A few days ago I had a post evaluating Elizabeth Warren as a candidate for President. Needless to say, the evaluation wasn’t very favorable. But that post touched only lightly on a subject that Warren has sought to make a centerpiece of her campaign, namely political corruption. I thought that that subject deserved a post of its own.

First, some background. If you have been reading Manhattan Contrarian long enough, you know my view that government is inherently corrupt. The government consists of human beings, and it’s just part of human nature that people will act in ways to help those who somehow further the financial and career interests of the government officials. As one example among many of my posts on this subject, here is one from August 2016 covering the Clinton Foundation. The Clinton Foundation had collected some $2 billion in donations in the period 2001 to 2015, supposedly for charitable works. During most of that period, Hillary Clinton had been either running for President or serving as Secretary of State. A large percentage of the $2 billion came from people or governments with some major interest before the U.S. government or State Department. My post covers various government favors granted to certain of the donors. Meanwhile, tens of millions of dollars from the $2 billion went to support the personal lifestyles of the Clintons and/or the employment of potential Clinton campaign staff. Nobody was ever prosecuted, and in any event it’s not clear what the crime would have been. My comment:

You need to recognize that government spending of money and allocation of the resources of society is inherently corrupt. Government spending will always preferentially go to those who have curried the favor and greased the palms of the relevant government functionaries. There is no conceivable collection of anti-bribery laws, or campaign finance laws, that can improve this situation other than a little at the margins. The only significant improvement can come from shrinking the government and letting the private sector expand.

The best we can hope for is a situation where the government allocates a relatively small portion of the resources of society, leaving people with relatively little incentive to engage in corrupt manipulation of government favors. But as long as there is government, there will be an irreducible minimum of inherent corruption.

You will not be surprised to find out that Elizabeth Warren’s view of the situation is exactly the opposite of mine. As covered in my post earlier this week, Warren proposes a collection of “plans,” each backed by some combination of government coercion and/or government money, to solve every significant human problem. The plans in the aggregate amount to a vast expansion of the federal government and its powers and its ability to allocate resources. And at the same time, Warren’s other major campaign plank is that she is the anti-corruption candidate. Really.

How exactly is this supposed to work? Repeal human nature, perhaps? On September 16 she gave a big campaign speech in Washington Square Park in New York City. (Somehow I missed it, even though I probably could have heard it if I had just opened my windows.) Excerpts (from vice.com):

"End lobbying as we know it." Generous applause.

"No more lobbying on behalf of foreign governments." Wild applause.

"Anyone who wants to run for office will have to put their tax returns online." Unhinged applause.

The same day, Warren came out with her latest “plan,” this one being the plan to “end Washington corruption.” So, Washington is to be given vast new powers to completely run the healthcare regime, and to take over and restructure the energy economy, and to revamp primary and secondary education, and to meddle deeply in the financial services sector, and on and on, and at the same time she will be able to eliminate corruption? Sure. By my count there are some 37 different proposals here, all of which I would characterize as nibbling around the edges. Also, somehow, many of the proposals seem to have the surprising side-effect of advantaging Democrats and disadvantaging Republicans. Some comments on a few of them:

• “We must begin by rooting out financial conflicts of interest in Washington. Donald Trump is a walking conflict of interest. Actually, more like 2,310 conflicts of interest — and counting. . . . Force senior government officials to divest from privately-owned assets that could present conflicts of interest.” In other words, make it impossible for any successful businessman or woman to hold senior public office, thus clearing the field for only career politicians, lawyers and academics.

• “Ending Lobbying As We Know It. . . . Impose strict rules on all lobbyists, including preventing them from donating to or fundraising for political candidates. . . . Dramatically expand the kinds of information lobbyists are required to disclose. . . . End the practice of inviting corporate bigwigs to negotiate rules their companies would have to follow and put a stop to the stall tactics they use to kill public interest rules.” Ms. Warren seems to have lost track of the part of the First Amendment that prohibits Congress from making any law that “abridg[es] . . . the right of the people . . . to petition the Government for a redress of grievances.” I.e., lobbying.

• “Expand the definition of “official act” in bribery statutes to criminalize the sale of government access.” She thinks she can make it a crime for any elected official to facilitate setting up a meeting with a regulator on behalf of any campaign donor. Completely delusional.

If you have nothing else to do this afternoon, try going through these 37 proposals and see if you can find the one that addresses the corruption of the Clinton Foundation. I couldn’t find it. Or, try finding the one that addresses the corruption of deep state actors in the FBI and national security agencies using their powers to investigate and disadvantage the disfavored political campaign for President. Again, not there. Or, how about the proposal that addresses the corruption of labor unions using government-granted coercive powers to take dues from members who support one political side and using those dues to support the other political side. Again, not there.

Perhaps we could take a look at some of the major countries of the world where the government claims the vast powers to control the economy that Warren would like our government to have. I gave a list in my September 15 post of the six countries in the world other than the United States with the largest populations: China, India, Indonesia, Pakistan, Brazil and Bangladesh. All of them have very restricted private economies, where the government exercises extensive control over who can do what. Examples:

• China, a one-party state with a two-tiered economy, the first tier consisting of well-connected government-owned enterprises with preferential access to government-controlled credit. From ganintegrity.com, China Corruption Report, August 2018: “Corruption in China presents business operating or planning to invest in the country with high risks. . . . Companies are likely to experience bribery, political interference or facilitation payments when acquiring public services and dealing with the judicial system. The common practice of guanxi is a custom for building connections and relationships based on gifts, banqueting, or small favors.” According to the World Bank, China’s per capita GDP is $9771, or about 15% that of the US.

• India has been famous for decades for the intense regulatory regime known as the “permit raj,” where every step a business seeks to take requires one or multiple permits from different bureaucracies, each one of which presents an opportunity for a functionary to seek some sort of bribe or other favor. The Modi government came in five years ago promising to clean up the corruption; but they have only marginally reduced the role of the government in the economy. From Forbes, January 2019: “Corruption Is Still Thriving In Modi's India.” The World Bank puts India’s per capita GDP at $2016, or about 3% that of the U.S.

• Brazil. Brazil has long had a huge state sector of the economy, most notably including the state oil monopoly Petrobras. In 2003 Brazil elected a left-wing government headed by Luiz Inacio Lula da Silva, promising social justice through activist government. Lula served as President through 2010, and then was succeeded by his right-hand woman, Dilma Rousseff, who served through 2016 — when she was removed via impeachment. Turns out that Lula, Rousseff, and plenty of others in the government were on the take from the oil company. Lula is currently serving a long prison term. The World Bank gives per capita GDP in Brazil as $8921, about 14% that of the U.S.

The fact is that the vastly expanded government role that Warren envisions will inherently bring comparably expanded corruption and reduced prosperity. That’s how it works. Warren doesn’t seem to know that. It can only be called unforgivable ignorance.