A Republic No More. Jay Cost

Modern Liberalism and the Interest Group Society

       9 “A Grab Bag of Subsidies”

       The Politics of American Agriculture

      10 “The Parochial Imperative”

       The Politics of the Pork Barrel

      11 “A Big, Dumb Price Fixer”

       Medicare and the Politics of Entitlements

      12 “A Robbery of the Great Majority”

       The Politics of Corporate Taxation

      13 “The Pretorian Band”

       Fannie Mae, Freddie Mac, and the Politics of Regulatory Capture

       Conclusion: A Republic No More

       Acknowledgments

       Notes

       Index

       Preface to the Paperback Edition

      DOES BIG GOVERNMENT DIRECTLY CREATE CORRUPTION?

      A major assumption that conservatives and libertarians make about political corruption is that it correlates directly with the size of government. Despite the subtitle of this book—“Big Government and the Rise of American Political Corruption”—I dispute this idea in the pages that follow. My argument has drawn some criticism from advocates of limited government, whose aims I sympathize with. In this new preface, I would like to clarify my views.

      For starters, it is a misconception to think that political corruption did not exist, or that it existed only on a negligible scale, in a government of modest authority. As early as the 1780s, when America was governed by the measly Articles of Confederation, political corruption was evident on the national level. Consider, for instance, the disposition of the western territories. About half the states could lay some claim to territory in the west, while the other half could not. This was not simply a parochial dispute, as the “four-sided states” were claiming land titles of dubious validity sold to them by Native Americans, much to the chagrin of the “three-sided states.” The final settlement on the western lands was ultimately up to the Confederation Congress, many of whose members were speculating in land or were associates of land speculators, and therefore looking to validate those titles.

      This was a government of virtually no power whatsoever, and yet in an area where it did possess power, it struggled mightily to act on behalf of the people of the United States and not just a handful of cronies.

      This tells us something important about political corruption: it can exist wherever government has authority. Indeed, the first six chapters of this book detail political corruption prior to the New Deal, when government was small by any contemporary measure. In the domains where government did have authority—tariffs, internal improvements, public finance—I find instances of corruption that are often quite shocking. And the corruption tended to worsen over time. To assume that political corruption was inconsequential before the New Deal requires one to forget that the progressives of the 1890s to the 1920s, the forefathers of the New Deal, were motivated at least in part by the will to cleanse the government of what they saw as rampant political corruption.

      Obviously, a larger government creates more opportunities for corruption, but I think that the relationship between corruption and big government is mostly indirect. I have drawn heavily on the political philosophy of James Madison to make this case. For Madison, the central question in a republican government is whether its efforts are dedicated to the general welfare, or instead serve some faction that wishes to advance its own ends above the collective good. The inherent selfishness of human beings creates two particular challenges for a republic. First, factions in society can pull politicians away from concern for the general welfare; this is a potentially mortal threat in any government founded upon majority rule, as factions often amount to a majority of the population. Second, politicians often have selfish reasons for advocating a policy or measure that harms the general welfare.

      What is required, Madison thought, is a well-constructed government that takes men not as we would like them to be, but as they are, redirecting their selfish interests toward the general welfare. In the Federalist essays, both Madison and Alexander Hamilton speak of the effort to design such governing institutions as “the science of politics.”

      Is it possible to design a government that could responsibly wield the massive powers that ours wields today? I think so, but this is admittedly speculative. As I note in the conclusion of this book, if you look at Hamilton’s plan of government, it goes a long way in this direction because it separates both the president and the Senate almost entirely from the people. By Hamilton’s reckoning, this separation would induce them to focus on the good of all society, without the temptation to cater to factional interests in the service of their own ambitions.

      I am not advocating a Hamiltonian-style aristocracy. The point, rather, is that the structure of a government bears on the likelihood that its authority will be exercised impartially for the general welfare. Thus it is crucial for the structure of government to be well suited to the power that the government actually wields. Is that the case with our government today?

      The thesis of this book is that when the United States government was framed in 1787, there was a reasonably good fit between the powers that the Framers granted it and the structure they designed. It was a fair bet that the government as built was going to behave responsibly with those powers, redirecting natural human selfishness toward collectively beneficial ends. However, almost immediately upon its inauguration, the new government began assuming authority that, at best, was hotly disputed among delegates to the Constitutional Convention in the summer of 1787. Since then, the trend has always been in the same direction: the national government acquires ever more power, and never gives any back. Meanwhile, the structure of the government—the formal rules of the game enshrined in the Constitution—have been virtually unchanged. This dynamic creates, in my estimation, a mismatch between authority and structure: our government was made to do much less than what it now does, and so it does a very poor job of exercising the authority it has acquired in a way that benefits the public at large, rather than self-interested factions.

      Thus, my argument is that there is an indirect relationship between the size of government and the level of corruption: a government that has grown “too big for its britches,” that wields more power than it is capable of exercising responsibly, is a government that will produce public policy that favors well-positioned factions over society as a whole. This is a corruption of the republican form of government. To borrow that phrase from Madison and Hamilton, subsequent generations of Americans forgot about “the science of politics” as they eagerly expanded the scope of governing authority without considering whether a structural redesign would also be necessary.

      My research and thinking on the subject of political corruption did not end with the publication of this book. I’ve pondered the friendly criticisms it received as I have further researched American political corruption in the eighteenth century. On the basis of this reflection, I would add a refinement to my theory: certain kinds of governmental authority are more likely to generate corruption than others. The problem, then, is not so much the absolute level of power, but the kind of power that government wields.

      One of the main undercurrents of political debate during the first thirty years of the new government was whether it was appropriate for it to advance the general welfare through mediating factions. This concept is at the core of Hamilton’s economic agenda in the 1790s, which is discussed in Chapter One. Hamilton thought the moneyed class had a special role to play in the long-term prosperity of the nation, and he geared public policy specifically toward them. Madison and Thomas Jefferson deeply opposed this approach. While Madison had originally lobbied for a government of vast power, he was always skeptical of the idea that the government could advance the national interest in the long term by playing favorites