Thursday, July 28, 2011

How the Heck Can Politics Make You Rich (Legally)?

This video answers a question, albeit with just one sentence, that I have often wondered about. I think of it like this:

Thomas Jefferson's finances were devastated by his two terms as President. His only source of income was his farm, which he had to neglect while in Washington. Meanwhile, he had to pay the salary of at least one staff member out of his own pocket.

Today, on the other hand, politicians often become (by my standards) fabulously rich while in office (yes, this does include Obama).

The question is, how is this possible without breaking the law? Why aren't these guys being led off in leg irons? How do they do it?

The answer, apparently, is by means of practices that in the business world would be called "insider trading."

George Washington Plunkitt called a similar practice "honest graft":

There's an honest graft, and I'm an example of how it works. I might sum up the whole thing by sayin': "I seen my opportunities and I took 'em."

Just let me explain by examples. My party's in power in the city, and it's goin' to undertake a lot of public improvements. Well, I'm tipped off, say, that they're going to lay out a new park at a certain place.

I see my opportunity and I take it. I go to that place and I buy up all the land I can in the neighborhood. Then the board of this or that makes its plan public, and there is a rush to get my land, which nobody cared particular for before.

Ain't it perfectly honest to charge a good price and make a profit on my investment and foresight? Of course, it is. Well, that's honest graft.

Shouldn't this sort of insider trading be illegal? Do the objections to Plunkitt's "honest graft" apply to them?

(Hat-tip to Amy Alkon for the video.)

No comments: