Wednesday, May 9, 2007

Corruption in the U.S.A.

Every once in a while there is a newspaper headline about an elected official in the U.S. being indicted for corruption. In contrast if you read articles about life in third-world countries you are told corruption is rife there. Cops and bureaucrats ask for bribes every time you encounter them.

One of today's headlines, Doctors Reap Millions for Anemia Drugs [New York Times, registration required], tells of a different type of corruption. Legal corruption. Amgen and Johnson and Johnson developed and now sell drugs for anemia that are used mainly for cancer patients undergoing chemotherapy, which tends to reduce their red blood cell counts. These are good drugs: Aranesp and Epogen from Amgen; and Procrit from J&J. But being good is not, apparently, good enough. Doctors are being paid to prescribe the drugs, and we are talking small fortunes here. In one example 6 doctors split $2.7 million in 2006 for prescribing $9 million in drugs. And here is the kicker: it is totally legal.

Totally legal is the defining nature of corruption in the United States of America. And it is no accident. Alexander Hamilton, the Secretary of the Treasury under President George Washington, had observed that men where, by and large, corrupt. Positions of power, he had noticed, attracted the most corrupt men. Rather than trying to change human nature Hamilton advocated institutionalizing the corruption. Three branches of federal government meant that corruption would have to be shared, a sort of consensus effort. Corruption would lift all ruling class yachts if structured properly. Otherwise it would be ruinous to business.

He was right, but the price American's pay is high. We began paying that price right away. Slavery, which steals people's dignity and labor, was written into the Constitution; it is the systematic essence of corruption. Hamilton did not invent it, but it is why slaveholders fought the American Revolution. He did corrupt the first Congress of the United States under the new Constitution by getting them to pay off revolutionary war debts on par, but only after they and their friends had bought up all those paper debts at heavy discounts. The members of the first Congress made themselves richer, in many cases far richer, overnight by a simple vote. They also simultaneously created the national debt, which was part of Hamilton's plan.

So today, and over the past two-hundred plus years, corruption is done systematically and effectively in the U.S.A. You generally don't have to bribe policemen. Instead the police lobby has assured that police are paid a good ordinary salary. The government takes their salary out of your taxes and fines.

The rich are different. Their money comes from capital gains, dividends, and inheritance. They have made sure the Democrats and Republicans tax these sources of money minimally, if at all. For the most part the reporting of capital gains by individuals and income by businesses is semi-voluntary. If you are an employee both Social Security and income tax are deducted from your wages. You have to apply to the Feds to get your money back if you overpay. Businesses and rich individuals write checks to pay their taxes, such as they are. True, they fear auditing, but a lot of taxes can be avoided between audits. Special tax breaks keep their taxes minimal.

If you are rich enough and want something in the U.S., you don't bribe a beaurocrat or elected official. You make a campaign donation; you bundle campaign donations from your associates and make sure you are noticed handing them in. When laws are written your donations are remembered. You have shown an interest in the law. Your lobbyist may be invited to draft the law or amend the draft proposal.

Mostly we don't think about it. It is the water we swim in, with currents swiftly stripping the working people of assets and heading them for the sewers, while warm gentle currents caress the rich. Think about it too much and the African pay-as-you-go systems begins to look attractive.

Once a lawyer who made his money off fees on probating estates boasted to me how he and a group of other probate lawyers recommended that the State of California set maximum probate fees lawyers could charge. They always charge the maximum. It was passed without opposition; it was sold as a reform; but in fact the level of probate fees they set was higher than was previously customary for lawyers to charge.

I'll be writing quite a bit about institutionalized corruption in this blog, over time. Tales from history, tales from the recent past, and analysis of the rare news article on the subject.

If I ever get enough people coming to this site to support myself and a few crack reporters, I'd like to do a section that specializes in reporting on corruption of the legal kind. It takes a lot of research to do that kind of story and you have to be prepared to withstand legal threats and even criminal threats. That is why you see so little of it in America's "free press."

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1 comment:

  1. Mr. Meyers,

    thank you for the eloquent and interesting blog on corruption in USA.

    I would be interested in your views about the system of rich becoming richer, and while financial resources are final, many poor becoming poorer.
    This aspect seems to be glorified in American history. It also creates dangerous balance at present, when technology (such as TV and internet) makes this situation visible to many, while unemployment reaches the hights of German numbers in thirties.

    Best wishes

    Bea Michalik