Politics, et Cetera

A publication from The Political Forum, LLC

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Tuesday, March 1, 2016

They Said It:

Big Corruption is surely one of the great problems of modern democracies precisely because modern democracies raise the hopes of the people so far beyond anything that governments can possibly meet.  But Big C was not always a great problem for American democracy.  It is a quite recent problem, and that makes it all the more difficult for contemporary Americans to confront.

For over 150 years, into the 1930s, the United States was a small nation-state.  It was a small nation-state when Tocqueville came to look us over in the 1830s, and it was a small nation-state nearly a century later.

As a small nation-state, most of the corruption was petty corruption, Little C.  And there was a great deal of it. The national government was built on patronage and parties, parties and patronage.  A patronage state is built on petty corruption.

There are advantages to a patronage state, the most important of which is that it can avoid many of the great issues that have led so many countries to one revolution or coup d’etat after another. It can buy off the opposition, or as least delay the final conflict.

However, when the national government began to grow, it grew very fast. And it grew very large. And the nature of corruption changed.

Theodore Lowi, “The Intelligent Person’s Guide to Political Corruption,” 1981.



Longtime – and we mean really longtime – readers may recall that we spent the 1990s writing about a handful of very broad and important issues and trends, many of which are still important.  We wrote about the administrative state, about the clash of moral codes, about the new political paradigm, about the Millenarian nature of contemporary liberalism, and about the eventual collapse of the parties as they existed then.  We continue to write about each and every one of these today.

Back then, though, we wrote about two issues more than any others, two concerns that worried us more than the rest and which we thought would impact the markets, the country, and the world more than the others in the first part of the twenty-first century.

The first of these themes was terrorism, Islamic terrorism in particular.  In those days, Mark sat on the board of directors of a group called the Institute for the Study of Terrorism and Political Violence.  In that capacity, he was friends with and had access to the thoughts of real, bona fide experts in what was then a largely speculative field.  There had been some terrorism here and there during the 1990s.  Sunni radicals had tried to blow up the World Trade Center, but were magnificently inept.  Shiite terrorists murdered a handful of American service men at the Khobar Towers in Saudi Arabia.  And Al Qaeda attacked a couple of U.S. embassies in Africa and the USS Cole off the port of Aden in Yemen.  In general, though, most people – including the then-President of the United States, Bill Clinton – thought of Islamic terrorism as a nuisance more than anything.  We didn’t.  We thought it was a potentially world-changing political concern.  And we thought this in large part because of the brilliant people we knew, met, and were exposed to at the ISTPV.

Our other theme was corruption, an issue we had spent most of the previous decade writing about and which we detailed in our introductory piece at Lehman Brothers, published almost fifteen years ago exactly.  To wit:

Our first theme is global corruption.  For several years now we have been emphasizing that this is the biggest threat today to liberal democracy, to capitalism, and thus, to the investment business.  Throughout most of our lives, communism was the threat.  “History is on our side.  We will bury you,” Khrushchev said in 1956.  And the threat was real.  Indeed, at its height, the evil called communism engulfed, or directly threatened, half the globe.

In many ways, however, communism was less a threat to freedom and free enterprise than corruption is today, primarily because it was a flawed ideology from the start, but also because the proselytizing was directed from within a bunker surrounded by what was called an “iron curtain.”

Unlike communism, corruption is not an outside threat.  Nor is it something new.  Corruption is endemic to capitalism. And it is as old as mankind. . . .

Corruption comes in many garbs.  The quality of corruption in Russia and China, for example, is unstrained. . . .

And then there is the corruption called “crony capitalism,” which infects the non-communist Asian nations; the soft corruption of socialism that is strangling Europe; and the narco-corruption that has spread throughout much of Latin America. . . .

We are not saying here that the United States occupies the moral high ground on this issue.  As has been amply demonstrated over the past eight years, U.S. politicians and business persons can be as crooked as any in the world.  What we are saying is that if honest capitalism cannot be sustained in the United States, with its long history of respect for moral and ethical behavior and the rule of law, then it will disappear from the world.  And therefore, it is incumbent on all Americans, but most especially the nation’s business community and its politicians, to be scrupulously honest in their dealings, both here and abroad.

Given that this piece was published in March, 2001, it should surprise no one that within a few months, we and our clientele lost interest in one of those two themes and took a far greater interest in the other.  Or, to put it another way, it didn’t take long for events to prove that we were right about the impact that terrorism would have in the 21st century.

Unfortunately/Fortunately – depending on your perspective – the powers that be at the now defunct Lehman Brothers decided that our foresight and longstanding interest in the subject were irrelevant.  They decided, instead, that a guy who smuggled documents out of the national archives in his socks and then unlawfully destroyed them would “speak for the firm” on the matter of terrorism.  (Needless to say, they weren’t too interested in the dangers of corruption either.)

Hence, in due time, The Political Forum was born.  And the rest, as they say, is history – just like Lehman Brothers.

In the immediate aftermath of the initial attacks, politicians and political commentators often referred to 9/11 as “the day that changed everything.”  And while some might quibble with this assertion today, given the reversion of partisan political attitudes to the proverbial mean, one can hardly doubt the impact that terrorism has had on the world over the last decade-and-a-half.  It has become the dominant issue of the era, which is to say that it has also become the dominant theme in the study and coverage of geopolitics.

The bad news in all of this – other than the death and destruction that accompanies Islamic fundamentalism, of course – is that terrorism pushed other stories to the periphery, making them appear far less important by comparison.  For us, as we said, we focused on one of our two principal themes to the detriment of the other.  In our defense, we did this unconsciously.  But we did it nonetheless.

Recently, we were asked about our best, most accurate, and most important predictions over the last couple of decades.  We reiterated our dual themes from the 1990s and then noted the impact of terrorism.  As we did so, it occurred to us that our unconscious disregard for the other of our two main themes was a terrible mistake.  We had missed an opportunity.  Terrorism did indeed change everything.  But then, so did corruption.  We just didn’t see it as corruption.  Nevertheless, while most of us in the political analysis/commentary business are still trying to understand the earthquake that is shaking and will continue to shake Western politics to its core, the key to this understanding may well be right in front of us, where it has been all along.  Or, to coin a phrase: It’s the corruption, stupid.

Now, as was the case back in the 1990s, there are several types of corruption extant in the world.  In China, for example, the remnants of the old Communist Party continues to dominate the political and economic scenes, despite the alleged shift to capitalism, taking the best and greatest shares of whatever international investors foolishly give them.  In Russia, Vladimir Putin and his friends have established the world’s most blatant and powerful oligarchy, inverting the Robin Hood meme:  they steal from everyone and give to themselves.  In Latin America, drugs and retro-socialists continue to steal everything for themselves, even as the region’s most favored son, Pope Francis, insists that an economic system he has never witnessed in person and knows almost nothing about is responsible for greed and poverty.  In Africa, the old strongmen continue to do well, Chinese “investors” continue do well, and everyone else continues to die young and poor.  And so it goes. . . .

In the United States, of course, we have our own brand of political and economic corruption, the most obvious variety of which goes by the same surname as it did twenty years ago:  Clinton.  In the years since Bill left office, he and the little Mrs. have grown fat and happy.  Or at least she’s grown fat and happy.  He looks a little like Stan Laurel to her Oliver Hardy.  In any case, the two have earned more than $100 million, while their “foundation” – and we use the scare quotes advisedly – has raised in excess of $2 BILLION, the overwhelming majority of which has been used to pay the people who work for or lend their surname to the foundation.  The list of the Clintons’ ongoing scandals is long.  It is wide.  And it is deep.  But for our purposes today, it is also irrelevant.

You see, the standard, run-of-the-mill political corruption doesn’t really much interest us right now.  We all know Bill and Hillary are crooked.  There’s nothing new in that.  Moreover, we know that Bill and Hillary are not alone, that almost everyone in politics has had brushes with traditional corruption.  Ted Cruz and his campaign have dishonored themselves with blatant lies throughout the campaign.  Marco Rubio can’t account for such things as official state funds being used for $400 haircuts.  Bernie Sanders’ wife likely defrauded lenders when she worked as President of Burlington College, while she and her husband have ensured that friends and family have profited nicely from his campaign spending.  And then, of course, there is Donald Trump, perhaps the least ethical politician not named Clinton to run for president in nearly half-a-century.  No one really comes close to Bill and Hill for sheer chicanery, but Trump is nevertheless in a league of his own.  As the editor, author, and publisher Roger Kimball put it, “As a businessman, he is thoroughly disreputable: a liar and a cheat. Then there is the matter of Trump University, a ‘massive scam,’ as Ian Tuttle put it in a masterly piece, a scam that has earned Trump three class-action law suits, two in California, one in New York.”

Still, that’s not really our point today.  Our point, rather, is that the ENTIRE ruling class in the United States – and in Europe, although thus far to less dramatic effect – is manifestly and undeniably corrupt in that it has rigged the game for itself.  Moreover, in rigging the game for itself, it has ensured that the country class has no real access to power and is labelled a “threat to society” if it ever tries to alter the status quo.

For years, we’ve noted that the two parties in this country collude with one another to feed the government, to feed themselves, and to feed Big Business.  On the cultural issues, the parties fight, but on the issues that affect the day-to-day lives of the REAL people, they do little but put on a show to provide the country class with a little entertainment.  GE pushes for legislation and regulation that promotes efforts to impede climate change.  And politicians from both parties support it, never bothering to mention that the biggest beneficiary of the laws and regulation would be large energy companies like GE.  The Big banks push for financial regulation.  And the “liberal” Democrats oblige them, never bothering to mention that said regulation would enshrine “too big to fail” as the law of the land and benefit the Big Banks prodigiously.  Facebook founder Mark Zuckerburg pushes immigration “reform.”  And the politicians from both parties support “reform,” never bothering to mention that Zuckerburg wants to replace American workers with cheaper, foreign-born labor, that both legal and illegal immigration have hurt low-skilled workers over the last few decades, or that the states with the highest rates of foreign-born residents also have the highest rates of income inequality.  The game is rigged, in short.  In a fantastic piece published yesterday, our old friend Angelo Codevilla made this point more broadly.  He wrote thusly:

Civics classes used to teach: “Congress makes the laws, the president carries them out, judges decide controversies, and we citizens may be penalized only by a jury of our peers.”  Nobody believes that anymore, because no part of it has been true for a long time.  Barack Obama stopped pretending that it is.  During the twentieth century’s second half, both parties and all branches of government made a mockery of the Constitution of 1789.  Today’s effective constitution is: “The president can do whatever he wants so long as one-third of the Senate will sustain his vetoes and prevent his conviction upon impeachment.” . . .

Today, nearly all the rules under which we live are made, executed, and adjudicated by agencies such as the Environmental Protection Agency, the Occupational Safety and Health Administration, and countless boards and commissions.  Congress no longer passes real laws.  Instead, it passes broad grants of authority, the substance of the president’s bureaucracy decides in cooperation with interest groups.

Nancy Pelosi’s remark that we would know Obamacare’s contents only after it passed was true, and applicable to nearly all modern legislation.  The courts allow this, pretending that bureaucrats sitting with their chosen friends merely fill in details.  Some details!  Americans have learned that, as they say in DC, if you are not sitting at one of these tables of power, “you’re on the menu.”

America is now ruled by a uniformly educated class of persons that occupies the commanding heights of bureaucracy, of the judiciary, education, the media, and of large corporations, and that wields political power through the Democratic Party.  Its control of access to prestige, power, privilege, and wealth exerts a gravitational pull that has made the Republican Party’s elites into its satellites.

This class’s fatal feature is its belief that ordinary Americans are a lesser intellectual and social breed.  Its increasing self-absorption, its growing contempt for whoever won’t bow to it, its dependence for votes on sectors of society whose grievances it stokes, have led it to break the most basic rule of republican life: deeming its opposition illegitimate.  The ruling class insists on driving down the throats of its opponents the agendas of each its constituencies and on injuring persons who stand in the way.  This has spawned a Newtonian reaction, a hunger, among what may be called the “country class” for returning the favor with interest.

The roots of this corruption – as you might have guessed from Codevilla’s rant – is another one of our ongoing themes, the rise of the administrative state.  For more than 100 years, now, the government once described as “of the people, by the people, and for the people” has been something completely different.  The founding motives of the administrative state may well have been noble-ish, but they hinged on two inherently corrupting notions.  First, they presumed that the Constitution was outdated and naïve, and that complex government required complex governance.  And second, they imagined that the people as a whole are too dumb to provide this complex governance and thus a governing class is necessary.  The rest of the last century is the story of the corruption of these noble-ish motives in perfectly Acton-ish fashion.  The power corrupted the administrative state.  And when the power became absolute, it corrupted it absolutely – and corrupted everyone and everything that had contact with it.

The bureaucracy has been corrupted.  The legislature has been corrupted.  The presidency has been corrupted.  The courts – including the Supreme Court – have been corrupted.  The media, the education system, Big Business, entertainment, and countless other sanctums of elite achievement have been corrupted.  The country class is suffering, and not only does the ruling class not seem to care, it doesn’t even seem to understand what is happening.  Perhaps the most telling depiction of this cluelessness in corruption was published last week by the New York Times (natch) and was written by one of its two allegedly conservative columnists, the frustratingly oblivious David Brooks.  In a twist that he could never possibly comprehend, Brooks’ column was fittingly titled “The Governing Cancer of Our Time.”  He wrote:

Over the past generation we have seen the rise of a group of people who are against politics.  These groups — best exemplified by the Tea Party but not exclusive to the right — want to elect people who have no political experience.  They want “outsiders.”  They delegitimize compromise and deal-making.  They’re willing to trample the customs and rules that give legitimacy to legislative decision-making if it helps them gain power.

Ultimately, they don’t recognize other people.  They suffer from a form of political narcissism, in which they don’t accept the legitimacy of other interests and opinions.  They don’t recognize restraints.  They want total victories for themselves and their doctrine.

This antipolitics tendency has had a wretched effect on our democracy.  It has led to a series of overlapping downward spirals: The antipolitics people elect legislators who have no political skills or experience.  That incompetence leads to dysfunctional government, which leads to more disgust with government, which leads to a demand for even more outsiders.

Holy cripes.  Talk about your “political narcissism.”  Brooks is unhappy because the damn people have the gall to demand that their representatives actually REPRESENT their interests.  Moreover – and note that he make this point repeatedly – he thinks that it’s shameful that anyone would want to be ruled by “normal” people with no political skills and not by people with “professional experience.”  He finds the country class’s recent resistance to the ruling class’s demands for obeisance unbecoming.  He just can’t seem to wrap his head around the fact that the people just won’t do what they’re told to do by their betters – himself included.  This, Brooks insists, smells of “authoritarianism” and “violence.”

We’ll grant him the violence bit; after all Thomas Jefferson himself noted that “the tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.”  But the authoritarianism claim is absurd on its face.  The people want nothing more than for their rulers to pay attention to them, to their desires, their needs, their demands.  The people see the ruling class and its ambitions as an impediment to their happiness, their liberty.  Brooks, by contrast, sees the people as an impediment to the ruling class’s agenda, to the smooth operation of the administrative state.  THIS is the corruption extant in our system today.

Last week, Peggy Noonan penned a column that has been very well received among conservatives, mostly because of the “insights” it provides with respect to the current political chaos in the West and in the United States especially.  She put it this way:

I keep thinking of how Donald Trump got to be the very likely Republican nominee.  There are many answers and reasons, but my thoughts keep revolving around the idea of protection.  It is a theme that has been something of a preoccupation in this space over the years, but I think I am seeing it now grow into an overall political dynamic throughout the West.

There are the protected and the unprotected.  The protected make public policy.  The unprotected live in it.  The unprotected are starting to push back, powerfully.

The protected are the accomplished, the secure, the successful — those who have power or access to it.  They are protected from much of the roughness of the world.  More to the point, they are protected from the world they have created.  Again, they make public policy and have for some time.  I want to call them the elite to load the rhetorical dice, but let’s stick with the protected.

They are figures in government, politics and media.  They live in nice neighborhoods, safe ones.  Their families function, their kids go to good schools, they’ve got some money.  All of these things tend to isolate them, or provide buffers.  Some of them — in Washington it is important officials in the executive branch or on the Hill; in Brussels, significant figures in the European Union — literally have their own security details.

Because they are protected they feel they can do pretty much anything, impose any reality.  They’re insulated from many of the effects of their own decisions. . . .

You see the dynamic in many spheres.  In Hollywood, as we still call it, where they make our rough culture, they are careful to protect their own children from its ill effects.  In places with failing schools, they choose not to help them through the school liberation movement — charter schools, choice, etc. — because they fear to go up against the most reactionary professional group in America, the teachers unions.  They let the public schools flounder.  But their children go to the best private schools.

This is a terrible feature of our age — that we are governed by protected people who don’t seem to care that much about their unprotected fellow citizens.  And a country really can’t continue this way.

On the one hand, Peggy Noonan is absolutely right.  This IS the dynamic that is playing out in the West today.  It is the dynamic that features a corrupt ruling class, totally oblivious to the will, needs, and fears of the country class.  And the Trump phenomenon is indeed the monster these corrupt Frankensteins have created.

On the other hand, Peggy Noonan is only NOW getting around to this?  Honestly, it’s great that she’s figured it out, but she’s only about six YEARS late.  Our friend, the aforementioned Angelo Codevilla wrote this very piece in July of 2010, only he used more sensible terms for the opposing factions, the Ruling Class vs. the Country Class.  We picked the theme up then and have been writing about it ever since.  It has been the dominant theme in American domestic politics for the majority of Barack Obama’s presidency.

Ms. Noonan, of course, endorsed Barack Obama in 2008, because . . . well . . . who knows?  Mostly she endorsed him because he seemed like a more sophisticated member of the ruling class than did John McCain.  In 2013, Ms. Noonan complained that the Tea Party was trying to “destroy” the Republican Party.  The Tea Partiers were “gullible,” she insisted,  and they should have more sense than to believe that they could change the nature of our government.  In short, Noonan – the former speechwriter for Reagan and the first George Bush – is the epitome of the political establishment.  She writes now about the years and years of conflict and disregard that led up to this political revolution, but where was she for most of those years?  If Peggy Noonan had bothered to listen to the Tea Party from the start; if she had bothered to read Codevilla’s cri de couer six years ago, when he wrote it; if she and people like her in “protected” positions of power had not simply assumed that the masses were stupid and therefore unable to articulate their thoughts coherently, then the Trump phenomenon might have been prevented.

As it is, Donald Trump is likely to be the Republican presidential nominee.  And if he gets the chance this November to run against the most corrupt woman in American political history, he may well be the next President of the United States.  Two cheers for Peggy Noonan for finally figuring this out.  But we’ll withhold the third cheer, noting that she is and long has been, part of the problem in American politics, part of the corrupt faction that forestalled a reckoning until it was too late to do anything sensible about it.

Now, here’s the catch.  While it is obvious that the Trump surge and the erstwhile Sanders surge are manifestations of the country class’s frustration and exhaustion with the corruption of the ruling class, it is just as obvious that neither man is actually able or willing to doing anything to alleviate the corruption or assuage the anger it has caused.  Indeed, Trump – like Hillary Clinton or Bernie Sanders or Joe Biden or almost anyone else you can name – is actually more likely to exacerbate the corruption.  In a flash of honesty the other day, Trump declared that once he is elected, he will “open up” libel laws, which is to say that he will make it easier for him to shut down, confront, and punish anyone who dares to criticize him.  A President Trump wouldn’t have the power to “open up” anything, of course, but his comment is nonetheless telling.  He doesn’t have much use for the First Amendment.  He doesn’t really care about the people’s right to speech and, by extension, to criticize their leaders.  Like the rest of the ruling class, he hates the idea of the people daring to speak back to their betters.

All of this means, in turn, that the revolution underway in American politics is not going to be concluded during this election cycle.  This is just the beginning.  And when the country class realizes that it’s been had – by Trump, by Clinton, by whomever – it is going to be even unhappier than it is now.  Hillary Clinton and Donald Trump are both manifestly corrupt now.  And giving them the ultimate political power in this country is not going to make them any less so.  Indeed, it’s not going to make the entire system any less so.

The American political class is corrupt.  The administrative state the American political class has spent the last century-plus building is corrupt.  Corruption is still an important story.  Indeed, it may be the most important story of our time.  More important than terrorism even.

Somehow, we suspect that we are lucky that we didn’t come to this conclusion fifteen years ago, when we were working for the previously mentioned now-defunct firm.  If we had, we might not have been allowed to resign on our terms to start our own little business.  The members of the ruling class don’t especially like being talked back to.  And that applies whether they’re politicians, bureaucrats, columnists, or big shot bankers.

Copyright 2016. The Political Forum. 8563 Senedo Road, Mt. Jackson, Virginia 22842, tel. 402-261-3175, fax 402-261-3175. All rights reserved. Information contained herein is based on data obtained from recognized services, issuer reports or communications, or other sources believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness, and we are not responsible for typographical errors. Any statements nonfactual in nature constitute only current opinions which are subject to change without notice.