Coyote Blog

I am a big absolutist on allowing campaign donations as an essential part of free speech largely without restriction.  However, I have always wondered why we treat campaign donations after the election is over, made to the winning candidate, as anything but an outright bribe.  I guess in theory one can argue that the candidate does not get access to it personally (it used to be that retiring public officials could personally keep the remnants of their campaign funds when they retire;  the elimination of this rule spurred one of the last big incumbent turnovers in Congress as our elected officials rushed to beat the deadline and personally bank those leftover contributions.)  However, many candidates lend money to their own campaigns or borrow money with their personal guarantee, and so money paying off these loans does indeed benefit the candidate directly. And candidates have numerous ways to shift campaign cash to benefit friends and family.

I accidentally watched a few minutes of a morning show today, something I try really hard to avoid.  Matt whats-his-name was interviewing Richard Branson, and they were talking about the importance of corporations "doing good".  Once startups get going, Branson said, they need to start doing good for people, meaning I guess that they buy carbon offsets or something.

Guess what?  If my startup is succesful, I am already doing good.  I can't make a dime unless I create value for people net of what they pay me.  Every customer walks away from our interaction better off, or they would not have voluntarily elected to trade with me (and if they are not better off, I will never see them again and I will find lots of nasty stuff chasing future customers away on the Internet.)  I am tired of this notion that a succesful business person's value can only be judged by what he or she does with their money and time outside of business.  I understand the frustration with a few Wall Street and GE-type executives who are living like fat ticks on their connections with government, but most of us only are succesful if we do something useful.

This, from Carpe Diem, is along the same lines.  He looks at an editorial from the DC paper about the entry of Walmart, which says among other things

Despite the peacocking by Gray and others after the agreement was signed, the District is receiving mostly crumbs. Walmart has committed to providing $21 million in charitable donations over the next seven years, an average of $3 million a year. That's a pittance."

Walmart does not have to do squat for the community beyond its core business, because selling  a broad range of goods conviniently and at really low prices is enough. Or if it is not enough, they will not make money.  The promise of $21 million to some boondoggle controlled by a  few politician's friends is just a distraction, I wish they had not done it, but I understand that this is essentially a bribe to the officials of the DC banana republic to let them do business.

Postscript:  I have no problem with doing charitable work outside of work.  Both my company and I do, by choice, though unlike Richard Branson I don't need to have a crew of paid PR agents making sure everyone knows it.

From Arnold Kling

I think that (non-classical) liberals and libertarians see the problem of "special interests" differently. Liberals view special interests as exogenous to the policy process. You have to overcome special interests to create good policy. Libertarians see special interests as endogenous. Policy is what creates them.

Yep, I have had this argument about a million times with liberals.  Liberals will argue that government power is neutral to positive, and that it is private action corrupting government, and this corruption can be avoided if private action is aggressively policed (including campaign spending limits, etc).  Example:  If Wall Street money could be taken out of politics then financial regulation would work.

I argue that money in politics are a result of the stakes that we have put on the table -- the more power we give to government to reallocate wealth, the more money will be spent to have such decisions made in one's favor.  In the age old question of whether a bribe is more the fault of the politician that demanded it or the private party that offered it, I would answer that the fault is with the system that gives the politician enough power to make such a bribe pay.  And increasing the government's power to limit private involvement in politics (e.g. via campaign spending limits) only makes the government power problem worse.

Yours Truly, on July 16, 2009:

It is totally clear to me that Obama and Pelosi will spend any amount of money to pass their key legislative initiatives.  In the case of Waxman-Markey, the marginal price per vote turned out to be about $3.5 billion.  But they didn't even blink at paying this.  That is why I fear that some horrible form of health care "reform" may actually pass.  If it does, the marginal cost per vote may be higher, but I don't think our leaders care.

Barbara Hollingsworth, 11/4:

The Heritage Foundation's Dennis Smith says that a "manager's amendment" to Pelosi's controversial 1,900 "“page health care bill includes new provisions that will allow back-door payoffs to specific members of Congress, such as more favorable Medicare reimbursements to particular doctors or hospitals and lower taxes on medical device manufacturers in certain congressional districts.

One such earmark - which Smith says "suddenly appeared" after the Energy and Commerce Committee had already completed its work - creates a new $6 billion Medicaid slush fund for nursing homes to be doled out by Health and Human Services Secretary Kathleen Sebelius, with no input from the states, ordinary rulemaking or administrative review.

This is nothing but a blatant attempt to buy off wavering Blue Dog Democrats. Just when you thought this bloated behemoth couldn't get any worse, it does.

I can't answer the question in the post title -- apparently no one has told me all the rules, but I would have called this a "bribe" rather than a "gracious gesture," as Kevin Drum does:

The latest rumor making the rounds is that maybe
Barack Obama will pay off Hillary's $11 million loan to her campaign if
she quits the race. I suppose that makes some kind of sense "” and it
would be a gracious and unifying gesture from Obama

If Newt Gingrich had paid a fellow politician $11 million to drop out of the Spearker's race against him, that would have been a, what?  Gracious gesture?  I doubt it.

We have a federal system in this country, so Louisianans are welcome, I guess, to run their state any way they please.  However, in light of recent events, I propose that the US Government stop sending any of our federal tax money to the state.  Maybe we could send the money instead to a country with a better government that is more likely not to use it corruptly, like maybe Haiti.

All of this is in light of recent events.  I guess most will consider the 1991 gubernatorial election between a convicted felon and a Klansman old history (the felon won).  More recently I think anyone who isn't just looking to blame every problem in the world on GWB would come to the conclusion that local Louisiana government had more to do with the worst aspects of Katrina (both before, in the corrupt levee districts and after, in the pathetic disaster response) than any other public entity.  The final straw comes today as the Congressman who was found with $90,000 in bribe money in Tupperware in his freezer (and god knows whatever he carried off with the aid of the National Guard during Katrina) was apparently reelected. 

Maybe we can find a better investment than sending our money to Louisiana.  Anyone have any Enron stock for sale?

Am I the only one who gets ethical qualms about frequent flier programs?  If your job was to buy supplies for the company you work for, and a printer company offered to give you and your family a Hawaiian vacation if only you would have your company buy their printers instead of the competition's, could we all agree that would be a kickback or bribe?  And that it would be, if not illegal, certainly unethical?

So why don't the same rules apply to airline travel?  When buying an airline flight for business, you are acting as a purchasing agent for your company.  And the airlines, in the form of frequent flier miles, are offering you [not the company] something of value to steer your corporate purchasing decisions to their product.  Frequent flier miles are a blatant kickback.  Informal poll:  How many of you have purchased flights that are a worse deal for your company but a better deal for your frequent flier account?

A further rant: OK, if you are not turned off by that rant, here is a related one about Visa cards that give out frequent flier miles.  As mentioned earlier, these are hugely profitable for credit card companies, so much so that they create much of the value in modern airlines.  Credit card companies, perhaps the only stable monopoly I have seen in my lifetime, have perfected the art of forcing retailers to subsidize their credit card users. 

Now, a fairly rational person would expect that a cash transaction is cheaper than doing one on credit.  However, due to the very strong position of MC and Visa processors, credit card customers actually get a lower price than cash customers.  Here is why:  Credit card companies have taken to giving their users a rebate on their purchases, either in cash or frequent flier miles or some other compensation.  These rebates are funded by charging higher interchange fees to merchants (basically a percentage of credit card transactions cleared).  The magic occurs because merchants, in their processing agreements, are generally banned from giving discounts to customers for using cash.  As a result, the higher credit card interchange fees are spread among all customers, cash or credit card, equally.   The result is that credit card customers pay lower net prices than cash customers, when the rebates are factored in.

Though our trade association tries to seek government action of some sort, I am neither confident that this will help or philosophically inclined to ask for such help.  Right now, I am working within the association to try to build support for some sort of one day boycott against accepting credit cards as a starting point to trying to build up some group negotiating power vs. the credit card processors.

Via ABC News, comes this story of Congressman Randall Cunningham:

Prosecutors call it a corruption case with no parallel in the long
history of the U.S. Congress. And it keeps getting worse. Convicted
Rep. Randall "Duke" Cunningham actually priced the illegal services he
provided.

Prices came in the form of a "bribe menu" that detailed how much it
would cost contractors to essentially order multimillion-dollar
government contracts, according to documents submitted by federal
prosecutors for Cunningham's sentencing hearing this Friday....

The card shows an escalating scale for bribes, starting at $140,000
and a luxury yacht for a $16 million Defense Department contract. Each
additional $1 million in contract value required a $50,000 bribe.

The rate dropped to $25,000 per additional million once the contract went above $20 million.

There is a tendency in politics, once you have an enemy, to attack that enemy no matter what position they take.  Conservatives of late have (rightly) attacked Liberals for being un-supportive of Iraqi democracy, just so they can embarrass their arch-enemy GW Bush.  However, conservatives can be guilty of the same thing. 

Ed Morrissey of Captains Quarters has been on Governor (of Wisconsin) Jim Doyle's case for historically opposing and promising to continue to oppose reforms in election controls, despite very suspicious voting numbers in Milwaukee.  In this case, Captain Ed has done a great job bringing focus to election fraud and "over-vote" issues in Milwaukee, E. St. Louis, and Washington State, especially since the MSM has preferred to focus on potential "under-vote" issues in Ohio and Florida.

However, in piling on Mr. Doyle, I fear that Morrissey has put aside his political and/or philosophical beliefs in favor of giving his enemy another good bludgeon.  His post points out that:

executives involved in a controversial health-care merger gave Doyle over $28,000 in donations shortly after he allowed the merger to go through. Critics at the time wondered why Doyle didn't ask for common-sense economic concessions

OK, lets take this in two parts.  First, lets look at Doyle's decision on the merger.  The article says that Doyle is being criticized basically for NOT holding two companies for ransom.  Often anti-trust law is used as "merger tax" to extract some sort of pay-off from the parties, in the form of reduced prices or a spun-off properties or whatever.  However, no matter what you call it, this is a bribe the government is demanding to let individuals carry forward with a private business transaction.  Usually this bribe is waved around by some politician in order to score some populist political points toward their next reelection (the Europeans and Elliot Spitzer are both good at this).

Is this really what Morrissey thinks Doyle should have done?  As a libertarian, I find that conservatives' support for truly free market capitalism sometimes runs hot and cold, but I would generally expect a conservative to oppose this kind of extortion and interference with the free market.  So does Morrissey really think Doyle did the wrong thing?

The second part of the story, of course, are the campaign contributions.  First, I would argue that if Doyle's merger decision was not wrong, then donations based on this decision are not wrong either.  Many, many companies out there donate to politicians who promise to keep the government off their back.  I certainly do - does that make my contributions graft?  Finally, Morrissey admits that

These donations do not appear to have broken any laws, although the timing strongly suggests some sort of payoff

Look at it the other way around:  If Doyle HAD extracted concessions to approve the merger, it would not have strongly suggested a soft of payoff, it would have been a definite payoff.

Captain Ed- I enjoy your site immensely, even when I disagree with it.  It is OK for you to say that Doyle made the right decision on the merger without backing off of him over the election issue -- just as it is OK for those of us who had concerns about the war in Iraq to gleefully support that country's return to democracy.