Transcripts For CSPAN2 Book Discussion On A Republic No More 20150330

The people who get in government think that they can centrally plan the economy as it the economy or set society was like a chessboard that the government can manipulate. That is the problem with the Big Government. So i dont think i think jays critique is the hamiltonian or henry clay kind of Big Government system perhaps could have worked in washington if we changed the institutions in washington over the decades. I dont think thats right. I think the government failed because it tries to centrally plan. A second point and maybe this is more, i thought it was interesting more bit of an agreement with j. Is that the master and the of checks and balances and that factions and extend republic our each other to the broader public good medicine and fairly, jay can correct me if im wrong, didnt see logrolling. Its a central and crucial problem in government and jay goes into this in some detail. Back to the 19th century logrolling was a huge problem with various programs. I think a discussion of Woodrow Wilson served one of the big problems with the decentralized power structure and was that the window who was responsible for failed government policy. Its a huge and central problem i think right now and you can see the difference in countries i think in the United States with countries with the British Parliament a system like canada and britain where governments coming to power ended simply short term dictatorship it everyone knows who is at fault for failed government program. The United States its much were difficult. Political accountability is something that is a real problem in the american system. Woodrow wilson was a terrible president but i think his observations about responsibility our bank on which jay goes into. A final point and maybe a point of some disagreement with the g8 is that the election of 1800 when Thomas Jefferson came to far was a landmark in American History. Jefferson promised a Smaller Government a review of all income taxation, spending cuts, balanced budget all the stuff we like you at the cato institute. Jay argues that the jeffersonians were quickly overwhelmed i federalist ideas and they became federalist in subsequent years and decades. I think thats a little off. I think a number of the jeffersonian ideas actually had real sustained power in American Public policy. Jefferson, for example did, in fact, follow through ever feel income taxes. That policy held until the civil war. Jefferson hated that come him and htreasury secretary hated that and they promised they would cut it. They did cut it, and that policy the hatred of that in favor balanced balance budget lasted all the way through to the new deal, with the exception of war. There is something here that culture plays a role there, too. The idea that we are to balanced budgets budgets, we have to pay down debt, it was an ideal that the institutional structure of the government didnt guarantee balanced budgets but we generally balanced budgets all the way from 1800 through to the new deal. Ive calculated we balanced the budget 70 of this years which is a pretty impressive record. Again, generally an excellent book. I think one thing that is left out is the culture of our governing institutions just a bit of a different issue than the institutional structure. Jay would be useful to kind of, can you take a very specific definition of corruption in the book and certainly if you ask five different people what they mean by corruption you will get six different answers. Theres definitions site think would be helpful before we get into conversation if you could lay out a very specific what exactly are you defining as corruption in the book . Thats a really good question. It was something i struggle with when i was writing the book because of course you can win any our commitment on how you define the terms. So the question then became where should i plant my flag . Was my foundational premise . It just has to be the premise. I decided that madison, at least as i read him and i think i have read them recently, i think madison, his definition of factionalism or the violence of faction, and they chose that because, well for a couple of reasons. The first one is i think it illustrates pervasive problems that are often overlooked with too narrow a definition. But 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 women like hamilton and washington and madison so worried about . They were very worried, and they were worried about factionalism. And i think that its not unreasonable to use that as a 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. Thats sort of how i take him about that. Worth observing a lot of the corruption was maybe what we all commonly think of corruption as Public Officials and the friends lining their pockets. I guess you could survey say the smallest faction is a faction of one. I think thats very helpful to me. The book is kind of about these concentrated groups essentially taking advantage of the government for their own benefit at the public expense. I think it is i think jays sort of i can tell you struggled a bit with the idea of what is private interest versus Public Interest. We all want Public Policy and abroad general Public Interest of people on every end of the political spectrum will say thats what they want what does that mean . Im writing an essay now on why the federal government failed, and theres a similar problem that what is the definition of failure is when the federal government doesnt do something the broader general Public Interest. Special interests, like the one mark used to for, would argue that what they are proposing is in the general Public Interest in the mortgage interest deductions and it is hard to get a really good, a hard definition about the special interests undermine the general welfare. It is. In fact, it reminds me and introduction of chapter one, i dont remember where i recount it was jeffersons telling which maybe might make it of dubious agassi but it was for his personal record, personal note. He recounted a conversation he had with john adams and hamilton about the british constitution. Adams said it would be the perfect constitution if it only was purged of its corruption and given a quality representation. And hamilton said purge it of its corruption and will become a useless institution, as it stands it is the most perfect government ever created. Jefferson of course was appalled by this but hamilton was, and this speaks to the question of what is a public good. Hamilton thought that what is the problem if the team has to bribe small minded members of parliament to do what they should do anyway . Weve seen it at times for our history. Lincoln had to dispense patronage to a congressman from new jersey to get the 13th amendment passed. The response when i read that that was very striking. One reaction would be thank god yet available patronage. But the same time though its a difficult, its a difficult, seemingly difficult to find define the Public Interest at times. The way Justice Potter stewart described pornography. You know when you see it. We can talk about the difficulty of the public good in the abstract but the new start decorating a dead weight lost inherited farm subsidies since the new deal enjoyed with a farm subsidies are going, and theres no question. Similarly you look at the patronage regime by the end of the 19th century. You could make an argument early on jackson and jefferson, to a lesser extent were cant hold the Political Coalition together which is necessary to implement a public program. But look at the way the port of new york city functioned by the end of the concentric. It was disastrous. It was harmful to the national interest. When you read the story since exactly what what was going on theres not a lot of doubt. I think that concept of Public Interest is from certain perspectives is often very hazy and, of course, informed a lot of our public debate. But then there are these issues where the split is really 955 and thats what i try to look at in the book. Something you can elaborate on his old logrolling issue. Was i right that madison missed the logrolling problem . Get a welldesigned system. He read about the constitutions but it does seem to be that almost as soon as the ink was signed on the constitution of logrolling will start. You going to detail how starting aagainst in 1826 they started passing big harbor army corps of engineers project to build where they initially started passing these army corps of engineers projects singly and let them fail in the legislature but then they got the great idea of bundling a few hundred together, putting them into big omnibus and it was called on the bus at the time and that was the beginning. They realized they could do that with post offices, bundle that with a bunch of bad projects with has been a big deal. That is something out of it into in the book. 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. It might of had to do it in to taxation but im not sure. I think the first or Second Congress was very disturbed by what he saw. And, of course by the 1820s which was just a generation into the new government. Not only do you get rivers and harbors act legislation but then you also, rivers and harbors you dont think is a big deal nowadays but think about the country in the 1820s, it was usually important. On top of that you get in 1827 28 tariff of abominations which was a log wall between new england and the Midatlantic States at the expense of the south. And ultimately precipitated the nullification crisis. That was something he missed. Of course, today log rolls, and to talk about this in the second half of the book is that log rolls today you dont exist on the house floor, or the legislative floor. They certainly have been but usually the committees are much better for securing what political scientists have called gains from trade. You hand discretionary power over the process to committees and the people who want pork from say defense or technology, they gravitate to whatever committee has particular control over it. That was not formed yet in madison state and thats what get things like rivers and harbors. As a former Committee Staffer i saw way too much of the. But if you want to go back to what i think is kind of an interesting issue, hamilton almost suggesting theres good corruption, and ill use some of the examples i saw on a regular basis on the hill. So for instance chris has written on the very large grants and subsidies we get to states and localities. As you could imagine they want the check without any federal strings. One of the things i was on the receiving end on a regular basis on hill with some senators coming and saying we like the money but can you exempt this from this requirement . Of course the usual answer was happy to have a conversation with you. The shocking thing was i was the only one who ever did that. I never had anybody argue with me on principle, youre right but we got to get the bill done. It for the greater good, lets move this forward. Whether its the Mortgage Finance stuff or whether its other areas of public assistance you do often hear this argument, its not explicit implicit, that if you dont let the special interests, the providers take some portion of the subsidy, then nobody will lobby for the subsidies and we wont have these great and good things and poor people will die in the streets. Im going to put it back to you and say other than kind of the outrage of the cornhusker carveouts and things like that where is your evidence and viewed that on net these offsets, these carveouts, these corrupt deals outweigh the greater good of these individual individual, the back package if you will . Thats a good question. A Ranking Member for years on ways and means, riding the tax policy inflames and means, comes in and says a policy that is good but i need an exemption. He gets his exemption and year later, the exemption you gave a was perfect and wonderful to see it is effective in this way so i made an exception and then year later c comes in and says the same thing. That is all they the question of whether or not it was hamilton wright, all these deals from the grinding necessity of managing political i mean, the argument that make in the book and i sort of go through and that kind of rank the chapters one after another into the epic i look at farm subsidies and i look at the porkbarrel and the delicate medicare and Corporate Tax is and then fannie mae. I think of all five those areas i think the benefits are clearly outweighed by the costs. I think the waste i sort of roughly it was sort of a spit public educated precise estimates on these things but i sort of rank the chapters so the farther in the book you go the more wasteful and pernicious effects of the policy are. So by the time you get to financial Regulatory Reform and to see what, or regulation and juicy revelatory capture actually happening and its overwhelming, the indication that this was not this was not managing the venal and diffraction for the sake of the greater good. The that somehow somehow failed to i think you see them, especially in the two prior chapters on Corporate Taxes and medicare. In 20 years if i were to write this book medicare would be the last chapter in the book by a long shot because the waste in her to medicare going to become more problematic by an order of magnitude as the baby boomers retire and this inefficient system that privileges, that privileges waste and pay off is going to become more expensive. Ive often said if you start from the premise of thinking Financial Regulation is about stability or safety and soundness and youll never understand the financial system. One of the things that struck me, a commonality among much of this whether its fannie or freddie or whether its medicare or many of the, Crop Insurance its all hidden subsidies to chris worked on budget issues a lot and theres lots of stuff that really outraged you about whats on budget. It seems to me some of the worst of these, what we call contingent liabilities by their essentially hidden, so let me ask you is it the corruption particularly worst with this element of budgetary secrecy to . I would say some. I would say, the extent to which their hidden is extraordinary. I remember when everybody kept telling me gse has never failed. Weve all told these things would be great and im sure thats true the case of thinning and freddie, one of the problems there was they werent keeping honest books. There was no discovery. But i give you an example of just how difficult a lot of these issues get is that tom cotton who of course is a new senator from arkansas voted last year against the farm bill. He was the only member of the arkansas delegation to do this. Early in your charlie cook was a bold political, a very insightful guide, wrote a column criticizing cotton for doing that and saying this is not smart politics to business ideology trumping commonsense arkansas values. Toward the end of the cycle, chuck todd it again very plugged in, very connected, smart guy made the same point. And i took to the electronic pages of the Weekly Standard and excoriated him for it. You have to be kidding me. The percentage of arkansas and a drop benefit from this farm bill are vanishing small. And more over the entire kansas delegation voted against the farm bill. I think tom is going to be okay. But the point of is that people who draw a living and they do a good job of understanding politics, i dont want to single those two out because of the compound they are both sharp smart endless but imaginists eddie tafoya the extent of the obscurity that the reality of the farm bill is something am at by the way the farm bill has been around for 80 years. Its not like its a new policy. Chris mentioned culture and think this is important. I consider my time on the hill and i think charlie cook reflects this washington mentality that the way you get reelected is bringing goodies on to your constituents rather than standing for something. On capitol hill that viewpoint is internalized spent farm subsidies, an interesting aspect with respect to transparency is that the Republican Congress in 1986 did a big farm reform bill freedom of the farm bill that made a lot of, most of the federal subsidies a lot more transparent and thats what is a decade or more of embarrassing stories about how folks like ted turner were massive collectors of farm subsidies. And in the recent farm bill that passed i guess last Year Congress realized this is a big problem, a lot of negative publicity. They ended that direct Farm Subsidy Program and they switched to insurance subsidies passing tens of billions of dollars to the farmers through insurance, through private insurance companies. So it is essentially laundered money and that has made the recipients of the farm pork more invisible. Congress does like transparency and they work against it. An interesting point i think about special interest is sometimes it almost seems i do see how we could have avoided it in American History and no tv took samples. You go into great detail about land in the 19th century. The federal government a commitment a vast amount of land to the Louisiana Purchase and other big chunks of land given to us, grab really. It had to get rid of some of the agenda policy was to get rid of it. A lot of it for example with to the Railroad Companies in return for promising to build a land lines. It was a lot of corruption associate with that but i dont know how you could have ever gotten around that because of the its a good thing the federal government got rid of the land. I dont want a big federal government with big land so it had to get rid of the. Another example you go into detail but in vienna treaty. Indian treaties. The relationship between the federal government and Indian Tribes are generally awful right up until the 1970s. During the 19th century the federal government wrote treaty after treaty with Indian Tribes and broke them again and again and again. So from one perspective there was a special interest problem. White settlers were moving west and lobbying their representatives to break treaties, which was bad and horrible when you look at enough but i dont see how else you could have avoided the. To our millions of settlers pushing out over the appellations and squatting on indian land. I dont have we could have avoided. A final example of that is what 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 in my view, is the basic structure of it trying to tax this complex thing called income since the government up for failure and corruption. The Corporate Income tax its the liberal structure is so complicated that its easy for corporations to go to washington and lobby and say this tax is unfair to me because of this and this and this. So were trying to tax something that is very complicated in the economy, this thing called Corporate Income come and because of that there is no good sound sort of neutral basis for it. I think they could thank you your initial response of the book and this is a Good Opportunity for me to respond to the. To the question of, for instance, Something Like farm subsidy, is this a just a fundamentally misguided policy that will always produce pernicious, perverse effects that would accurately be labeled corruption . Im not an economist. I can answer that. For what its worth i think that the edge to that question is yes. But i didnt deal with that in this book. Sort of the merits of the policies of policies. What i wanted to do was sort of because i think what happens is now functioning policies always seem to malfunction. To me they always seem to malfunction in the same way which is one of the reasons why i wanted to do this but as history because i seek commonality between, for instance, the problems with the tariff regime of the 19th century and the problems with the Corporate Tax regime today. Ive read arguments, i found persuasive that by the end of the 19th century he did need such heavy protective tears and that this was a misguided policy. The same about to your point about Corporate Taxes my book what im trying to emphasize, putting aside the merits of policies itself, not as i dont have opinions on them to say that im neutral on them i write for the Weekly Standard so its not a hard bed or i can do most of these policies, but when they malfunction and dont work there seem to be these commonalities to it. Like i said i think as i noted in my remarks i think he gets back to the structure of the government. I think thats a good point to you could look at it as either a feature of, i felt like it, points of the book and might sound surprising, i thought it was too easy on some government programs. With that said i think thats a balanced towards, really a discussion of the merits of the various programs that are listed really a discussion of the function of them. Let me raise what i think is in an interesting issue in some of the cases, particularly through the bank of the United States. Fannie and freddie, i want to go back to it economic historian at the university of maryland who should whole lot on corruption at the state level in 1800. You talk about this a little in the book particularly in new york, do you think the federal government would of course especially in this era of great default, we remember during the 1820s, 30s and 40s were all at the state level defaults. One of the think professor wallace has done in his work is sort of entry barriers. So to me what if you think about fannie and freddie and houses as an aside for those, theres lots of arguments about this one of the merits of the chapter is you dont wade into those. This is not about city versus fannie. It is about here are the specific institutions that got privileges that nobody else got, just like you mentioned the United States. Interestingly what professor wallace argues in his work is that you of all of these state chartered institutions where legislators were handing out charters. And what he saw as the really big change in about the 1840s and 1850s was the creation of General Corporation laws so that anybody want to start a bank, anybody want to start a corporation did not have to bribe politicians. You filed paperwork. He argues this is a big change in terms of reducing corruption in state government. I think theres some truth to the. The question to you is how much of this is driven by exclusive special charters and privileges at least in the Financial Sector . I think certainly the story of fannie and freddie is and i think that they were given basically rent. It was enormously valuable. In 2001 cbo scored at around 10 billion was the value, and then there was a real bombshell that said only twothirds of it got returned back to homeowners. Later Federal Reserve studies have said even less. This is the problem with charters and privileges, right . This is sort of by fannie and freddie are at the end and why the banks are at the beginning is because every given the special privileges, as they were private institutions. They were able to take a portion of the bounty and plow back into the political system to protect the rent. This is like its not as widely known as maybe it should be but because it was in a letter to madison road. Madison and jefferson were infuriated by the behavior of the first event. Jefferson had it on result could afford it was i members of congress to madison new he was in new york early on in the banks days and was appalled by the scramble for federal paper. He knew that poor farmers in the south and west were not on the inside of it. He worried that the stockholders of the bank, he worried it would become the band of government. Bribed by its largess is an overwhelming it with disclaimers, was his quotation. I think thats a perfect description of fannie and freddie. I do not commission is in the book but one of my favorite little tidbits about the bank of of the United States was during the congressional debates one of its biggest defenders then senator Daniel Webster, was paid council while senator. Thats an example of sort of i got a bit of grim humor writings but because of course Daniel Webster has been remembered, and not wrongly, as a great defender of the union. But if there was somebody whos pocket he could put his hand into, thats what he did. Maybe a last quick question. What about solutions jay . I dont know how we could ever fully solve problems like logrolling, but are there institutional changes like a balanced budget a minute, like term limits that you would favor to try to tamp down some of these problems because i would favor both of those. In terms of institutional changes i would favor a whole host of the the problem is the minute problem has to go to congress and your effectively asking congress to reform itself. For what its worth a good piece coming out in the Weekly Standard, it went live overnight, and then if something coming out in National Affairs talk about next steps in to try to frame it. It comes up with a little small ball and we can talk about bigger reforms but it wanted to frame it in serflike what could actually get done. Things like locking the revolving door, for instance, and regulating not Campaign Finance and regulating speech, but regulating who members can accept pac money from. If you are the chairman of the committee that oversees agricultural interests, how are you taking contributions from monsanto . If you were a judge and he did it and they were before your court you be kicked off the bench. Those are some suggestions i have. I wanted to write something that i didnt think was high in the sky. Thanks very much. That was really excellent and im sure you agree with them. I was thinking maybe our friends at home on cspan might come in and hear the conversation and think, wow matt, sounds like a really interesting book, but i wonder what it is. The title of the book is a republic no more Big Government and the rise of american political corruption. Your author is jay cost and you can opt in the book in usual places online or at your local bookstore. Here however were going to go to the question and answers part of our event. What i would ask in the usually is that people raise their hand but then wait for the microphone. Someone will bring you a microphone so everyone can hear your question. Please identify yourself in any affiliation you have endless you wish to remain anonymous, in which case you can. Otherwise, lets start right here in the front. And i will point rudely at you im sorry, i didnt hug her name. Unless you specify also we will assume your questions are for jay. My question is for jay but i would like to everybodys opinion. My name is steve. Im the cato groupie. I noticed the title has the word republic in it, and this is the word that i have been looking at for three years trying to get a handle on what the definition is of republic. Of course, theres always common definitions that basically say well its not a monarchy. There are other definitions that go all the way to say, no it requires constitution, that you have to have individual rights. Im just shocked by the range of definitions that i found, and im also shocked by the fact that nobody seems to ever come when they talk about a republic, ever attempted to fund. I dont know if your book does but my experience has been that people use the word republic all the time and make no attempt to define. So my question to you is how would you define what a republic is . Thats a really good question anything that one of the challenges 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 the republic almost refers to the end result. Montesquieu, for instance, got the british system was the most perfect republic ever invented the human artifice. Hamilton similarly hamilton is certainly within the republican spectrum, and if you look at his proposal to the Constitutional Convention you will see is very close to the project system. Because the republic, but meanwhile, though, madisons first choice was not as close to monarchy on the spectrum in the final product of the Constitutional Convention was very far off. I think the range of opinions in the Constitutional Convention, those who signed the document on the most monarch will side with the hamilton and those who also rejected the document who rejected the document doctor who refused assignment i would say theyre all with the republican spectrum because its not about the process per se. Its about the end result. My understanding of the way i would define is that a republic is a system of government whatever the eventual design may be, that governs for the sake of the people as a w whole interest. Madison specify that a littleand he adds a condition called the republican principle which i think was heard widely accepted that opening majority rules have to play an essential role in the republic somehow. But again there were vast differences about what role it should play. Hamilton saw most institutions of government completely and permanently separated from majority rule and i would still say he was a republican with a small our. If i coul in laymans terms. Intention is it the government aimed at trying to broadly serve the general interest rather than the reflection of the monarch. To me what i think the book is trying to reflect that the reason we havent republic though more is the general interest for fractional or special interest. Lets go to another question. My question picks up on one of the themes maybe there are some areas where corruption is especially beneficial. Lets say infrastructure. Pick up an example with railroads. Between agency divide1960, 1950 america built 5000 miles of rails a year and we lead the world in rails, transportation both in amount and poverty. Since we regulated at and eliminate corruption americas rail system has become somewhat a laughingstock of the world. China built 10000 miles during the last decade, far superior to anything we have ever built in our history. So the question is maybe they really are some positive elements, and i will give you one example as a contemporary issue, the future of the tv spectrum. We have decided were going to give broadcasters close to 100 billion in giveaways because thats the only way we know how to transition to getting them to provide to repurpose for Cellular Service but no other solution except give it to them. I think there are a lot of issues like that with infrastructure where its unfortunate but thats the only way we can progress with a pretty significant dose of corruption in that area. I mean im not going to disagree with that in principle but like i said, the book you could read it isnt it criticism of hamilton in some respects, but i am profoundly aware of his genius. And at times found myself overwhelmed by it. Your point is not a point that i take lightly. I just want to make a comment though to challenge, the challenge with the argument talking about the railroads in the 19th century, that was this the best way things could have been done . The railroads had a vise grip on the American Farmer in the west, to the point where these traditional Republican Voters embraced populism. A populist party and the pockets movement, which was a far left wing movement. I think as late as 1907 William Jennings bryant said its time for the state to control the railroads. That is just antithetical to the system. And yet in 1896 he came shockingly close to becoming president of the United States. It was not for the uptick in wheat prices, he very well could have one. Why . Why did the system almost produced probably the most radical president that you could have produced . It was because of the atrocious condition of the American Farmer, and generally, and i think the American Farmers treatment at the hands of the railroad 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 i think by about 1880 constitute a majority of the workforce, a majority were farmers. That sort of speaks to the dangers. I mentioned this because we can look and run suspect at this time its a this is a good thing and this is a good thing. It was a good thing in the long run. If youre a farmer in western kansas in 1887 it was an awful thing. I will give you my quick thumbnail of railroads in the 19th century. Most american railroads in the 19th century were not built with government subsidy. Most of them were private enterprise but im talking railroads in the east without government subsidy. Government started subsidy to railroads to the west the Union Pacific and thats when he started getting corruption. My take is that america wouldve been railroaded without any government subsidy and, indeed, theres a famous case of the Great Northern railroad built by an entrepreneur that went up on the northern route near the Canadian Border completely unsubsidized, they successful. The railroads wouldve got built without any government subsidy. The railroads to the west probably got built faster because of the subsidy. As i said there was i dont think it was necessary into being a bad policy because the federal government have this mass amount of land. It could get rid of it give it away to individuals or businesses like railroads and that may be not a bad result to i would rather that result in the federal government had attained retains all the land land. There were lots of things where for instance, there are constraints like certainly lots of places around the world if you want to pass a checkpoint into one country to another youre going to have to pay a bribe. It would be nice if it have to pay that bribe that would be the first best but if the choice is if you dont pass the checkpoint or border, or you pay the bribe, that bribe facilitates transportation in that instance. Maybe more directly into the United States. Its difficult to build almost anything in many places in the United States. Lots of Council Members are bribe one way or the other so that that Shopping Center Apartment Building can go on. First best World Construction things get done and you dont have to bribe people. If we dont live in a world where some Government Official controls a decision or not, the fact that decision is for sale is probably better in a book with that decision is not going to be allowed to happen at all. I service in some instances this is not a generally but in some instances where brides are going to be degrees they get something done. Offset all sorts of other imperfections. What we could get it is talk about those imperfections that you should do with in the first place. Let me make one final point. In the book im very sensitive to the degree in the book is that like for instance, the agent system in the 1830s was corruption. But it doesnt in my judgment come in for nearly as Harsh Criticism as the patronage regime of the 1870s, for instance. To our differences. In the 1830s you can see as i mentioned earlier the way to hold Political Coalitions together but it evolved to the point where became the perfect of politics so by the time the regime finally collapsed with the assassination of james a. Garfield. I tried to get to that with the five chapters on domestic policy, here we have corruption that overwhelmed whatever noble spirited purposes exist behind the originating legislation. The job went three up and to gopher. Gentlemen. Karl. Im reminded of he referred to plunder and how the law can be misused i think were pretty much arrived at universal perfected blunder in our system. I want to ask you about Andrew Jackson whether you explore the wonderful words of his farewell address from 1837 . He articulated so clearly that the constitutions system of gold and silver coin money was spent to protect the wealth of the laboring class from being the Largest Corporation of politicians and financial interest which together would barter away control of the most precious aspects of life like today health care. Did you explore Andrew Jacksons farewell address in your book . I did not. I had a lengthy section in Andrew Jackson who comes in general for fairly harsh treatment, deservedly so in my estimation. This is the second book ive written and i find i have opinions about certain historical characters when i go into a book and then when i come out its interesting to see how theyve changed in my opinion of jackson has plummeted to about as low as any opinion can plummet, notwithstanding his views on currency. The currency is an issue that i elected not, very strategic and look at picking issues which fetches a currency doesnt fit into the hypothesis but it was just that i limited space and wanted to be strategic in my selection so that the chapters could be grounded on what i view special in the latter half of the book, the five substantive chapters on farm subsidy, on porkbarrel, medicare, Financial Regulations and Corporate Taxes. I tried to find consensus views of the facts, and i felt like regulation of the currency is something where theres such deep divisions between people on it that there wasnt Common Ground for which i could make an argument. So i think one benefit of the book and this is sort of a feature is there are many issues in which the book gives you a taste of issued and again to me ive been women were passing episodes of American History. I encourage people to read and i also encourage to read jacksons veto message one of the powerful to the argument against privilege. Icy jackson as their next i believe to be the trip of tears and rejection of Supreme Court decision in that regard also enforce episodes in American History. Is quite a mixed bag. I will say to me there are some discussions in the book not a Lot Committee thinks of economics are a little off but if thats a topic youre going to pursue in the future i sort with the courage it and i would encourage people to do some research in the area in general. The woman on the aisle near the barrier. Im meredith mcgehee. You touched just at the end about solutions and not surprisingly this notion of the corruption that is inherent in specialinterest washington notwithstanding which mcconnells claim that theres no such thing special interest in washington. I would be more interested in any speak more about the role that you think money and politics plays in this cronyism, in the corruption and the corporate welfare, however you want to characterize it to some of us have thought a novel influences the outcome of elections but along with lobbying and other things, thats exactly happened. I would like to use the olympic more about the. I would be happy to. The end of the book is sort of a call for a bipartisan cross ideological coalition. I think there are areas of agreement. I for myself agreeing a lot when i was running especially the last chapter with ralph nader who saw the problems of fannie and freddie very early on and recognize it was a problem and you can put it right next to peter wallison. I dont think its deniable insist special interest money is a problem. Because of the limitations inherent, i think it has to be the small end of the wedge is what it is and its sort of maybe a better metaphor to say it would be the foundation of what has become pervasive transactional relationships whereby you have campaign contributions, you have statements of public support, lobbying and providing partial information to legislators who buys policy and Political Uncertainty indeed with the questions they have to deal with. At the top of that you have the revolving door which is basically a way to subsidize legislators who make relatively little money compared, and if you think, your average american would say they make 200,000 a year. But if you compare them in terms of their social status, they are grossly underpaid. In marketplace, theres only 435. They should be able to negotiate a better wage and private economy. What happens is they take that salary but then they know when they leave office i have a nice censure coming to them. I do with that because its interesting to me because it happened as a product of the progressive reform during the first half of the 20th century. Did away with the old corrupt style of doing business, which was the Party Machine which is why, i get a lot of conservatives complain to me about the 17th amendment, and oftentimes debating what kind of mood i am in i will humor them or i will see you dont understand how bad it was before the 17th and was passed because it was a disaster. If you look at the cover of the book, the person at the top is Nelson Aldrich whom lincoln called the head of it all. The head of this vast alliance between corporate interest in the political barons that control the senate and do in turn controlled state government. Its one reason why we never got any sort of sensible tariff reform until Woodrow Wilson became president , for better or for worse on that. On that point for budget to the point of it is this regime was undone and then discard regime came up in its place. Discard regime is relatively new. Its about 50, 60 years old and its not as grubby as the old regime. The old regime was very grubby. And where these letters exposed to William Randolph hearst found these letters. He founded in 1909 but he kept them in his pocket from 1912. Letters that executives from standard oil and these politicians and the politicians would write i need money. Executive order ive got no problem to if you get a chance could you please kill this reform that is percolating in the states . Nowadays we dont have any of that. Everything is couched in a legalistic veneer. Theres plausible deniability everywhere. I refer you to my counsel to i dont recall that the blah, blah, blah, but the result is the same. The Campaign Finance system that exists is the foundation of it. I will also dont note aldrich was one of the fathers of the Federal Reserve system i dont think by coincidence. This is one of things i struggle with it but because at the end part of the suggestion is maybe what i will characterize it as maybe a marriage between progressives and libertarians that break off from the separate parts and use the ever of Grover Cleveland as someone whos able to do that. At least in theory. Theres no president has been perfect. Exactly. To me, i think i can someone who tries to build this coalition on a regular basis it often comes down to where do you think the actual source of corruption is . Does this government, basically trading rants to distort any registered or is this, d. C. At corrupted into wellmeaning government . Its probably all bit of both but if you think you skip around that issue in the book. Im going to ask you which d. C. As the predominant source of the . It doesnt matter. Im not sure matters for the sake of an alliance. To treat the underlying malady or do you treat the symptoms . You get a little relief from treating the symptoms. Symptoms. I think matters in the sense of, so to me if we believe the problem is that government essentially creates pseudomonopolies by restricted market and entry, then the answer is not, lets just regulate more. The answer is lets not hand out special privilege. I pointed out that seemed to be the solution at the state level in the early 1800s. You know when i wrote the book, the book was meant as a diagnosis rather than a cure. So the final concluding section is just sort of a suggestion pointing towards a cure. Like i said the piece that i coming out in the standard is just a stop that i think is more salable, you know . I say all that because i dont disagree with anything you said but i just think as a practical, i wanted to be practical. I cant help recall on the question of money and politics the name of another book the fallacy of Campaign Finance reform, which takes a slight a different view of these matters. I would also mention that we should keep in mind the people engaged in the practice of doctor in this book are the ones who write federal Campaign Finance regulation. With that on the aisle three up please. Jay im convinced to buy the book. Thank you. To publicprivate partnerships for Building Infrastructure produce actions that threaten local government . Well, i think the answer is yes. I think the short answer is yes. The long answer is, i will give you an example of one i mentioned in my previous question about how crappy the 19th century was. I have to admit i often found its grubby and his charming in a way. In the sort of devious sort of the characters i found them sort of refreshing for their frankness. And one of the more sort of also for over the top quality as well. Theres something to them that i had this point in the preface to talk about matt quay who was actually born where i live. He was born in beaver. So he is hauled before committee before the debate on sugar tariff. Are you investing are you speculating sugar . Sim and i will continue to do so and theres nothing you can do about it, thank you very much. Out of a classic archetype idea of that kind of character was cameron, 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 he said the 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 defeat . Because he was a wealthy. Why . Because he was a newspaper man in the 1830s in pennsylvania, and, of course, the newspapers in the 1830s were partisan the course todays papers are partisan. When hes a democrat he became a republican but when they start handing out charters for this and that, he transition very seamlessly from being a newspaper man to a businessman and made a vast fortune in, you know, eyesight all other there is corporation that he was in charge of, and its just ridiculous how many things he controlled. And cameron is a perfect illustration. Yes, that franchise granting is a pathway to corruption and it was how i met as obviously crooked and Simon Cameron could nevertheless not only rule pennsylvania politics, but create a political machine that was only brought down by the great depression. [inaudible] ive written about the in shoe of infrastructure, i am generally in favor, theres three ways you can build infrastructure. You can have a purely private, a lot of airports and seaports in britain for example, our private. You could have a holy government, oldfashioned contracting, or you could, theres been developed over the last couple of decades to move to a middle road to building highways and some of the things the capital beltway in washington, d. C. Was widened. It was not 2 billion project. Private Company Kicked in three quarters of that i think roughly and then virginia kicked in the rest. So to widen the beltway in virginia, either you could get oldfashioned contracting and that it would dish out 2 billion, you could do a ppp which is a pathway privatization with the private sector takes in some and the government takes in some. You can get corruption in both of those ways. Before ppp arose in recent decades it was oldfashioned Government Contracting. There was often corruption and who got the contract. What ppp is is a new way of doing Government Contracting where some of the risk is handed to the private sector. They can be lots of problems in ppp contract by the colossal problems and oldfashioned government contracts as well. Its not pure black and what ppp is are interesting because theres a lot of folks on the left were against it but theres also a number of conservatives were against them, too. I dont think its a pure black and white answer. Where are the risks . Well, in the capital beltway and all over virginia in part of the partnership took a lot of the risk. If the revenues from the traffic that they projected over the decade doesnt come through, they take a hit. They make more profit if they can maximize the flow on the highway and keep the operating and maintenance costs down. [inaudible] no, thats not true. Are but today has been a republic no more and i would like to thank its author jay cost for coming in today. I would also like to thank my colleagues Mark Calabria and Chris Edwards once again have reminded me that its a good thing to have good colleagues. I would like to thank you all for coming. Now were going to go to lunch. The lunch will be held on the second level. You go up the staircase to the conference center. Restrooms are on the second floor on your way to lunch just look for the yellow wall and thank you very much. [applause] [inaudible conversations] you are watching booktv on cspan2 with top nonfiction books and authors every weekend. Booktv, television for serious readers