Transcripts For CSPAN2 Book Discussion On A Republic No More 20150301

[inaudible conversations] good afternoon. And welcome to our book forum here at the Cato Institute today for a republic no more Big Government and the rise of american political corruption by jay cost. I am john samples, Vice President and publisher here at the Cato Institute. And i again would like to welcome you to this event today for this very important book. Now, if you have been to book forums before youll notice today our event will proceed in many ways the same as all other book forums have that is, you will hear from some participants and then there will be a question and answer session about 1 00 and then lunch. Also one other thing is like all of our other events please turn all your cell phones now so that we can have the event both in peace and quiet. But some things are going to be different today. Were trying some different things, different format. In this particular case our author, jay cost, will speak for a while about the book to give you a general sense of the lay of the land, and then jay will be joined by two of my colleagues mark colabria and Chris Edwards, and they will for a few minutes give you some impressive their impressions of the book, and then mark jay and chris will have a conversation about the spread of political corruption in america and our book a republic no more. So im going begin by getting administrative stuff out of the way. Ill introduce everyone you will be hearing from and then we can go straight to our event. Jay cost is an elections analyst, political historian, and pundit who writes for the Weekly Standard. If you read the Weekly Standard regularly you will know jays work well. He rote for the horse race blog at real clear politics. And he had an earlier book spoiled rotten. How the politics of patronage corrupted the once noble Democratic Party and now threatens the american republic. Cost received a b. A. In government from the university of virginia, as well as an m. A. In Political Science from the university of chicago. In 2005, while working on this dissertation at the university of chicago, cost joined the staff of real clear politics and then became a writer at the Weekly Standard in 20022010. His background is in Political Science huh claims to rely more on his reading of the history of elections than Political Science and Public Opinion polling. Our book today is the fruit of that and in political hoyt which many of us would say has an Important Message for Political Science and indeed for american politics. My colleagues are mark calabri a and Chris Edwards, mark is the director of Financial Regulation studies here at cato. Before joining cato in 2009 he spent six years as a member of the senior professional staff of the u. S. Senate committee on banking, housing and urban affairs. In that position mark handled issues related to housing, Mortgage Finance Economics Banking and insurance, for Ranking Member richard shelby. Prior to his service on capitol hill he served as Deputy Assistant secretary for Regulatory Affairs at the u. S. Department of housing and urban development. And also held a variety of positions at Harvard Universitys joint center for housing studies, the National Association of home builders, the National Association of realtors and also been a Research Associate with the u. S. Census bureaus center for economic studies. He holds a doctorate in economics from george mason university. If you dont know the cato staff very well today, when the conversation starts mark will be the one with the yellow tie on. The other fellow will be Chris Edwards. Chris is the director of tech policy studies at cato, editor of downsizing government. Org. A top expert on federal and state tax and budget issues. Before joining cato edwards was a senior economiest on the congressional joint economic committee, manager with Price Waterhouse coopers and an economist with the tax foundation. Chris has testified to congress fiscal issues many time and his articles have appeared in the Washington Post winds and the wall street journal and other major newspapers. No one at cato rails against political corruption better than Chris Edwards so he was a natural for our event today, and he comes up with a lot of examples. Chris holds a b. A. And m. A. In economics and was a member of the fiscal future commission of the National Academy of sciences. Please join me in welcoming jay cost to the Cato Institute. [applause] thank you john for that very kind introduction and thanks as well to mark and chris for participating today. And thank you to everybody who is here, and thanks especially to the Cato Institute for hosting this forum. So as john said, were here to talk about my new book public no more Big Government and at the rise of american political corruption. I was attracted to the idea of a history of political corruption because i like the idea of writing a history of something that nobody studied in isolation before as a different subject, a subject that most people dont want to talk about because it doesnt paint the hoyt of our nation in the brightest of lights. I thought i would set sail on the grimy back waters of american politics and see might find and i discovered quite a bit. My book is one part history, one part civics and one part policy analysis, and i was thinking about a way to tie all of that together in these brief remarks and since mark is here im sure well talk about fannie mae and freddie mac which i analyze in the final chapter of the book. So i am looking forward to that because their behavior, to talk about fannie and freddie, their behavior was the most obscene example of legal corruption that i discovered. So, im going to take an opportunity at the end of these remarks to bring them into the picture. But first let me just outline exactly what my argument is. I take a broader and more philosophical view of political corruption than what we typically read in newspapers or see on television. Where usually its a matter of extortion or bribery or kickbacks. In my telling those are all examples of corruption, but i view the problem much more broadly, and my framework is a madisonian one. James madison has the phrase, the need to break and control the violence of factions. If you read the federalist papers youll know that hamilton is by far the better in those essays but the phrase violence of faction knocks me off my feet. He defines the faction thusly. Quote, a number of citizens whether amounting to a majority or minority the whole united and actuated by some common impulse of passion or interest adverse the rights of other citizens or to the permanent and aggregate interests of the community. So that gives me, at least very useful definition of corruption. It occurs when the government does violence to the Public Interest or individual rights by allowing factions to dominate Public Policy for their own ends. Its incompatable with republican form of governance and its suppression is at the very heart of madisons project. After all a republic, a true republic must resist factions if it hopes to govern for the sake of all and with respect to the individual rights of all. Madison rejected the idea that virtue provided through Civic Education or public religion could overwhelm what he saw as the inevitable human tendency tornado factionalism. He said is it sow n into the very nature of man and suggested el a small city state would be an ideal for a republic because in those instances small groups are less likely to bicker over big issues. But madison observed, and especially during the 1780s, the general of the State Governments saw exactly the opposite and indeed in the federalist papers he makes the persuasive claim that even when men dont have something substantive to bicker over they will find invent reasons to fight one another. So, as an alternative to this madison embraces an institutional solution because after all, if factionalism is sow n into the very nature of man, theres a problem there. Republican governorrance is inpatiently unstable. If virtue doesnt cut and it its of small size of the city state doesnt cut it, what would you do . Madisons solution was institutional. He thought that so long as the institutions of government were were designed factionalism could be thwarted, and this idea, this principle is at the very heart of our complicated system of checks and balances. It is an effort to build the institutions of government just so. Just so that the Government Works on behalf of everybody rather than a select few. Madison called that goal the great another very evoc staff afraid. Woodrow wilson once called our regime a new toneam system with forces calibrated against one another. In other words the rules of the constitutional game were to be structured so the vast array of forces in society could combine within the government produce something in the common interest that a faction may have representatives who will do it bid neglect government but those agents will only possess limited power and will be regularly stymied by agents aligned with other factions. So through per madisons theory its irrelevant if those who check the selfish ambitions are themselves driven by selfish ambition. All that matters is the result. The only proposal that should make it through the constitutional gauntlet and be enacted into law will be those that benefit the people generally. Everything else will fall but the wayside offering a decisive check on and but to be truly madisonian requires something other than strike adherence to the constitution. Its not simply commitment to that document. And the constitution cannot be understood as it is rather compromise hammered out at the Constitutional Convention in 1787 convened after the existing Governmental Authority had proved up workable. The status quo at that time could no longer stand, but what to do next . Delegates disagreed on many points and two important disputes are illustrative for my purposes. The first is how powerful should the new government be, and how dependent on local interests should it be . One group, leveled by madison, Alexander Hamilton and George Washington wanted a powerful government immune from local concerns madisons original proposal envisioned a government distant from localities. The senate was to be selected by the house, the president by both chambers of congress and the congress would actually have Veto Authority over state legislation. Finally, a counsel of revision would have authority to monitor and veto state laws excuse me veto federal laws. Meanwhile the congress would have enormously wide discretion. It could legislate in all this is a quote in all cases to which the separate states are incompetent or in which the harmony of the United States may be interrupted by the exercise of individual legislation. The virginia plan was a truly National Plan of government. Opponents rallied to a proposal from William Patterson of new jersey which called for slight alterations to the existing articles of confederation, which had a limited power and parochial orientation. Under the new jersey plan the Continental Congress would acquire the power to tax and an executive couple would be created to provide executive couple would be created. The constitution as was finally worked out occupies the middle ground between these views. After months of debate delegates decided that the government should have more power than patterson proposed but less than what madison proposed and it would depend more on local perspectives than madison wanted but less so than what patterson envisioned. This is not merely a splitting of differences. The framers sense blue blended die sergeant die sergeant view divergent views. You can see them make sure this compromise actually worked the various pieces fit together into a coherent whole. It was remarkable compromise for america of 1787. This was a people deeply skeptical of centralized power and fearful of creeping monarchism, yet they were in tells separate need of a Central Authority that could deal with urgent problems. The constitution gave them gave the government enough power to meet the existing crisis but no so much as to overwhelm state and local authorities. It also distanced the government from popular sentiment but certainly not without cutting it off entirely. And over the ensuing two centuries and more the American Population grew from 4 million to over 300 million, and society changed. Straining the original compromise and gradually forcing an effective revision of the governing charter. New problems emerged and repeatedly the public decided that the power of the federal government had to grow to deal with new threats and grow it did. Today washington, dc has achieved the scope of centralizees power envisioned in the virginia man. For all intents and purposes the federal government can legislate whatever is it sees fit. Rarely does the Supreme Court remind washington of any constitutional limits. Yet in this this where is we turn to problem of corruption. The country never substantially revised the institution that channeled government ever expanding powers. We have tinkered at the margin, tweaked the Electoral College after the election of 1800 mandated the direct election of senators and of course expanded the franchise. Nevertheless, for all of to the growth in federal authority the basic institutions remained largely as they were, when the constitution went into effect in 1787. And from the madisonian perspective this is the problem. If our institutions require a particular design in order to break and control the violence of faction and serve the common good then it is imprudent to give greatly expanded powers to institutions that were originally intended to do much less. But that is exactly what we have done. And we have done so in a decidedly ad hoc manner. Even if the trajectory and the growth of government has always been upward it has been a zig and a zag. At crises arise voters elect a new governing class that expands power to deal with the challenge and the expansion is retained even after the danger has abated. This haphazard process left us with institutions that are far too parochial and tied to factional interests to permit the wide exercise of this expansive authority. Perhaps not surprisingly our 18th century institutions wield their 21st century powers corruptly. Lacking adequate checks and balances in this new redesigned regime, they regularly tilt Public Policy to benefit narrow interest groups. Madison called it the violence of faction. Sometimes conservatives call it cronyism. Liberals call it corporate welfare. I call it corruption. And this i think gets the heart of madisonian jim. It is not blind faith in the constitution. It is a commitment to the ideal of proper institutional design. It is a commitment to the principle that we must take institutions seriously. They must be welldesigned if a truly republic republican regime will endure and this country that not been very madisonian. Put aside the debate of Big Government versus small government and think of it this way. If we expand the power of the government, will the existing institutions be capable of exercising their powers responsibly or will they need to be revised . That is the madisonian question, and it is one that in my search through history i have rarely seen asked. So having outlined my theory i briefly want to tie fannie mae and freddie mac into the story as i think it illustrates this point. For the sake of brevity ill assume youre generally familiar with fannie and freddie. The bottom line is they combined unsafe, unsound financial practices with an unprecedented lobbying operation to protect their investors and pad the bonuses of their executives. To hell with the credit risk, was their motto. For those who study the subject fannie and freddie are government sponsored entities. Theyre not part of the government. They are instrumentalities of the government. Theyre private corporations with pentagon public charters. The first and second banks of the United States, the experience with the banks, the second bank in particular, is eerily similar to the experience of fannie mae and freddie mac. Normally when we think about the second bank of the United States, were wont to think of nick rat biddle very farsighted financier and we tend to think of the bank war where in my opinion Andrew Jackson comes across as much worse. But that is as far as the common understanding usually goes. But it overlooks something which is that the bank had been in place for about a decade before biddle came onboard and it was terribly run. Politicized and selfinterested Bank Managers abused the public good oft of ignorance, vanity and baseballity, and all the while the government could do nothing about it until it was too late. The reason i would is the bank was wellconnected into the political system. Members of congress were given advances on salaries, for instance, they received campaign contributions, they got personal loans. This greasing of the skids may not have been as comprehensive then as is it is in our age but the skids were greased and as a consequence of this toxic brew bad management and political influence peddling, the second bank harmed the countrys economy in its early years. Did not cause the panic of 1819 but reacted far too late to it and it overreacted, because it was run by men who understood politics better than the understood public finance. It seems to me and i make this argument in the book that history repeated itself a couple years ago. The same stories that i just described of the second bank applies equally, if not mo so forks fannie and fredity. Only the latter were better at politics and n collapse of 2008 was much worse than the panic of 1819. That hoyt would repeat itself in this way just goes to show how little care and attention the Political Class, and by extension the people at large, have paid to the design of our governing institutions. Franklin roosevelt was not aware of the second banks troubled history when he created fannie mae. He just wanted to jump start the housing market. Lynn john johnson was certainly ignorant of the history when he privatized fannie mae. His motivation was to get fannies only guys off the federal books bass the vietnam war and the Great Society were ballooning the deficit. Similarly, rich nixon had no knowledge of historys lessons when he created freddie mac as a competitor to fanny may. In this way leaders were simply following the american peoples demand to solve pressing problems wife fussing over concerns like whether our system could keep these entities in line, and this is an unfortunate pattern i have found throughout the process of research. For a country founded by men who were obsessed with how institutions could ensure a truly republican result the citizenry and the Political Class over generations has been decidedly disinterested in such questions. They hardly consider past institutional mistakes when designing new scrubbing structures and and almost unquestionably accept ad hoc structures whose providence is decidedly political. And people are too quick to blame personalities rather than institutional maladies when bad policy is produced. It has been didly unmadisonian, and the country has paid the price again and again in the form of political corruption most recently from the damage caused by fannie mae and freddie mac. Thank you very much. [applause] [inaudible conversations] [inaudible] were going to engage in conversation and then get you in on the conversation. [inaudible] let me say how much i really enjoyed the book. Obviously some of the issues dealing with finance are close to my own heart, having spent my time on the hill trying to work on Financial Issues and also as well my desert addition work dissertation work was on i found that chapter to be very much of interest. Let me make an emphasis. The subtitle of the book is the rise of Big Government, and i think it really is a book that is less about the size of government than about the structure of government. In fact if you read this book and then immediately read classic time for conservativism. Youd be pressed to find different takes. So i suggest that despite the Big Government title might be offputting to friends on the left this is a book that anybody in the political spectrum would enjoy. I think its a great introduction to the history. Some of the critiques would be that again this is going to reflect my beats as an economist theres a whole literature in economics, some of it on corruption, some on constitutional design that not there but this is a Political Science hoyt history book, but to me, again, some of the conversations particularly about some of the bank war the u. S. Banks, ill say my friend alex pollack at eia a number of years ago wrote a very wonderful essay campaigning fannie and freddie to the first and second bank of the United States. So to me its all this wonderful parallel with the same problems that were there. So, found this a great introduction. To me it was frustrated in terms of well, can we really have some fixes here . I probably did not i guess i put it this way. Of youre looking for a laundry list of how to fix this and go back in time and deal with this all, you will probably be disappointed, but again, its a great read of history, a great set of examples, and i think the thesis is very clearly let out and i enjoyed it. Look forward to next book, too. So ill turn to chris. Thank you, jay. It is a fantastic book. Youre clearly a historian by heart as the detail is tremendous. If you want a good introduction to american 19th century Public Policy, this is a great book to start with. Your discussion of the rise of the pattronnage in the 19th 19th century, the ride of the parties, the rise of the Progressive Movement and the new deal fantastic. Jay has a chapter in here on farm subsidies and on medicare, tremendous crow introduction, each chapter could be a cato study on those who issues so he does a tremendous job with the history. I have three sort of main critiques. The first is that in my view Big Government gets dumb and corrupt and wasteful whatever their basic structure. The farm subsidieses are a terrible policy. Theyre distortionary, theyre unfair, but every major western country has a big distortionary farm subsidies prim. British systems and men constitutional system. So the problem with farm subsidies is this is what i think maybe mark was touching on that jay gives us a sort of critique special interest critique of government. What he leaves out is the Central Planning critique of government and maybe thats a separate book. But the problem with farm subsidies is note special interests problem. Its a Central Planning problem. Farm subsidies never work, all distortionary no matter what the structure of government. The same with his chapter on medicare which is a tremendous chapter. I if you want a grow introduction to distortions in the medicare system jays book is a good place to go the problem with medicare is not the special interests handouts. Theres unfairness and theres loopholes and that sort of stuff but its the Central Planning problem. Medicare is a soviet style Central Planning price control system. Medicare has thousands of prices on provider that are imposed on providers and doctors that cause a tremendous amount of distortion but you see them same sorts of distortions in other systems and other countries. So, jay ignores i think, or he leaves out of this book, the basic adam smith or fredic hayak critique. Adam smith complained about what the called the nano system, the people who get in government and think they can sort of centrally plan the economy as if the economy was just a society was like a chess board that the government can manipulate. That this problem with Big Government. I dont think i think jays critique is that if the hamiltonian or henry clay kind of Big Government system could perhaps have worked if washington if we had changed the institutions in washington over the decades itch dont think thats right. I think that Big Government fails because it tries to centrally plan. A Second Opinion and maybe this is more i thought it was very interesting, maybe a bit of an agreementy is that the madisonian view of checks and balances and that factions in the extended republic would substance each to the public good. Maddison pay lint through jay can correct me m didnt see the rise of log rolling. Its a crucial problem in government and jay goes into this in some detail, back to the 19th century. Log rolling was a human problem with various programs and i think its a discussion of Woodrow Wilson who observed one of the big problems with the decentralized power structure in washington was that no one knew who was responsible for failed government policies. Its a huge and central problem right now, and you can actually see the difference in countries in the United States with countries with the british parliamentary system like canada and britain, where governments come into power and they essentially are short term dictatorship. Everyone knows who is at fault for failed Government Programs. United states is much more difficult, and so that political accountability is something that is a real problem in the american system. Woodrow wilson was a terrible president. Just about every other way but his observations about responsibility are bang on, which jay goes into. A fiber point, maybe a point of some disagreement with jay is that the election of 1800 when Thomas Jefferson came to power was a landmark in American History. Jefferson promised a smaller government, a repeal of all internal taxation, spending cuts balanced budgets all this type of stuff we like here at the Cato Institute. Jay argues that the jeffersonians were quickly overwhelmed by federalist ideas and essentially just became federal in subsequent years and decades. Thats a little off. I think that a number of the jeffersonian ideas actually had real sustained power in american Public Policy. Jefferson, for example, did in fact follow through and repeal internal tacks. Taxes. That policy held until the civil war. The jefferson hate edit. Him and treasury secretary hate edit and promise that i would would cut it. They did cut. And the hatred of debt this favor of balanced budgets lasted through to the new deal, with the exception of wars. So there is something here that culture plays a role here too. The idea that we ought to have balanced budgets, ought to pay down debt was an idea that there is no the institutional structure of the government didnt guarantee balanced budget but we generally balance budgeted from 1800 through to the new deal. I calculated we balanced the budgets 70 of those years, which is a pretty impressive record. So i thinkagain, generally excellent book. I think one thing left out is the culture of our governing institutions, which is a bit of a different issue than the institutional structure. Jay would be useful to kind of to me you think of very specific definition of corruption in the book. Certainly you ask five different people what they mean by corruption you get six answers. Theres definitions in economic literature and policy literature. So it would be helpful before we get into the conversation if you could lay out a very specific what exactly are you defining as corruption in the book . Thats a really good question. And it was actually something that i struggled with when i was writing the book because you can win any argument depending on how you define your terms. So the question then became where shy plant my flag . What is my foundational premise . And i just have to it just has to be the premise. And i decided that madison i read him reasonably i think madison he definition of the violence of factions, and i chose that because well, for a couple reasons. First i think it illustrates pervasive problems that are often overlooked with too narrow a definition. I also chose it because i really my read of history ive been really struck by the struggles of the 1780s, leading up to the Constitutional Convention leading up to the document that was produced, what were men like hamilton and washington and madison so worried about . They were very worried. And they were worried about factionalism, and they and i think that its not unreasonable to use that as the definition because i look at the behavior of a lot of the State Governments in the 1780s and i see an awful lot of corruption. So thats sort of how i came about that. Certainly worth observing that a lot of that corruption was we all commonly think of corruption as Public Officials and their friends lining their pockets. I guess you can say the smallest faction is a faction of one certainly fell out saw a lot of that but thats helpful because the book i kind of about these concentrated groups essentially, taking advantage of the government for their own benefit at the public expense. Right. I think it is i think jay sort of struggled a bit with the idea of what is private interests versus Public Interests. We all want Public Policy in the general broad Public Interest, but and people on every end of the political spectrum will say that what they want, but what does that mean . So, im writing an essay now on why the federal government fails and theres a similar problem. What is the definition of failure is when the federal government doesnt do something the broad general publics interest but no one its hard to special interests like the one mark used to work for, would argue that what they are proposing that is in the general Public Interest, the mortgage interest deductions is in the general Public Interest and its hard to get a really good, hard definition of how these special interests undermine the general welfare. It is. In fact that reminds me in the introduction of chapter one i dont remember where but it was jeffersons telling but which maybe might make it of dubious accuracy but it was for his personal record his personal notes. He recounted a conversation he had with john adams and hamilton about the british constitution. Adams said it would be the most perfect constitution if it only was purged of its corruption and given equality representation. And hamilton said, burn it of it corruption and it purge it of its corruption and it will become a useless institution. As it stands it is the most perfect government if create. And jefferson was appalled by this but hamilton was this speaks to the question of what is the public good. Hamilton thought that what is the probe almost if the king has to bribe smallminded venal members of parliament to do what they should do anyway . And we have seen that at times throughout our history. For instance, lincoln had to dispense patronage to a congressman from new jersey to get the 13th amendment passed. So, the response, when i read that i was that was very striking and one reaction would be thank god he had available pattronnage. But at the same time, though, its a difficult its a difficult seemingly difficult to define the Public Interest at times. But its sort of the way Justice Potter stewart described pornography. You know it when you see it. We can talk about the difficulty of the public good in the abstract but then you start calculating the dead weight loss inherent to farm subsidies since the new deal and look at where the subsidies are going, and theres no question. Similarly you look at the pattronnage regime by the end of the 19th century. You could make aning are jefferson and jackson were trial trying to hold their political coalitions necessary which was necessary to implement any sort of public program. But you look at the way the port of new york city functioned by the end of the 19th century. It was disastrous. It was harmful to the National Interest and when you read the stories and see what was going on theres really not a lot of doubt. So i think that the concept of the Public Interest is from certain perspectives is often very hazy and informs a lot of our public debate. But then there are these issues where the split is really 955 and thats sort of what i try to look at in the book. Something that perhaps you can elaborate on is the whole log rolling issue. Was i right that madison missed the logrolling problem . He had a welldesigned system, read about the constitutions of many other states at the time but it does seem to me that almost as soon as the ink was signed on the constitution, the logrolling started. You go into detail how starting in 1826 they started passing big harbor army corps of engineer project bills where terrible enoughly started passing the army corps of engineer projects singly and a lot of them failed in the legislature, then they got the great idea of bubbling them together, putting them in omnibus, and that was the beginning then they realized they could do that with post offices and other stuff. Bundle everything together at a bunch of really bad projects would pass in a big bill. Thats right. That is something i dont get into in the book. But because you have to select your stories and certain things get left on the cutting room floor but youre right. I dont remember what the particular issue was in mad dissounds day. Might have that to do with internal taxation but im not sure. The congress was disturbed. By the 1820s, generation into the new government not only do you get rivers and harbors legislation, the pork barrel there, and rivers and harbors you dont think is a big deal now daze but you become that the 1820s it was hugely important, and then on tom of that you geoff the day tariff of abominations which was basically a logroll between new england and the Midatlantic States at the expense of the south, and ultimately precipitated the nullification crisis. That was something he missed today, log i talk about this in the second half of the book is that logrolls today usually dont exist on the house floor or the legislative floor. They certainly happen but usually the committees are much better for securing what political scientists call gains from trade. You hand discretionary power over the process to committees and then people who want pork from say, defense or technology they gravitate to whatever committee has particular control over it. So that was not formed yet in madisons day and thats why you get to rivers and harbors. As a former committee staffer, saw way too much of that up front. I want to go back to what i think is an interesting issue, hamilton almost suggesting theres good corruption, and ill use some of the exampled saw on a regular basis on the hill. For instance in chris written on the very large grants and subsidies we give the states and localities and as you can imagine, these states want the check we see on a regular basis on he hail some Senators Office saying wed like the money but can you exempt us from this requirement . And of course my usual answer was, happy to have a conversation about you, but exempt everybody or nobody but you. And the shocking thing was i was the only one who ever took that position. I never had anybody argue with me on principle, youre right but we got to get the bill gone. The greater good expediency and whether its Mortgage Finance or other areas of public assistance you often hear this argue. If you dont like the special interests take some piecer of the subsidy, then nobody will lobby for the subsidy and we wont have these great and good things and poor people will die on the streets. And so im going to put it back to you and say, other than the outrage of the cornhusker carveouts, where is in your evidence and view that on net the these offsets carveouts corrupt deals outweigh the greater good of the individual, the package. Thats a good question. Well barber a Ranking Member for years on ways and means called a what you described as the abc syndrome. Theyre writing the tax policy in ways and means and a. Says the policy is great and i need an exception. And the its is exception, and then b comes in and says the exemption you gave a was wonderful but its affected me and i need an exemption, then a year later c comes in and says the same thing. Thats the question of whether or not it was hamilton right or all these deals the grimy necessity of managing a political i mean the argument i make in the book and i sort of go through and i kind of rank the chapters one after another in the second half. I look at farm subsidies and then look at the pork barrel and then i look at medicare and Corporate Taxes and then fannie mae, and i think on all five of those areas i think the benefits are clearly outweighed by the cost. And i think that the waste i sort of roughly it was sort of a jump ball. You cant get precise estimates but i rank the chapters the farther in the book you go the more wasteful and pernicious the effects of the policy are. So by the time you get to financial Regulatory Reform or regulation, and you see regulatory capture actually happening, its overwhelming. The indication that this was not this was not managing the venal and fractious for the sake of the great are good. That somehow failed. And i think you see it in the especially in the two prior chapters on Corporate Taxes and medicare. And in 20 years if i were to write this book medicare would be the last chapter bay long shot because the waste inherent to medicare is going to become more problematic by an order of magnitude as the babyboomers retire and this inefficient system that privileges the waste and payoffs is going to become more expensive. Often said that if you start from the premise of thinking that Financial Regulation is actually about stability or safety and soundness, youll never actually understand it. One of the things that struck me commonality, whether its fannie or freddie or medicare, and many of the subs dies like drought insurance all kind of hidden subsidies. Chris works on budget issues and theres a lot of stuff that really would outrage you what is on budget it seems to me that some of the worst of these are what we economy exists called contingent liabilities but theyre hidden. Let me ask you. Is the corruption particularly worse when theres an element of budgetary secrecy to it . I would say so. I would say that there is. And the extent to which theyre hidden is extraordinary. I was i remember when everybody kept telling me that gse never failed, they make money. We all thought they would im sure that is true in case of fannie and freddie, one problem was they werent keeping honest books there was no discovery. But i will give you an example how difficult a lot of these issues get. In tom cotton a new senator from arkansas, voted last year against the farm bill. And he was the only member of the arkansas delegation do so. And early in the year charlie cook an old political hand and very insightful guy, wrote a column criticizing cotton for doing that and saying this is not smart politics. This is ideology trumping common sense arkansas values. Toward the end of the cycle chuck todd, who again very plugged in very connected, very smart guy made the same point. And i took to the electronic pages of the Weekly Standard and excore rated them. You have to be kidding me. The percentage of kansans who draw benefit from this farm bill is vanishingly small and moreover, the entire kansas delegation voted against the farm bill. I think tom is going to be okay. But the point, though is that people who draw a living and who do a good job of understanding politics, i dont want to single those two out because i think on balance theyre smart sharp analysts, but i mention that simply to opinion out the extent of the obscurity that the reality of the farm bill is something by the way the farm bill has been around for 80 years. Its not like its a new policy. Chris mentioned culture, and i think this is incredibly important from my time on the hill and i think that charlie reflect this washington mentality, the way you get reelected it bringing goodies home to your constituents rather than actually studenting for something itch can tell you on capitol hill, that viewpoint is members have internalized. On farm subsidies, an interesting aspect with respect to transparency is that the Republican Congress in 1996 did a big farm reform bill freedom to farm bill, that made a lot of the most of the federal subsidies a lot more transparent, and thats why there was a decade or more of embarrassing stories how folks like ted turner who are massive collectors or farm subsidies and in the recent farm bill that passed last Year Congress realized this is a big problem and negative publicity. They ended that direct Farm Subsidy Program and switched to insurance subsidies, passing tens of billions of dollars to the farmer through insurance through private insurance companies, and so its essentially lan laundered money and that has made the recipients of the farm fork more invisible. So congress doesnt like transparency and they work against it. An interesting point i think about the special interests is sometimes it almost seems i dont see how we could have avoided it in american height and ill give you two examples. You go into great detail about land in the 19th century. The federal government accumulated a vast amount of land through the Louisiana Purchase and other big chunks of land given it grabbed really. It had to get rid of it somehow and the general policy for a century was to get rid of it. So a lot of it went to the Railroad Companies in return for promising to build landlines. And theres a lot of Corruption Associated with that. I dont know how we could have ever got around that because i think its a good thing the federal government got rid of the land if dont want a big federal government with big land so it had to get rid of it. Another example of indian treaties. In the relationship between the federal government and Indian Tribes was generally awful up until then 1970s. During the 19th century the federal government wrote treaty after treaty with Indian Tribes and broke them again and again and again. But so one from one perspective is its a special interest problem. White settlers were moving west and then lobbying representatives to break treaties. But which was bad and horrible when you look at it now but i dont see how we could have avoided that. Thats millions of settlers pushing out over the appalachians and squatting on indian land. I dont know how we could have avoided it. And a final example of that is with the Corporate Income tax, i differ with you somewhat on the how and why the Corporate Income tax is so complicated and corrupt as it is, but the basic problem with Corporate Income tax is that the basic structure of it is complex thing called income sets the government up for failure and corruption. The Corporate Income tax is fundmentam structure is so complicated its eating 0 for corporations to go to washington ask say this is unfair to me because of this and this and this. Were trying to tax something that is very complicated in the economy, this thing called Corporate Income, and because of that theres no good sound neutral base basis for it, and so you its an opening to corruption. Well, i think that gets back to your initial response to the book and this is a Good Opportunity for me to respond to that. I think to the question of, for instance, Something Like farm subsidies. Is this just a fundamentally misguided policy that will always produce pernicious peer verse effects that would accurately be labeled corruption . Im not an economist. I cant answer that. For what its worth think the answer to that question is, yes. And i didnt deal with that in this book in the sort of the merits of the policies as policies. What i wanted to do is sort of i think what happens is that malfunctioning policies always seem to malfunction to me they all malfunction in the same way, which is one of the reasons why i wanted to do this book as a history. I see commonality between the 19th the problem with the tariff regime of the 19th 19th century and the problems with the Corporate Tax regime today. Ive read arguments that i found persuasive that by the end of the 19th century we didnt need such heavy tariffs and this was a misguided policy. The same about to your point about Corporate Taxes and what my book is what im trying to emphasize, putting aside the merits of the policies themselves and just not to say that i dont have opinions on them and to say that im neutral on them. I write for the Weekly Standard to its not a hard bet where i come down on these policies. When they malfunction and dont work there seems to be commonality to it. I think like i said, as i notedded in my remarks, it gets back to the structure of the government. A good point. You could look at it as either a feature of, i know that dish i thought you where are too easy on some Government Programs but that sid i do think thats a balance toward isnt really a discussion of the merits of the various programs that are listed and really is a discussion of the function of them. Let me rates what i think is kind of to me an interesting issue in some of the cases, particularly both of the u. S. Bank and the bank of the United States and fannie and freddie itch want to good back to theres an economic historian at the university of maryland. John wallace, written a whole lot of corruption, particular hill at the state level in the 1800s, and you touched on this in the book, particularly in new york, and you think the federal government was bad. Wow. Of course especially in this era of great default and we remember during the 1820s and 30s and 40s with statelevel defaults. One thing that professor wallace identifies is in his work is entry barriers, and so to me one of whatever you think fannie and freddie as an aside there are lots of arguments about the financial crisis. One merit of the chapter is you dont wade into those. This is not citiverse fannie. It is about here are these specific institutions that got privileges that nobody else got just like the bank of the United States, and so interestingly what professor wallace argues in his work is that you had all of these state charters institutions with the legislators were hand ought charters. And what he saw is the really big change in about the 1840s and 1850s was the creation of General Corporation laws so that anybody who wanted to start a bank, anybody who wanted to start a corporation didnt have to bribe politicians. You just went down, filed the paperwork, and he argues this is a really big change in terms of reducing corruption in State Government and i think theres some truth to that. So my point the question to you is, how much of this is driven by exclusionsive special charters and privileges, at least the Financial Sector . I think certainly the story of fannie and freddie is. And i think that day were given basically a sprint that given a rent that was enormously valuable inner 2001, ceos scored it 10 billion was the value, and then there was the bombshell that only twothirds of it got returned back to home owners. The rest later Federal Reserve studies said even less. This is the problem with charters and privileges. Right . This is sort of that why fannie and freddie are at the end and why the bank the banks are at the beginning, because they were given these special privileges, but they were private institutions and what they were then able to do is take a portion of that bounty and plow it back into the political system to protect their rent. This is why its not as widely known as maybe it should be, but because it was in a letter that madison wrote. Mad sis on and jefferson with unfire infuriated by the actions of the bank. Madison knew he was in new york early on in the banks days and was awe appalled by the scramble for federal paper and poor farmer ares in were not on the inside of it. He worry evidence that these stockholders of the bank he worried that it would about become the band of government at once it school it tyrant. Bribed be large largess and overwhelming it. One of my favorite tide tidbits another be bank of the United States, during the congressional debate one of it biggest defenders senator daniel webster, was its paid general counsel while a senator. Thats an example of where i sort of got a bit of humor writing this. Daniel webster has been remember and not wrongly as the great defender of the union. But if there was somebody whose pocket he could put his hand into that is what he did. Thats what he did. Excuse me. Maybe he last quick question. What about solutions jay . Its i dont know how we could ever fully solve problems like logrolling, but are there institutional changes like a balanced budget amendment, like term limits 0 you would favor to tamp down i would favor both of those in terms of institutional changes, i would favor a whole host of them. The problem ultimately is that the amendment process has to go through congress, and youre effectively asking congress to reform itself. But what it is worth i have a piece come knight Weekly Standard actually went live overnight and then i have something coming out in National Affairs talking about next steps, and i tried to frame it it comes off as a little small ball, and we can talk about bigger reforms about i wanted to frame it in sort of like what could we actually get done . There are things like rocking the revolving door and regulating locking the revolving door and regulating not Campaign Finance and regulating speech but regulating whom members can accept pac money from. If youre a chairman of the committee that oversees agriculture interest, how are you taking contributions from monsanto . If youre a judge and you did that and they were before your court you would be kicked off the bench. Those are suggestions i have. Theyre smaller ball but i wanted to write something i didnt feel like was pie in the sky. I was thinking our friends at home on cspan might hear the conversation and the title of the book is a republic no more Big Government and the rise of american political corruption. You are authorize is jay sos and you can obtain the book the usual places online or at your local book store. Here however were going to go to the question and answers part of our event. And what i would ask in the usual way, is that people raise their hand put then wait for the microphone. And this is a word that ive been looking at for three years trying to get a handle on what the testify in addition is of a republic. Now, of course, theres all these common definitions that basically say, well its not a monarchy. There are other definitions that go all the way to say, no, it requires a constitution, that you have to have individual rights. And im just shocked by the range of definition that ive found. And im also shocked by the fact that nobody seems to ever when they talk about a republic ever come to define it. I dont know if your book does but my, my experience has been that people use the word republic all the time and make no attempt to define it. So my question to you is how would you define what a republic is . Well, thats a really good question, and i think that one of the challenges is is that a republic is not a republic is almost the product of government. Its almost as if and democracy, monarchy, whatever, thats sort of the process. And republic almost refers to the end result. So montesquieu, for instance thought that the british system was the most perfect republic ever invented by human artifice. Hamilton similarly i mean, hamilton is certainly within the republican spectrum, and if you look at his proposal to the Constitutional Convention, youll see its very close to the british system. Because a republic, you know meanwhile, though, you know, madisons first choice was not as close to a monarchy on the spectrum in the final product of the Constitutional Convention was very far off, and i think that the range of opinions, the diversity of opinion in the Constitutional Convention, those who signed the document and so are on the most monarchical side would be hamilton and those who also rejected the document refused to sign it, and i would say they are all within the republican spectrum. Its not about the process, per se, its about the end result. And my understanding and the way i define it is a republic is a system of government whatever the eventual design may be that governs for the people as a whole rather than the individual interests. Madison specifies that a little bit, he has a condition he called the republican principle that i think was widely accepted that ultimately majority rule has to play an essential role in the republic somehow. But, again, there were vast differences about what role it should play, you know . Hamilton saw most institutions of government completely and permanently separated from majority rule, and i would still say that he was a republican with a small r. And if i could try to summarize sure. Very shortly what i think jay is getting at, well n layman terms in layman terms the intention is a public that is trying to broadly serve the general interest rather than the reflex of an monarch. A monarch. The reason that we have a republic no more is this erosion of the general interest for fractional or special interests. Lets go to another question. Gentleman right here on the aisle. Jim snyder. My question picks up on one of the themes that there are some [inaudible] to corruption. Things often get done [inaudible] but my question is maybe there are some areas where corruption is especially beneficial. Lets say the development of infrastructure. So pick up an example with railroads. Between 1865 and 1915 america built 5,000 miles of rails a year, and we led the world in rails, transportation both in amount and the quality. Since we regulated that and eliminated corruption from the system, americas rail system has become somewhat the laughing stock of the world. China built 10,000 miles during the last daled far superior to anything we have ever built in our history. And so the question is maybe there really are some positive elements. And ill just give you one vivid example thats a contemporary issue, the future of the tv spectrum. We have decided were going to give the broadcasters close to 100 billion in giveaways because thats the only way we know how to transition to getting them to provide, you know be purposing it for cellular services. No other solution in our system other than just give it to them. And i think there are a lot of issues like that with infrastructure where its just, its really unfortunate, but thats the only way we can progress, is with a pretty significant dose of corruption this that area. So let me well, i mean im not going to disagree with that in principle. Like i said, you know, the book is you could read it as a criticism of hamilton in some respects but i am profoundly aware of his genius and at times found myself overwhelmed by it. And so thats not your point is not a point that i take lightly. But i just want to make a comment, though, the challenge the challenge with the argument is talking about the railroads in the 19th century was in the best way things could have been done . The railroads had a vice grip on the American Farmer in the west to the point that where these traditional Republican Voters embraced populism the populist party and the populist movement which was a far left wing movement. I think as late as 1907 William Jennings bryan says its time for the state to control the railroads. Now, that is just antithetical to the foundation of our system and yet bryan in 1896 became shockingly close to becoming president of the United States. I mean, if it was not for the uptick in wheat prices he very well could have won. Why . Why did the system almost produce probably the most radical president that it could have produced . And it was because of the atrocious condition of the American Farmer. And generally and i think that the American Farmers treatment at the hands of the railroads was a general condition whereby the nations political economy, the Political Economic development of industrialization was grossly unfair to the American Farmer. Who, by the way, still by i think about 1880 constituted a majority of the work force, a majority were farmers. So that sort of speaks to, you know, the dangers. And even so and i mention this because, you know, we can look in retrospect at this time and say well, this was a good thing and this was a good thing, it was a good thing in the long run. If you were a farmer in western kansas in 1887, it was an awful thing. Can i jump in . Ill give you my quick thumbnail of railroads in 19th century. Most american railroads in the 19th century were not built with government subsidy. Most of them were private enterprise, and im talking railroads in the east. Government started subsidizing railroads to the west, union pacific, and thats when you started getting corruption. Jay talks about the scandal of the corruption. My take is that, you know, america would have been railroaded without any government subsidy and indeed, theres a famous case of the Great Northern railroad built by a entrepreneur that went up on the northern route near the Canadian Border completely unsubsidized, very successful. The railroads would have got built without any government subsidy. The railroads probably got built faster because of the subsidy and as i said, there was i dont think it was necessarily ended up being a bad policy, because the federal government had this mass amount of land it had to get rid of it, it could give it away to individuals or businesses like railroads x thats maybe, you know, not a bad result. I would have rather that resulted than if the federal government had retained all the land. Let me follow up on a related issue which as an economist, we often talk about things that are second best. So theres sevenly lots of things where dub certainly lots of things where there are constraint and supply. Youre going to have to pay a bribe. It would be nice if you didnt have to pay that bribe. That would be the first best. But if the choice is you dont pass that checkpoint or that border are you paying the bribe, that bribe facilitates transportation in that instance. Maybe more directly in the United States. Its very difficult to build almost anything in many places in the United States. Lots of Council Members are bribed one way or another so that shopping center, that Apartment Building can go up. First, best world you dont have to bribe people, but if we dont live in that world and where some Government Official controls the decision or not, the fact that that decision is usually for sale is probably better than a world where that decision is not going to be allowed to happen at all. I certainly see in some instances, this is not a generality where bribes are going to be the grease that gets something done, offsets other imperfections. And, again, what we try to do at cato is talk about all the imperfections that you should deal with in the first place. Let me make one final point which is, you know, in the book im very sensitive to the degree in the book. Like, for instance the patronage system in the 1830s was corruption. But it doesnt in my judgment, come in for floorly as harsh a criticism of the 1870s. And in the 1830s, it was a way to hold political coalitions together. But ited had devolved to the point where it became the purpose of politics itself by the time the regime finally collapsed with the assassination of james a. Garfield. And that i try to get to that with the five substantive chapters on domestic policy. Here we have corruption that overwhelms whatever noblespirited purposes exist behind the originating legislation. Gentleman three up and two over. Thank you. Carl gulling ivan. A reminder of t the law, t and he referred to plunder and how the law can be misused for i think weve awe arrived at pretty much universal plunlder in our system. And its all based on dishonest weights and measures in terms of a monetary unit and usury. I wanted to ask you about Andrew Jackson, whether you explore the wonderful words of his farewell address from 1837. He just articulated so clearly that the constitutions system of must be was meant to protect the wealth of the laboring class. Just together would barter away control over the most precious aspects of life like today health care. So did you explore Andrew Jacksons farewell address in your book . No, i did not. I have a lengthy section on Andrew Jackson who comes in in general for fairly harsh treatment, deservedly so in my estimation. You know, when i this is the second book ive written, and i find that i have opinions about certain historical characters when i go into a book, and when i come out, its interesting to see how its changed and my opinion of jackson has plummeted to about as low as any opinion can plummet notwithstanding hi views his views on the currency. I elected not to, you know i was very strategic in looking at picking the issues which is not to say currency doesnt fit into the hypothesis, it was just that i had limited space and wanted to be strategic in my selection so that the chapters could be grounded on what i view the five especially in the latter half of the book, the five substantive chapters on farm subsidies, on the pork barrel medicare Financial Regulations and Corporate Taxes, i tried to find consensus views of the facts. And i felt like, you know regulation of the currency is something where there is such deep divisions between people on it that there wasnt Common Ground from which i could make an argument. So i think one benefit of the book and, again, this is both the sort of feature and the bug, is there is many issues where the book just gives you tastes of the issue. And, again the bank war is one of those and to me, i find it one of the more fascinating episodes of American History so id certainly encourage people to read it and to read jacksons veto message of the second bank is one of the powerful, to me, arguments against privilege. But then again i see jackson as very mixed. Obviously, the trail of tears and his rejection of the Supreme Courts decision in that regard also probably one of the worst episodes in American History. So hes quite a mixed bag. I will say, to me, there are some discussions of the Current Issues in the book. Not a lot. To me, i do think some of the economics are a little off, but if thats a topic youre going to pursue in the future, i would encourage it and, again people to do research into that area in general. The woman on the aisle near the barrier. Hi, im Meredith Mcgee here with the Campaign Legal center. You touched just at the end there about solutions. And not surprisingly while we may disagree on many other areas, this notion of the corruption that is inherent in special interests in washington notwithstanding Mitch Mcconnells claim theres really no such thing as special interests in washington id be interested in hearing you speak more about the role you think money in politics place in this plays in this corruption the corporate welfare, however you want to characterize it. Some of us have long believed obviously, that not only does it influence the outcome of elections but, obviously along with lobbying and other things, exactly what happens the policies that get made. So id like to hear you speak more about that. Sure, id be happy to. And the end of the book is sort of a call for a bipartisan crossideological coalition where i think there are areas of agreement. You know, i found myself agreeing a lot when i was writing, especially the last chapter, with raffle Nader Ralph Nader who saw the problems of fannie mae and freddie mac very early on and recognized it was of a problem and you can put him right next to peter wallison. Hard to find people who disagree on more things, but on that one they do agree. And i dont think its denial that special interest money is a problem in politics. I think that it is, because of the limitations inherent to the federal Elections Campaign act i think it has to be the small end of the wedge is what it is. And sort of maybe a better metaphor to say it would be the foundation of what have become pervasive transactional relationships whereby you have campaign contributions, you have statements of public support lobbying providing partial and frackous information and then on top of that you have the revolving door which is basically a way to subsidize legislators who make rl thetively little money relatively little money compared, you know your average american would say, come on, they make 200,000 a year. But if you compare them in terms of their social status, theyre grossly underpaid, right . In a market base theres only 435 of them. They should be able to negotiate a better wage in the private economy. But what happens is, you know, they take that salary but then they know when they leave office they have a nice, you know [inaudible] coming to them. Its interesting to me because it happened as a product of the progressive reforms during the first half of the 20th century did away with the old, corrupt scale of doing business which was the party machine. Which is why, you know, i get a lot of conservatives complain to me about the 17th amendment and often times depending on what kind of mood im in ill humor them, or maybe i will say you dont understand how bad it was before the 17th amendment was passed, because it was of a disaster. As a matter of fact, if you look at the cover of the book the person at the top here is nelsonnal driven whom Lincoln Stephens called the head of it all. The head of this vast alliance between corporate interests and the political barons that controlled the senate and who in turn controlled State Governments. Its one reason why we never got any sort of sensible tariff reform until Woodrow Wilson became president for better or worse on that. But on that front, for better. The point, though, is that this regime was undone, and then this current regime came up in its place. This current regime is relatively new. Its about 50 60 years old, but it is and its its not as grubby as the old regime. The old regime was very grubby. There were these letters that were exposed, William Randolph hearst found these letters in 1909, but he kept them in his pocket until 1912, these letters that executive from standard oil and these politicians and the politicians would write i need money. And the executive would write back okay no problem, and if you get a chance, kill this reform percolating in the states. Very salacious and very grubby. Nowadays we dont have anything of that. Everything is couched in a legalistic veneer. I refer you to my counsel here, i dont recall that, blah blah blah but the result is the same. And the Campaign Finance system as it exists is the foundation of it. Its been at least a decade since the congressman was found with a freezer full of cash right . [laughter] ill note that aldrich is one of the fathers of the Federal Reserve system, i dont think by coincidence. A question i have, and this is one of the things i struggled with the book because i do think at the end part of the suggestion is this maybe what ill characterize it as maybe a marriage between progressives and libertarians that break off from the separate parties. And you used the example of Grover Cleveland right. As someone who was able to do that. At least in theory. Yeah. No president s been perfect. You know certainly talked a good game. Exactly. To me, i think the tension and, again, someone who tries to build these coalitions on a regular basis it often comes down to where do you think the actual source of corruption is . Is this, you know, government you know basically creating rents at which to extort and then redistribute, or is this business an otherwise wellmeaning government . Again, i do think its both, but i think maybe purposely you skip around that issue in the book so im going to is you where is which do you see is the predominant source of this . Or does it matter . Im not sure that it matters for the sake of an alliance. Do you treat the underlying malady or do you treat the symptoms . We get a little relief from treating the symptoms. I think it matters in the sense that so to me, if we believe the problem is that government essentially creates pseudomonopolies by restricting market and entry, then the answer is not, well lets just regulate it more, the answer is lets not hand out special privileges. Lets have competition, open markets. And, again, i point out that seemed to be the solution at the state level in the early 180s. Well yeah, you know when i wrote the book, the book was meant as a diagnosis rather than a cure, and so the final, concluding section is just sort of a suggestion pointing toward a cure. And like i said, the piece that i have coming out in the standard is just stuff that i think is more salable, you know . And i say a all that to say i dont disagree with anything you said, but i just think as a practical i wanted to be practical, you know . Excuse me. I cant help recall on the question with of money in poll the ticks the name of another politics, the name of another book the fallacy of Campaign Finance reform, which takes a slightly different view of these matters. I would also mention that we should keep in mind that the people engaged in the practices documented in this book are going to be the ones who also write federal Campaign Finance regulation. With that, on the aisle, three up, please. Thank you. Wait for the moan, please the microphone, please. Jay, im convinced to buy the book. Thank you. Do Public Private partnerships for Building Infrastructure produce factions that threaten madisonian and local governments . Well i think the answer is, yes. I think the short answer is, yes. The long answer ill give you an example of, you know, one of the i mentioned in a previous question about how grubby the 19th century was. I have to admit, i often found its grubbiness charming [laughter] in a way. And these sort of devious sort of characters i found them sort of refreshing for their frankness. And one of the more sort of and also for their overthetop quality as well. I mean theres just something to them that, you know i have this point in the preface where i talk about matt quay who was born near where i live, he was born in beaver. So hes hauled before a committee during the debate on the sugar tariff. Are you investing are you speculating the sugar yes i am. And im going continue to do so, and theres nothing you can do about it, thank you very much. A bit of the classic the archetype, the la topic ideal of that kind of character was Simon Cameron who was the boss, the originator of the pennsylvania political machine that dominated from basically the civil war to the great depression. And this guy was such a snake, but he was so good at politics that lincoln had hired him as his secretary of defense and shortly had to fire him because he was so over the top in his corruption. And yet it did not stop him. A decade later he was in control of the entire state. And how did Simon Cameron manage such a feat . Because he was so wealthy. And why was he wealthy . Because he was a newspaper man in the 1830s in pennsylvania and, of course, the newspapers in the 1830s were partisan. Well, of course, todays papers are partisan too. They were just openly partisan. And when the paper and he was a democrat in the 1830s, became a republican, but when they started handing out charters for this and that, Simon Cameron transitioned very seamlessly from being a newspaper man to a businessman and made a vast fortune. I, you know, cite all of the various corporations that he was in charge of, and its just ridiculous how many things he controlled. So, yeah the i mean and scam on is the and cameron is the perfect illustration. Yes, that, you know franchise granting is a pathway to corruption and it was how a man as obviously crooked as Simon Cameron could never the less not only rule pennsylvania politics but create a political machine that was only brought down by the great depression. [inaudible] ive written about the issue of infrastructure ppp, and i amgenly in favor. Theres three ways you can build infrastructure. You can have it purely private a lot of airports and seaports in britain, for example. You could have a wholly government oldfashioned contracting, or you could have and theres been development over the last couple decades to move to the sort of middle road for building highways and some other things. So the capitol beltway in washington, d. C. Here was wide ended in a ppp project. It was about a 2 billion project, a private Company Kicked in about threequarters of that, i think roughly and then virginia kicked in the rest. So to widen the beltway in virginia either you could do oldfashioned contracting and the government would dish out 2 billion, you could do a ppp which is sort of halfway privatization where the private sector kicks in some and the government kicks in some, you can get corruption in both of those ways. Before ppps arose in recent decades, it was oldfashioned Government Contracting, and there was often corruption in who got the contract. So what ppps are is a new way of doing Government Contracting where some of the risk is handed to the private sector. There can be lots of problems in ppp contract but there can be lots of problems in oldfashioned government contracts as well. So its not a pure black or white. Ppps are interesting because theres a lot of folks on the left who are against them but theres also a number of conservative groups are against them too. And i dont think its a pure black and white kind of an answer. [inaudible] well in the capital beltway in virginia the partner the private partnership took a lot of the risk. If the revenues from the traffic that they projected over the decades doesnt come through, they take a hit. They make more profit if they can maximize the flow on the highway and keep their the operating and maintenance costs down. [inaudible] no, thats not true. Yeah. Our book today has been a republic no more, and id like to thank jay cost for coming here today. Id like to thank my colleagues, mark and chris, who once again have reminded me that its a good thing to have good colleagues. And id like to thank you all for coming. Now we are going to go to lunch. The lunch will be held on the second level. You go up the staircase in the george m. Yeager conference center. Restrooms are on the second floor on your way to lunch, just look for the yellow law excuse me, the yellow wall, and thank you very much. [applause] [inaudible conversations] booktv is on twitter and facebook, and we want to hear from you. Tweet us, twitter. Com booktv or post a comment on our facebook page, facebook. Com booktv. Heres a look at some of the upcoming book fairs and festivals happening around the country let us know about book fairs and festivals in your area, and well be happy to add them to our list. Email us at booktv cspan. Org. Booktv continues now with me ma moore. She talks about the role that the public and policymakers have played in maintaining what she contends is a racially biased criminal justice system