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Crooked Inspectors and Crooked Cops

by Pat Pending

 Recently, here in Louisville, we have had examples of all kinds of corruption of government officials.  This is not just regular old politicians' lying, helping out friends, and skirting around the edges of the law.  No, what we have seen lately is crooked enough to be really illegal.  We have bridge inspectors demanding that bribes be paid before they will approve work.  We have police emptying the wallets of illegal immigrants, police charging the taxpayers for work that was not done and making phony reports.  Of course, most of us understand that some people are just unethical and crooked, and they can be found in every walk of life, including government, business, and even the clergy.  But what most of us do not recognize is how much more damage is done by corrupt government officials by virtue of the power of government and how much the enterprise of government attracts corruption by limiting the victims' ability to defend themselves.

 For example, there has been a great uproar about the Enron scandal, but what has really happened in the Enron case?   The only people who were really harmed were those who voluntarily took a risk on Enron, either by being employed by Enron or by investing in it.  The fact that Arthur Andersen's auditors apparently signed off on fraudulent practices that misled investors means that Arthur Andersen has lost its credibility and reputation.  Investors will no longer accept an audit by Arthur Andersen, so it will go out of business, and investors who have been defrauded will sue the culprits for compensation.  In very short order, private enterprise is resolving the problem and creating incentives for future managers and future auditors to operate with greater integrity.  Now, let's contrast that scandal with the problem of crooked government officials.

 For example, in the case of the crooked bridge inspectors, many people were harmed who did not voluntarily put themselves in harm's way.  In particular, Kentucky taxpayers, who have been forced to pay money to maintain highways, have been robbed.  Money that should have been used for their benefit, to construct or maintain highways, has, instead, been funneled to crooked government officials.  People in rural and mountainous areas are particularly harmed by the corruption in our state's transportation department, because difficulty in moving people and products into and out of their areas greatly restricts job opportunities there.  If transportation dollars were not being siphoned off by crooked government officials, they could be used to build more roads to connect isolated areas with the rest of the transportation grid.  So, while Enron's scandal harmed people who voluntarily put themselves in harm's way, this government corruption harms many innocent people who did not intentionally put themselves at risk.  While the victims of Enron's corruption can sue to recover damages against the people who defrauded them, what can the victims of our corrupt transportation department do about it?  Nothing!  They cannot sue for compensation.  They cannot refuse to pay taxes.  They cannot choose to use a different transportation provider.  There is no ability for the market to respond quickly to punish wrongdoers and set matters right.  Instead, we will wait as the episode plays out in the courts.  As usual, the crooks will get a slap on the hand, thereby encouraging future crooks.

 How about the crooked policeman who asked for identification from immigrants and then cleaned out their wallets?  The reason he was able to carry out his theft is because he was "the law".  He had the gun and the legal right to ask for identification, and, if the immigrants had refused, he could have hauled them off to jail or even shot them.  If he had been just a regular civilian, the immigrants likely would have refused to hand over their wallets and would not have been robbed.  Again, the victims were innocent people, who did not intentionally put themselves in a risky position, and again we have no recourse in the marketplace to protect ourselves from a repeat of this type of behavior.

 The crooked police who took payment for jobs they did not do have again robbed the innocent taxpayers who did  not intentionally put themselves in harm's way.  The taxpayers again are forced to continue handing over their money to the same police department that allowed the theft.  They cannot choose to hire a different police department, and they cannot sue for compensation. 

 What is perhaps most interesting is that, instead of recognizing the greater risk of corruption in government and choosing to reduce the size of government in order to make it easier for us to keep an eye on the people who have the potential to do the greatest harm to innocent victims, we take just the opposite approach.  We increase the power of government to regulate business and to regulate our private lives.  This, of course, puts more foxes in charge of the hen house and more hens in it.  It creates more incentives for further corruption (both of the shady type and of the actually illegal type) while, at the same time, severely reducing our ability to control the problem. 

 Why would we do such an irrational thing?  I chalk it up to religion -- the blind religious faith in government as savior. 

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