Government as “Protection Racket”

Since the Federal government and most “blue” states” are now essentially run as a "protection racket" (and have been for awhile IMHO) “fat cats” (and some not so fat) of all varieties must pony up with the campaign contributions. That way they try to avoid harmful regulations and also, in some cases, become qualified to get bailed out (too big to fail ya know), when their malfeasance (financial and otherwise) gets ‘em in trouble. Democrats, to their credit, are more honest about this practice, but GOPers do it too… they’re just not as good at it. Too give the “devil” his due… the Obama administration has just about perfected this (all that good “Chicago” experience?). BP’s misdeeds have led to a large “shakedown” (note to Rep. Barton: there’s NO GREATER punishment in Washington DC, than for telling the truth!!!). I soon expect all "Big Oil" to be victims as they get caught up in the BP mess (guilt by association)! I am curious to see if ANY but a bare minimum of folks adversely effected by this oil spill disaster get much help… (unless they display the “Union Label”… IMHO).

Union bosses who have a LONG tradition of looting their pension and health care funds, are next in line for the HUGE taxpayer bailout (biyon$$$$). It has been said for decades by most respected economists that you can’t “tax your way to prosperity”… I now know that is not exactly true… if you are among the select powerful in DC, you can… but just for yourself. Now with (soon to be?) HUGE tax increases on just about every aspect of American life our “protectors” plan to tax us ordinary folk to their GREAT prosperity. Thanx and good day!

I think the Obama administration has made government far more into a protection racket than it used to be.

Historically, large businesses actually have FAVORED regulation since it helps suppress competition by the little guys who don’t have the resources to negotiate a thicket of regulations and/or lobby to obtain exemptions or bend rules in their favor. In this view, big business and big government are co-conspirators in screwing the public (which has to pay higher prices and doesn’t benefit from as much innovation as would normally arise in a highly competitive market). A common feature of such arrangements is “regulatory capture” where the regulators end up in bed with the very industry they are supposedly trying to regulate.

Likewise, many states have a “pay-to-play” culture in which campaign contributions put favored businesses in line for major government contracts to purchase goods, services, invest public employee retirement funds, etc. Again, this is more of a partnership (”you scratch my back, I’ll scratch yours”) than a situation in which government is exploiting fear to induce campaign contributions to the party in power.

Under Obama, matters have taken a more fascistic direction, although some of this began in the waning days of the Bush administration.
1. When Hank Paulson essentially directed Bank of America to merge with Merrill Lynch under threat of firing their management, he was inappropriately using the power of government to influence what should have been purely a business decision.

2. The deals made with pharma, hospitals and doctors likewise had the whiff of coercion insofar as these industries didn’t dare risk opposing the health plan for fear of what might happen if the bill passed and those in power were in a “payback” mood towards industries that had sought to scuttle their political objectives.

3. I think it’s unquestionable BP got shaken down knowing that the administration could do them much economic damage by demonizing them and whipping up populist outrage against them and/or very damaging legislation that would cost them way more than $20 billion.

The point being that “protection racket” best describes situations where fear is the principal motivator to induce “appropriate” behavior by businesses. In such situations, it’s hard to fault business for knuckling under to such pressure, just as everyone understands why Tony’s Pizza pays protection money to the mob rather than risk being wiped out should they attempt to blow the whistle on the mob’s illegal extortion activities.

In contrast, regulatory capture and pay-to-play are better characterized as “it takes 2 to tango.” Sure, such arrangements require corrupt politicians, but they also require unethical business leaders to consummate deals. Their survival isn’t at stake, but it’s easier to compete on an uneven playing field and their conscience doesn’t inhibit them from tipping things in their favor. In short, unlike Tony’s Pizza, they are as crooked as the politicians who are using their influence to enrich themselves.

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