluded that this is not true – in fact, economic theory already tells us that it cannot be true, as the market is always more effective in providing services. Why should the courts, the police or the defense forces be excepted from this rule? Note here that crime has not been eliminated and never will be; the fact that the State enforces law and order has not altered this fact. 

The probability that limited government as envisaged by the constitution will be restored is of course practically zero. It is no more likely than the complete abolition of government and nation states and their replacement with a truly free society.

That should however not keep us from questioning the morality of existing arrangements and thinking about possible alternatives. What seems impossible today may not remain impossible forever.





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3 Responses to “A Fresh Look at the Parasitic Class”

  • Mark Humphrey:

    There is an unproven premise that always gets smuggled into the arguments made in behalf of Rothbardian “anarchy”. The premise is that the elimination of institutionalized aggression and coercion is necessarily society without government.

    But eliminating the aggressive state and thereby allowing the evolution of competition among “defense agencies” would probably create a universal market standard of justice. Such a voluntary standard would encompass not only issues of proper procedure, but also fundamental principles of encompasses both fundamental ethical/political principles and enforcement. Since warring is expensive, and since what people want most urgently is to protect their property and to uphold their contractual rights, it makes sense that competing agencies might coalesce into a federation formed around proper principles of justice and legal procedure.

    In short, getting rid of the aggresive state might well lead to limited and voluntary government–a form of natural monopoly as opposed to the atomized and fragmented competition envisioned by Rothbard.

    Money emerges in the market as a natural monopoly, because a commodity that is universally used and recognized in indirect exchange confers greater benefit to its owners than do numerous competing commodities. The same advantages could atach to natural monopoly in the provision of justice and defense services. So my point is that Rothbard’s followers never seem to address this important issue raised by Nozick and other thinkers.

    • jimmyjames:

      The premise is that the elimination of institutionalized aggression and coercion is necessarily society without government.


      “Advocates of a limited government often hold up the ideal of a government above the fray, refraining from taking sides or throwing its weight around, an “umpire” arbitrating impartially between contending factions in society. Yet why should the government do so? Given the unchecked power of the State, the State and its rulers will act to maximize their power and wealth, and hence inexorably expand beyond the supposed “limits.” The crucial point is that in the Utopia of limited government and laissez faire, there are no institutional mechanisms to keep the State limited. Surely the bloody record of States throughout history should have demonstrated that any power, once granted or acquired, will be used and therefore abused. Power corrupts, as the libertarian Lord Acton so wisely noted.”



      Unless I’ve read Rothbard wrong- his premise is and always has been.. only under a gold standard are his assertions/theory’s possible-

      Gold governs governments- power is not granted and coercion/corruption by government is always eventually unmasked- ie: the “unchecked power of the State” that exists today via government fiat-

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