Gross Evidence of Rent-Seeking

BadDog_05It’s not often that you get enough evidence of rent-seeking you can actually find it entered into a public record. Leave it to Stupakistan to show the incredible power of insurance and other nondepository financial institutions to leave their fingerprints without shame on the public policy debate over the healthcare payments system. It looks like the middle men are definitely winning on this one. Check out this article at the NYT today by Robert Pea with damning headline “In House, Many Spoke with One Voice: Lobbyists’. “

We have to get corporate money out of politics.  It’s essential to preserving our republic with its aspirational democratic roots.

In the official record of the historic House debate on overhauling health care, the speeches of many lawmakers echo with similarities. Often, that was no accident.

Statements by more than a dozen lawmakers were ghostwritten, in whole or in part, by Washington lobbyists working for Genentech, one of the world’s largest biotechnology companies.

E-mail messages obtained by The New York Times show that the lobbyists drafted one statement for Democrats and another for Republicans.

Notice that it’s an equal opportunity rent-seeking opportunity.  Lobbyists are carefully crafting their message to play to whatever base will fall for it.  If there ever is evidence that public policy is being high jacked by parasites of the market–those third party payers that bring no value and only layers of costs and confusion to the process–this is it.  Unfortunately, people are so dependent on their insurance companies, they fail to see they need to rid themselves of the fleas.

The lobbyists, employed by Genentech and by two Washington law firms, were remarkably successful in getting the statements printed in the Congressional Record under the names of different members of Congress.

Genentech, a subsidiary of the Swiss drug giant Roche, estimates that 42 House members picked up some of its talking points — 22 Republicans and 20 Democrats, an unusual bipartisan coup for lobbyists.

In an interview, Representative Bill Pascrell Jr., Democrat of New Jersey, said: “I regret that the language was the same. I did not know it was.” He said he got his statement from his staff and “did not know where they got the information from.”

Yea, right.  You’re so frigging business with things and you have so few staff you can’t actually read the bills, get information on the problems in the market, and find solutions for yourself.  You just have to rely on people with stakes in the status quo.

In recent years, Genentech’s political action committee and lobbyists for Roche and Genentech have made campaign contributions to many House members, including some who filed statements in the Congressional Record. And company employees have been among the hosts at fund-raisers for some of those lawmakers. But Evan L. Morris, head of Genentech’s Washington office, said, “There was no connection between the contributions and the statements.”

Mr. Morris said Republicans and Democrats, concerned about the unemployment rate, were receptive to the company’s arguments about the need to keep research jobs in the United States.

Maybe RD can clear up the connection between what they’re demanding congress keep in their cookie jar and the outsourcing of science jobs to the cheapest market, but my guess is it’s just a convenient excuse unless you actually force them to keep the jobs IN THE COUNTRY in the wording of the legislation.  They’ll go where the cheapest options are because corporations have ONLY one goal.  That is MAXIMIZING PROFIT.  Renting seeking and ruthless cost-cutting play right into that.  Also, gaining market share and power so you can manipulate the price and quantity–especially on a price insensitive (inelastic) item like drugs and health care.  When you need them you need them and you’re likely to rearrange your budget and everything else to get them; especially if it’s a matter of life and death.

My guess is we have a lot of gullible shills in Stupakistan.

Mr. Brady’s chief of staff, Stanley V. White, said he had received the draft statement from a lobbyist for Genentech’s parent company, Roche.

“We were approached by the lobbyist, who asked if we would be willing to enter a statement in the Congressional Record,” Mr. White said. “I asked him for a draft. I tweaked a couple of words. There’s not much reason to reinvent the wheel on a Congressional Record entry.”

Some differences were just a matter of style. Representative Yvette D. Clarke, Democrat of New York, said, “I see this bill as an exciting opportunity to create the kind of jobs we so desperately need in this country, while at the same time improving the lives of all Americans.”

Representative Donald M. Payne, Democrat of New Jersey, used the same words, but said the bill would improve the lives of “ALL Americans.”

Mr. Payne and Mr. Brady said the bill would “create new opportunities and markets for our brightest technology minds.” Mr. Pascrell said the bill would “create new opportunities and markets for our brightest minds in technology.”

My guess is these brains in congress were the same ones that talked their brainy class mates into sharing their homework and rephrased it just enough to pass the professor’s scrutiny or most like the professor’s grad student’s scrutiny.

There is something incredibly wrong in our governing process when a group of powerful nonvoting constituents get to write the voice of public policy.  If your congressman is on this list, find an alternative, FAST!!!

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How About a Big ol’ Game of Monopoly?

monopoly-empty-pocketsIf we’re a ‘free market’ economy, why do we keep protecting so many businesses and promote monopoly? Well, I suppose the practical answer is that businesses who can afford to do so will rent-seek via K Street and politicians looking for donations will happily give them whatever they want. The bigger question is why do we keep politicians in office that DO this to us? Why do we put up with policy makers that continually keep corporations safe from the economic Darwinism implied by capitalism while we pay for all their negatives like externalities, restricted output, and high prices? Can we just say, for once, that the real welfare queens in the economy are the bonus class and these kinds of corporations? They suck up the public funds like a bunch of leeches at a Louisiana picnic. Today’s news just provides us this ongoing example from the banking industry. It’s from WaPo and David Cho. Go read Banks ‘Too Big to Fail’ Have Grown Even Bigger; Behemoths Born of the Bailout Reduce Consumer Choice, Tempt Corporate Moral Hazard for a really good example of market failure. It makes me want to socialize the lot of them! I mean, if we’re going to continually subsidize them and give them monopoly status, we might as well have a stake in their assets.

The crisis may be turning out very well for many of the behemoths that dominate U.S. finance. A series of federally arranged mergers safely landed troubled banks on the decks of more stable firms. And it allowed the survivors to emerge from the turmoil with strengthened market positions, giving them even greater control over consumer lending and more potential to profit.

J.P. Morgan Chase, an amalgam of some of Wall Street’s most storied institutions, now holds more than $1 of every $10 on deposit in this country. So does Bank of America, scarred by its acquisition of Merrill Lynch and partly government-owned as a result of the crisis, as does Wells Fargo, the biggest West Coast bank. Those three banks, plus government-rescued and -owned Citigroup, now issue one of every two mortgages and about two of every three credit cards, federal data show.

A year after the near-collapse of the financial system last September, the federal response has redefined how Americans get mortgages, student loans and other kinds of credit and has made a national spectacle of executive pay. But no consequence of the crisis alarms top regulators more than having banks that were already too big to fail grow even larger and more interconnected.

“It is at the top of the list of things that need to be fixed,” said Sheila C. Bair, chairman of the Federal Deposit Insurance Corp. “It fed the crisis, and it has gotten worse because of the crisis.”

I really hate going to the mail box these days. I am now banking with Capital One not by choice but by merger. I now have a trading account with J.P. Morgan, not by choice but by merger. My mortgage is miserably serviced by Wells Fargo, not by choice but by secondary market transaction. Each day, I find myself to be a customer of a behemoth bank with whom I would not choose to do business voluntarily. It takes me forever to get out of customer service automated voice response hell to try to figure out how to close my account so I can go elsewhere. An expedition to Patagonia would be easier.

“Be not afraid of greatness; some are born great, some achieve greatness, and others have greatness thrust upon them”

William Shakespeare.

“And some have greatness handed to them on a silver platter by their government”


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