Author Peter Schweizer made the talk-show rounds a few weeks back to tout his new book Extortion, which examines the process by which a U.S. federal government with a huge regulatory portfolio routinely extorts its citizens.
Basically, whatever can be regulated makes a basis for extortion. Holding the whip-hand of the state over someone gives you the power to make threats – and then suggest ways for that someone to avoid “consequences.” That’s the anatomy of a shakedown, and it happens constantly in Washington, D.C.
This is a proposition so obvious that every six-year-old gets it, in the more typical political climates of non-Western, non-British Commonwealth nations. It takes a really unusual, historically bizarre political culture like America’s to produce a citizenry that actually thinks governments can regulate without dabbling in extortion (or, indeed, proceeding with it full-bore).
Many Americans are genuinely shocked to realize that what the regulatory state has wrought is a climate of extortion by government so routine and incessant as to be a banal pattern. In an interview with Glenn Beck in November, Schweizer outlined examples:
“I’ll give you a couple of examples in the book. These were with ex-corporate executives, not current ones because they won’t talk about it. But the president of Shell Oil told me how he sat before a Congressional committee in 2009 with Maxine Waters and people from both political parties, who were lambasting Shell Oil and other companies because gasoline prices were high,” Peter explained. “Set aside for a second whether you think that that’s true or not. But the fact is, after they grilled them publicly and Maxine Waters threatens to nationalize Shell Oil – after the meeting, what happened? Those same congressmen came up and said, ‘You know, if you were to hold a fundraiser for me or to make a donation, I might understand your issues better.’”
Another example Peter uncovered involved Wall Street in the aftermath of the 2008 economic collapse.
“I’m no defender of Wall Street, believe me, I’ve written a lot of critical things. But they go and get lambasted [on Capitol Hill],” Peter said. “And after the meeting, back in the cloak room or committee meeting, literally members of the Senate or Congress pull out Blackberries or iPhones and say, ‘Okay, when are you going to do a fundraiser for me?’ They don’t have to say, ‘Do this or else.’ Everybody knows how the game is played. That’s why you see a lot of these companies, Glenn – they give to candidates on both sides equally.”
Of course, fundraisers aren’t the only form of payoff to keep Congress off your back. Sometimes political silence is the preferred currency. William Jacobson at Legal Insurrection traced a recent example with Senator Elizabeth Warren (D-MA), who went after corporate donors to a think tank, Third Way, which published an op-ed critical of her policies.
Third Way is a centrist Democratic (not “progressive”) policy institute, which in its op-ed criticized Warren’s proposal to expand Social Security. Warren responded by sending a letter to the CEOs of major financial institutions which she suspects of donating to Third Way, asking them to begin reporting the donations they make to such think tanks. (H/t: Director Blue.)
Timothy P. Carney points out what matters here: that Warren sits on the Senate Committee on Banking, Housing, and Urban Affairs. She has the power to threaten the financial institutions with hurt. When she wants lists from them of which think tanks they donate to, it’s not just a politician whistling Dixie; it’s a regulator making a threatening move. Threatening the think tanks’ funding is the attack on free speech, but the pressure point is the banks, which Warren regulates.
This is one of a handful of key reasons why government regulation is not a panacea for the world’s ills. More often, it’s a Pandora’s Box. Every line of regulation enlarges a politician’s (or bureaucrat’s) scope for extortion. Every single one, even the ones we like. Regulation is just a form of socially-approved force administered by other people, as flawed and corruptible as all other forms of human endeavor.
We will always assume that some amount of regulation is inevitable and even desirable. But we are deceiving ourselves if we think it can really fix what’s wrong with our world. At best, it can address narrow and transient problems, things we usually become wrong in our thinking about within a decade of writing the regulation – because time passes, conditions change, people and technology move on.
When we place overreliance on government regulation, as Americans have for the last century, it becomes a deeply rooted source of our problems. Here’s a good rule of thumb: if you want corruption, get two people together. If you want a lot of corruption, start a government, and give it more and more to regulate.