>> welcome to hungry minds speak of series with steve simpson speaking on cronyism and corruption in government power. steve sampson is director of legal studies at ayn rand institute in irvine california. a former constitutional litigator for the institute for justice steve has litigated cases in the u.s. supreme court and lower federal and state courts throughout the nation. steve was the lead lawyer in speech now versus sec, the case that created super pacs and he has litigated many many other campaign-finance and constitutional cases over the years. steve has written and spoken on a wide variety of legal and constitutional issues. his writings have appeared in "the wall street journal," the "washington post," the "washington times" and many print and on line publications over the years. so let's will come steve simpson speaking on cronyism, corruption and government power. [applause] >> okay. first of all thanks very much hannah and doug and hungry minds for having me here. i have to say it's a pleasure to be back in colorado. the last time i was here, i was suing the government so i have very chervil memories of coming here so it's really nice to be back. that seems like a good segue into my topic than anything, cronyism and corruption in government power. we have heard a lot about cronyism in the last several years the political right in a lot of libertarians have been talking about it frankly for years and it's the issue at the export-import bank and another of other issues. we have also heard a lot for many years about government corruption primarily from the political left but frankly that's from across the political spectrum. i think most people understand that these two ideas somehow go together. i'm not sure everybody would place the idea of government power in there and that's part of the reason i put it there because i think this is really the key issue. but what i want to start, let's in a sense and essence that's what i want to get at. i want to get at what is the issue here and what should we be concerned about? there is a real problem when people talk about cronyism. it signifies it gets a real phenomenon with government but i think it's widely misunderstood. it's worth starting with a simple question. we hear about cronyism all the time. we hear about corruption all the time but what does this idea mean and this is part of what i want to do. i want to explore with this idea means and what its implications are. i will say off the top of the issue that there is a problem here but if you think about it the wrong way it has very dangerous consequences. in order to get into this issue we should first start with what do people think of this issue and what is it that people are talking about when they talk about cronyism and corruption? i want to start by characterizing this issue and kind of giving you an example of what we often hear. it's an election season now and it makes sense to think about this in the context that perhaps something that you have heard and if you haven't heard you probably will here. so think about this and ask yourself have you heard something like this? so here it is. money and influence are corrupting our democracy. we have a government not by and for the people but by and for the special interests. big business colludes with big government and redistribute money and favors to itself at the expense of everyone else. in short, it's not capitalism that we live under in this country it's crony capitalism. i don't think this is anything new to you guys and if it is you are not paying sufficient attention because this is especially in an election year but we are hearing constantly. but the question is what does this mean? what is it that people are getting at? there is a real issue here. i think there's a real injustice and a few of our economic system and our government that is accurately criticize but i don't think people are thinking about it in the right way. now that's kind of a caricature of the issue. instead of relying on what i think is the general statement, let's first before we start analyzing this take a look at what the commentary is saying. the right is criticizing this issue a lot and let me give you a sense of what a lot of commentators are saying. first i want to really get a sense of what this is all about. this is an author by the name of tim carney. tim is what the "washington examiner." he's done a great job attacking the issue of cronyism and special-interest influence. i would part company with them on how he describes a buddy wrote a whole book called the big rip off and here's one of the things he has to say about cronyism. the idea he is attacking is the myth according to him that this is big business is opposed to regulation. what he says is the truth is that big business lobbies for and profits from big government policies that rip off consumers, taxpayers and entrepreneurs. moreover government is happy to comply. i think this is a fairly typical view. here's another one from national review. this is how cronyism works. the company wants a special privilege from the government in exchange for political support in future elections. if the company is wealthy enough or backed by powerful enough interest groups the company will get its way in politicians will get another private sector ally. this is a quid pro quo or a trade going on here. a few cronies went at the expense of every one else. that's another common statement. last but not least let's look at what the politician has to say about this. this is i think my favorite of all. this is wendy davis who is a gubernatorial candidate in texas and she's describing her opponent. here's what she says about him. my opponent is quote part of the special-interest crony class of insiders who has raised millions of dollars. not that one really caught my eye because i asked myself what the hell is the special-interest crony class of insiders? it's not just an insider and it's not just a crony class of insiders but as the special-interest crony class. when i hear that i get this image of the guy that lives in halliburton and sits on a big pile of money and smoke cigars with dick cheney and they calculate on what's going on in the world. the point here is to ridicule the idea of crony capitalism because there is a serious issue. it is to ask the question what do people mean by this? let's characterize this idea. what are the essential points that people are putting forward in this idea of cronyism. i want to analyze the issue and see what is the real issue or what is it that we ought to be criticizing or not. the main point here is what comes across in this description is that big business and big government ripoff the little guy, that well-connected insiders are able to get benefits from government that are not available to others and that, at the expense of others. in short the idea here seems to be this is a problem of bad people corrupting a good system. if the evil insiders who are profiting in corrupting our system of government. in case anybody misses the point let me give you one more example. this one is from the economist magazine purportedly a magazine that cares about the free market and capitalism. not long ago they ran a cover issue called planet plutocrat and in case you didn't get the point of that day had on the cover a picture of crocodile, it will send a hippopotamus all dresses businessman. the obvious issue being animals are impersonating businessmen too much. it's too much, so but the idea here obviously is businessman and insiders are evil and this is a problem of outsiders or well-connected insiders influencing our political system to their benefit at the expense of everybody else. now i take pretty close to the opposite view of that. the idea that this is a problem of bad individuals corrupting consistently, far better way to think about it is the real problem here is a bad system, not bad individuals. the problem here isn't individuals per se. the system in which they are operating. the problem is not that bad people are corrupting a good system. it's that our system is fundamentally flawed. if we want to understand this issue we have to understand that aspect of the issue. in short this is a problem, cronyism or what people are referring to as cronyism is the problem of the misuse of government power. it's not a fundamental problem of individuals and i i'll explain why i think that. i would go as far as to say under the system of government we have what what people complain about when they complain about cronyism or the phenomenon here is absolutely unavoidable and until we fix there thinking about government and until we were formed government ultimately this problem has to persist. that is what i want to focus on. before i go further i should say a word about the term cronyism. and it's actually for words. i don't like it. i don't like this term. this term suggests that the problem is an issue purely a favoring people. it's purely an issue with influencing the system. there something inherently wrong with cronies. the term cronyism really just means favoring your friends or your colleagues. that is not inherently wrong but the suggestion of this term is the problem is favoritism. now i will however be using the term throughout the talk and i will apologize for that. i don't have a better term to use at least not one that's commonly used. in my focus ultimately it's on the phenomenon. what is it that people are complaining about and what should they be complaining abo about? if i had to pick a term ayn rand use the term the aristocracy, the idea that people are able to access government and use the power of government themselves. that happens in a particular system. another one that i really like come from the 19th century french economist and it's a legal plunder and i will explain why think this is an issue. that captures it really well. so here's what i want to do in the talk. i want to cover three basic points. first, i want to explain why you think this issue is really important. this is an issue that can even travel under the radar but i think that the issue of cronyism and how we think about a government that results in our economic system is really important. i guess i would classify the issue as i said as the misuse of government power. but there's more to think about and considering why it is we have to care about this issue. i ultimately want to do is to think about it and advocate to others and try to convince people what is the real issue here. that's the first thing i want to do. second i want to explain what i think is wrong with the common thinking. the prevailing view that this is a problem of bad people and not a bad system. there is an absence of packaging of two things that don't go together or ought not go together when to separate them. i may want to examine something i mentioned a minute ago which is that if this is a problem of government under the type of government that we have this problem is unavoidable. there's no way to avoid it and i really want to expose that because the way we think about government isn't a large part of the problem. so long as we characterize our government in the common way and i will get to the issue. you can sum it up by saying democracy but there's more to say about this issue. soma long as we actually have that government this problem is unavoidable. so let me start with the issue, why is cronyism a concern? my view is cronyism and what people are rightly complaining about the term is the music -- misuse of government power -- to be of great concern to people. that's not what i really want to focus on. i will go back to this issue of busy that but i want to focus for a minute on how this issue of cronyism or the underlying phenomenon this issue that some people are accessing government to their benefit at the expense of everybody else which is a common view. how does that affect their thinking on institutions in this country that are really important? that's something we need to step back and think about. i'm guessing that this actually impacts all of you in this room in ways that you have been considered. that's something i want to bring up because it's a serious issue and we need to correct this. if we want to correct a lot of the flawed thinking about government, about capitalism and about business. let's start with the issue of business. it impacts their view. it impacts their view of our economic system. capitalism and the free market and it impacts their view of government. all in negative ways and therefore we have to care a lot about this issue. now to begin with i don't think this is exactly radical, want to assume that most of the people in this room at least don't have an antibusiness view. in other words by antibusiness or pro-business i'm not talking about individual industries or individual businesses. my guess is you have a generally favorable view of business and that's a good thing. i do too. maybe you are not as radical about it as i am. i think business in principle to simple point-to-point is a big problem but to oversimplify what i would think about it like this. the industrial revolution and business on all the wonderful things that business has produced an individual business ultimately is what we are talking about has essentially made the difference between life and death for most people in this country and most people in the industrialized world. so too perhaps oversimplify a bit if it weren't for those two things industrialization and business probably lose it all be dead. or at the very least it make our lives infinitely better. so business is a positive thing to think about this for a moment. think about your own view of business grade in the current context of america is it true to really say to yourself that is a view of business and the pursuit of business. maybe you can abstract away from individual examples and i will give you a couple of examples in a minute that my guess is you are like me and sometimes you are you know what they're a lot of businesses that seem to do the wrong things. there are a lot of businesses that seem to be using government to benefit themselves at the expense of everybody else. cronyism really impacts that. in fact that's kind of what i would say one of the fundamental reasons by people who would otherwise be motivated to view business favorably and indeed some people who work in business still have the kind of mixed view. business isn't really good, it's kind of dirty sometimes and this issue of cronyism impacts it. let me give you a couple of examples to sort of get you thinking about how you think about business and why this issue affects our thinking. so consider the electric car company tesla and leave aside for a minute that -- i don't know if what you think of electric cars in the whole phenomena of electric cars. tesla is technologically amazing and everyone in southern california where i'm from, as far as i can tell only people in southern california can afford them but leave that aside for a minute. my point is to make a point about whether electric cars are good. it's to make a point about tesla and the broader phenomenon. tesla is now going to build a battery company in nevada. how do they come to nevada? there was a big competition that was held to decide what state tesla was going to come. in effect it was a kind of competition and guess who was -- and the competition was for how many goodies can we give to tesla to entice them to calm to the state? and they were things like a free road road which probably is the smallest cut rate initiative which means they will get a better rate than other taxpayers and no tax for i think it was 20. i can talk about this in a question-and-answer period. i'm not making a point about whether or not it's good or bad to exempt people from texas. i can make that point and it's good but the overall point is this looks like tesla has got an inside line to the nevada legislature. this is an example of the nevada legislature and the other legislatures essentially saying hey come to our state and we will manipulate the rule of law for you. when i moved to california nobody said hey we will exempt you from texas. that's just not the way it works. only tesla gets this. there are good companies when you think of tesla. apple set up operations centers in given state and it really looked like there was a kind of quid pro quo. there's a trade going on with the legislature and if you really look at these things closely as a lawyer somebody who respects the rule of law i have to say the phenomenon is prett pretty -- at hey let's make a deal. it's not leave us alone. with megadeal and we will negotiate in these laws will apply to you and these laws won't apply to and we'll have a special apple law or tesla law. that really is the impact on people's thinking about government, even people who are very pro-business. take one more, pfizer. pfizer the drug company. innovation and medications today are phenomenal. pfizer are producing amazing drugs but again taken by this issue of economies but there's a deeper issue here. i used to work at the institute for justice says hannah pointed out and you probably heard about eminent domain abuse. the k case in connecticut where suzette kilo's home is taken through the power of eminent domain and handed over like hundreds of other homes handed over to a developer so he could build a company partly which would be used by pfizer. of course if you think about and look at the circumstances they knocked hundreds of homes down and ultimately its nine years later and what do we have to show for it? nosh and that we should expect a good thing from these kinds of arrangements that what we have to show for it is a barren field that isn't being used by anybody because it's stuck in all sorts of fights over it except ironically literally a group -- a group of cats. it's a bunch of cats and they are not even fat-cats. they're just regular cats. [laughter] so where's. [laughter] so where's the justice and in that? the point ultimately here is this really pains their view of business and it's hard to sort out who are the good guys and who are the bad guys. even if you have a positive view of business you are tempted to think this is dirty. think about it from the layperson standpoint. i think this is really impacting people's view of business. it kind of corollary of that or a follow on to that is more broadly broadly speaking it impacts their view of capitalism and the free market which again i probably don't have to make this point too much to you but capitalism is a great thing. it's awesome that we have a system of capitalism that leaves us free to produce and the society, the advance society we have today is because of that freedom and the economic system of capitalism. think about what people argue about capitalism all the time. even people who might be sympathetic to it. let me give you a quote and i think that will round out the point. but i think you have probably heard this sort of thing before. so i'm going to read the quote first and then you guys can think about who this sounds like. this is a politician talking about the economy. this economy quoted record corporate profits with sagging middle class wages, and anemic jobless recovery that is promoted and exacerbated inequality. it has isolated the poor, squeeze the middle class. if ordinary citizens who work hard and play by the rules only end up subsidizing and bailing out privileged insiders in the land of opportunity. who does that sound like? is that john kerry and obama and that's what i thought. senator mike lee of utah who is actually very good on this issue of cronyism. my ultimate point here is this is an attitude so that this is the attitude coming from a guy who was supposed to stand for the free market and for capitalism, think about what the average man on the street thinks. they think that capitalism is a game. inequality just rules capitali capitalism. it's not a system that you can get ahead and work hard. it's not what you know, it's who you know. that's fundamentally untrue and it's a slander on capitalism. the cause of that and i will develop this as we go is really the opposite of capitalism. this is right at the doorstep of capitalism in a large part of the reason they get away with this is in my view what's going on with this issue of cronyism that makes capitalism look dirty and unfair. finally i would be remiss if i didn't point out the impacts of our thinking, on our thinking about government. you might think and again i'm guessing i am from the ayn rand institute oppose government and that's not true at all. ayn rand thought government was absolutely essential. i agree with you wholeheartedly and in fact what a lot of people on the right and among libertarians would characterize government is a necessary evil i wouldn't say that at all. government is a necessary good. it's absolutely essential for us to be able to live freely. now that only applies though if government is limited to its proper purpose and i will discuss that as we go. my point here is this. government is essential and it's really important to our lives. it's what keeps us free. institution that protects our rights and yet the prevailing view of of government largely because for a lot of the reasons because this issue of cronyism and the issues that are wrapped up in it if government is fundamentally corrupt. we have a corrupt government. not a government for the people although i will leave that characterization aside. it's not the best characterization of it but it's not a government that does do what is supposed to do which most people think is to protect us. that's a very negative thing. that breeds a kind of cynicism about our government that makes it very difficult to argue for proper limited government to breed the view that government is inherently corrupt. that's not true, not the proper kind of government. so that's to at least give you a sense of how this issue is viewed. it affects their view of business capitalism and government in its very negative thing so we have to get to the root of this problem in this issue and really root out what the problem isn't separate the good from the bad. that's what i want to do next. i want to talk about what i think is wrong with the prevailing view of cronyism with an eye toward what i think is right about it. in other words what should we be criticizing when we criticize cronyism? if you are with me and you think there's a real fundamental issue here that we need to talk about, we need to think about how this issue is used and what i would say is the great injustice done in the idea of cronyism. now if i had to boil my theme in this point down to one essential point it would be this. cronyism is kind of a fuzzy term that packages together to themes that don't belong together. one of them is bad and one of them is good. the impact of this is too good and to elevate the bad. it's sort of solis the good part. what is the good? actually let me backup at second. this is what if you are interested what i'm getting at here is what ayn rand would have preferred as a package deal. this is an idea for a term or a concept that packages under one concessional rules two very different things. if you are talking about things i should be evaluating as good or bad the impact always is too slowly or dirty the good and excuse the bad. in a sentence like this. it's like blaming the victim in a crime. claiming that the problem was you were walking through that dark alley. what does that tell you about the fact of nature that people should walk in dangerous areas. that's crazy. we shouldn't think about it in morality and illegality like that. we have to separate the good from the bad and judge harshly the bad and judge positively the good. the good is the following. is this production wealth that is produced by industrious people even goes as far as limited government and freedom. that's the good that is packaged into this idea of cronyism. that is just not to put too fine a point on it but it's also erosion of the rule of law, kind of perversion of the rule of law and a perversion of government. all of these things are packaged together in cronyism. and what the effect is is we ignore what is wrong with our government today and we end up blaming the wrong people. so that's what i want to focus on now. now what i want to do is, i want to do this by exploring a little bit more that the idea of cronyism per se but some related concepts. i'm guessing that you have heard some of these concepts. these are ideas that you either see in public these days as public discourse and oftentimes you will will see them and economics, discussions of government so let me through a few of these terms out. what i want to do as i want to examine them and try to understand what are they implying. here are the terms. has anyone heard the term rent seeking? the idea here is that government erects barriers to entry are some sort of a qualification to get into a business and those who are in the business are then able to use their privileged position to extract what's known as monopoly rent. here's an example. i'm a lawyer, let's take lawyers. i am licensed to practice law in certain states. because of that licensing i can at least this is the argument and it's absolutely true because it's difficult to compete with people like me. we can charge higher prices than we can really get rid of competition. that's definitely true on a state-by-state basis. i just moved to california. i can't practice law there but it would be great if i could become a member of the bar to do legal practice homicide or just because it would be interesting whatever. it's a wonderful way to keep competition up. here's another one, regulatory capture. have you heard this one before? i hope you have. regulatory capture is the idea that regulatory agencies whose job is to regulate businesses and get quote captured by the businesses. in other words they are turned in use by the businesses for the businesses on nefarious purpose. this is supposedly a bad thing. that's the second term. the idea that the individual is using government to take it away. two other ideas one of which i've mentioned already, special interest as everyone i think knows what the ideas here. private interests influence government or influence the political process and finally corrupting government or corrupting democracy. cronyism is another one that fits into this. all of these terms you see coming up in the debate. people are doing all of these things and is supposedly bad. they are rent seeking. they are capturing realtor agencies for for special interests influencing our policy or corrupting democracy. think about these terms for a minute. what is the common denominator or maybe another way to put it is what is the uncommon denominator? what is the implication for everyone of these terms? what is missing from this calculus when we think about rent seeking private individual or private interests taking advantage of government laws whether it's regulatory capture, private businesses capturing the regulation, special-interest influences. private interests influencing policy, corrupting democracy. the idea here is that private interests or corrupting so the commonality in all of these cases is its private interests who are somehow corrupting our form of government are taking over parts of our government in using that for their own device. this should strike us as weird and i will give an example of why think that's true in a minute but think about what is it that people are complaining about here when they complain about all these phenomenon? if the government has a particular power and you are capturing it for your own design. or rent seeking. think about that. why do we collect rent seeking? what's wrong with rand? is rent a bad thing? i have rented a property before and i think it's an awesome concept but the implication here is evil landlords who are preying on people. but why would we call her rand? special-interest influences. does anybody know where the term special interest came from? this is a term that wasn't just jammed up in the last few decades. this is my idea that has been around since the mid-19th century during the progressive era. this is an era when the government grew almost exponentially purposefully by the progressives who wanted to a address the size and scope of government. their view was we are doing a wonderful public interest and of course on the side of god or however you want to characterize it and the evil special interests, businessmen who are trying to influence what we do. they are bad outsider illegitimate. we are good, insiders running the government for a proper purpose so again this is the idea and any time you hear it is typically business interests but it very often is any private insurance that imposes the government. so at the root of all of these is somebody's using government but what is it that they're actually doing? if you really unpacked as i don't mean what people mean i mean what's actually going on here. what is the real evil that people are focusing on? what does it mean to create a barrier to entry? what is the government doing when it creates a barrier to entry? here's what it's doing as we strip it down to its essence. it is passing along -- a law that essentially says you are not allowed to undertake this interests so what does that mean? that means the government is using the law to actively prevent people from doing what they would otherwise freely choose to do. this is the application of force and that's really what people are complaining about. the same thing with predatory capture. what do regulatory agencies to? they regulate and restrict business. their purpose is to prevent businesses or private individuals from doing what they would otherwise do in a free market. they are imposing force. that is in essence what people are complaining about when they complain about all these issues. why is it that they are blaming the private interest in all of this and not focusing on what it is that government does? think of some hypotheticals for a minute. let's say you pay a mobster to destroy your competitor's business. go burn down his business. would anybody describe that as mobster capture? think about that for a minute. the idea is while the mobsters just exist to be used and the problem is here that you are using the mobster for illicit purpose. my view is the mobster is illicit to begin within a week to focus on that. and here's another example. a mobster comes to you and he says, you are in business. nice business you have there and i'd hate to see anything happen to it. if you pay me a little bit every week i will protect you from me destroying your business. the protection racket. would anybody say they paid the guy you are corrupting that mobster or? that's horrible come he shouldn't do that. what does this leave out? elites that two things. it leaves out the role of the mobster first of all. what is he doing? he's using force and is something i talked about earli earlier. it's a form of plundering. he is engaging in thuggery and a criminal act and get all of these terms and in fact the entire issued cronyism crosses over that entirely and that points at the individuals who are influencing the mobster. that's the first thing it does. the second thing it does it all lies the distinction between the guy who is defending himself by paying the mobster off because he has to in the guy who is enlisting the support of the mobster to destroy somebody else. that is a really important distinction. let me make it clear that should make it clear, my point is not government is a mobster in all cases nor is it that the businessman or private interests are always good. in fact this is an essential point the way to bring out. in one hypothetical the businesses being extorted and he's behaving in what many people, if you you don't have any other recourse what is your choice but to pay the guy off and let me do business. in one case he is innocent. in the other case what's he doing? he's using essentially extortion by means of paying somebody to go destroy another person's business. again the central issue here is in both cases you can't have this. this can't exist if you don't have mobsters. so the question i think that people need to ask about this issue of cronyism and governments role in it is do we want government that acts like a mobster or do we want government that protects our rights and acts like a proper government? there's a difference between those two things. cronyism glosses over the whole thing. it doesn't say the evil here is a government using its power which is the power of force against innocent people. it just says anybody who accesses this power, we are not really going to talk about what it is, it's bad influence. sometimes it's a good thing to use this power and sometimes it's a bad thing but we don't think about what is the essence of this and what is actually going on in these circumstances? now it's beyond the scope of my talk to go into a full-blown analysis or discussion of the nature improper purchase of -- purpose of government but i want to make two related points that are really important to think about when we think about government and unpacking the issue of influence over government for special interest warfare or cronyism. the first is this. government is not a value neutral enterprise that should be open for everybody to use depending on whether they get voted into office or whether they control the government. it's not value neutral. there is a right sort of government, a good sort of government, beneficial sort of government and there's an evil sort of government, a wrong sort of government in a destructive government and that really matters. as i said i think the distinction is ignored in the context of cronyism. what is being ignored ultimately is government's proper purpose. the idea is this. the idea is government is just, it's a value neutral enterprise and whoever wins the lottery called elections get to use it for their purposes. what is the essential point behind back? it's this. if i hold the reins of power is pretty much get to use power however i want and the government power which is the power of force. what we need to do to have a proper government is to subordinate the right. we have to understand that government has a limited proper role. that brings me to the second which is the essential principle of individual rights. again i don't want to go into a great amount of detail on this but the essential point is this, government is only acting properly if it's protecting rights rather than destroying rice or destroying individuals ability to be free. what rights get us the freedom to thrive, to pursue our lives, to produce, to pursue happiness and to live. so the purpose of government is to repent our rights from being violated in the way the government does that is by using force only against those who would violate our rights those who would initiate force. if government goes beyond this in any way and tries to get people not just the pursuit of happiness and the freedom to pursue happiness but actual actual happiness the only thing it can do is in effect plunder other people. that is the essential point and the essential thing we need to understand about cronyism. i refer to it earlier as a form of legalized plunder and i think that's a really apt term. the real evil here has to be and we have to focus on those who would use government the way a mobster does or the way somebody who pays the mobster to achieve our goal. that's a real essential point. my point is the broader question and it is a broader question here in a free society is there any such thing as corrupting the government or what is the role of bribery laws and had we think about those issues he or? i'm going to set those aside and if people want to ask me about my thoughts about that there's a lot to talk about it would be happy to address it. my fundamental point is that this is an issue and what we have to do is criticize the improper use of government pow power. not simply the effort to influence government at all. think about it like this. when we think about where we talk about the issue of cronyism or what the real evil here is that something like businessmen are trying to get favors we ignore the fact that sometimes those favors are favors end quote are a guy trying to prevent himself from being destroyed by the very government that is supposed to protect him. sometimes those favors are a guy or a group of individuals trying to use the government to destroy somebody else. there's a really important distinction between the two and it's entirely up scared in this issue of cronyism. we ignored entirely. what happens? i mentioned the idea earlier of blaming the victim. so let me talk about that just a little bit. if you think about it when we talk about government corruption and cronyism who is typically, who has the finger pointed at them? i have quoted a number of people earlier across the political spectrum and it seems pretty clear to me that the great villain all the time his business and especially big business. the idea is biggest bad and businesses are always out to use government power for their own advantage and at the disadvantage of others. but there is never a proper understanding of the fact that some businesses or private individuals or private interest so to speak, they have no other choice. we can't ignore that. we have to pay attention to the fact that the real evil here is using government to steal, well let's put some more flesh on those bones to redistribute income from one person to another, to put up barriers to business's ability to compete, to regulate and restrict businesses and prevent them from engaging in business in any kind of an economical way. let me just give you one quick example. let's go back to drug companies. people complain that drug companies in the medical profession in general, the medical device business captured the fda and is using it to their own benefit against others. here is how i think about that. if i were a drug company and i had to spend billions and billions of dollars trying to get drugs approved, beneficial drugs that people want to buy, and run through the fda's gauntlet i would try to capture it too. i don't blame businesses for trying to do this. now you can say this whole process is unseemly. i wish it didn't exist. i certainly wish it didn't exist. i wish businesses and all sorts of private interest, to want to seem like the only ones affected our business but business is a culprit and held out as the evil bad guy so it's worth focusing on. i don't want to suggest that the process is a good thing or or the phonon on is a good thing. but i really can't blame businesses for doing it. it's anonymously difficult even to blame businesses like tesla who are in a sense looking for the best deal from some government because not only does everybody do it but they are operating in a context in which there are so many regulations in such a web of laws that they have to deal with that oftentimes it's impossible to figure out how it started, who is the good guy and he's the bad guy and what what is that this is supposed to do? that is what they face. inability to do business without dealing with government. you can blame them for doing it. now you can blame people and you ought to blame people whose goal here is to use government to achieve unearned benefits or to destroy their competitors. that's a crucial cardinal decision. now if we don't make that distinction but think about what the consequences of this are. this is one quick consequence i want to go into that is not otherwise obvious and then i will finish by talking a bit about our conception of government and what leads to or allows for the prevalence of this issue of cronyism and what i would call pressure group. consider for a moment if you consider this issue a matter of bad people rather than a flawed system and that ideas that lead to it what's the logical result of? let me read another quote and i hope this will give you a sense. this is the new republic reacting to many on the right criticizing cronyism. here is what they say. they say quote if conservatives want to improve transparency or curb lobbying so the corporations find it harder to manipulate the political system there is a vast network of progressive leaning good government organizations working on that cause already. progressive meaning good government organization. i litigated campaign-finance laws for longtime championing free speech and that this guy is talking about her all the organizations who want to clamp down on political speech these days. my broader point is that is what he is saying. he is saying what we need to do if conservatives are against this let's join hands and pass more restrictions on people's ability to influence politics which a couple of examples of this in citizens united case which you may have heard about at issue is a film that criticized hillary clinton. that is what they're talking about when they talk about political speech or influencing campaigns. it's people criticizing government. and to the extent that and i can talk more about this in a question period but very recently congress and this will continue, congress considered a constitutional amendment that would change the first amendment to allow congress to impose reasonable regulations on political speech. that is what this is ultimately all about. this is -- if you dig down a bit deeper this is the logic of this new republic author statement. as i said before i think this is entirely logical. it's indefensible, constitutional and i would say moral standpoint. we have to check your premises here and say wait a minute we are talking about restricting free speech in our ability to restrict government. if you accept the idea that the problem is that people influencing a good system but it's an entirely logical result. what are you doing bad people are corrupting something? to pass laws to prevent them from corrupting. so the logical consequence of we don't challenge the root of thinking about cronyism is greater restrictions on our free speech or at least the pressure to restrict their free speech and ultimately to restrict our ability to influence the government which is a foundation principle of a free country. so with that let me move on and i hope i have motivated you to think more about this issue if you care about it than to think the right way about it. i want to talk about one final thing that i want to talk about why do we get into this way of thinking about government? one reason at the micro level is that people don't understand the nature of government power and they don't understand that government should be based on what the declaration of independence says switches governments are instituted protect life liberty and property. that's one component that there's another component at issue here. let me characterize it as follows. you have heard the term power corrupts and absolute power corrupts absolutely. i put a spin on that and say democracy corrupts absolutely. the point being if we really think of our government is a democracy and i will explain why this is, this interest group warfare is absolutely unavoidable. to do that let me ask you to think of again a common they are looking for something in return. they want to give financial support and are looking for return benefit in the form of legislation that is valuable to those businesses and then he asks isn't this obviously a form of corruption and? i think a lot of people would look at it like that. they would say that thing is corrupt. here is what i want to ask. why do we think that that's corruption? why do we think that that's corrupt? witticisms why? what does corruption main? it means the basement, defilement and destruction of something. how do you have a view of corruption if you don't first have a few of propriety or if you think about it in terms of the deceased body corrupted by disease of germs, you wouldn't know when something is corrupt. you can't think i don't have any idea what the good looks like but what the corrupt version of that looks like. let me ask you. how can we give the government that we actually have today as corrupt just because individua individuals, sorry. how can we view the process of a businessman or corporation for private interests trying to access government officials to campaign donations or lobbying as corrupt? the reason i asked it that way is i want you to think about not the government as it is conceived of in the constitution declaration of independence but the government would actually have. think about it like this. so every election seas do we not hear some variant of the following? vote for me and i will tax the middle class to pay for benefits for the elderly or vote for me and i will tax the elderly and the middle class to pay for benefits for students let's say, student loan forgiveness. vote for me and i will favor labor over business and i will pass laws that restrict the ability to freely associate with people because that's good for labor unions or vote for me and i will favor of business over labor. vote for me and i will favor american companies over foreign companies. vote for me and i will favor the farmers over i don't know wall street by -- and what you ultimately get to is this idea that the purpose of government is to hand out favors or to hand out essential to bilk some people with taxes or regulation and redistribute benefits to other people. so i ask you how can you consider any one instance of this to be corrupt without thinking that the entire system is corrupt? how can we point to any individual player in this process for this game and say he is corrupt but the entire system is somehow okay? that doesn't make any sense. it makes no sense to think only one example of this is corrupt the but the rest of it is perfectly pristine. what is the idea as -- at the root of this government for politicians to appeal to people to vote for me so i can we go in, or destroy one person's business in favor of another. in short it's democracy not in the popular conception of that although the popular conception of democracy is a very idea. some people think of it is freedom and other people think about more like this. it is majority are innocent. it is this idea that the purpose of government is to do what? to serve the will of the people. how does that work? every election system we vote on who controls the reins of power and then they go out and they supposedly serve all the various interests of society. in practice how does this have to work? what is this ultimately mean in practice? to cut to the chase if you are a businessman let's say or any of the other interests i talk about, what is your natural approach to this? are you going to sit still and say yeah okay i will be destroyed by the government and if the election goes the wrong way that's just the way that went. my business will be destroyed. my hard-earned income will be handed to other people. you know the insurance business let's say and ayn rand will be completely collected by the government but am i going to sit there? of course not. i'm going to go out and try to influence this process and that makes perfectly good sense. .. >> the. >> the inevitable a result is a mad dash like a one-hour sale where prices are reduced by 90 percent. you try to access government as a regulated view as kill or be killed mentality. everyone is a threat to liability to produce or be happy. of course, people willing gauge in the process. banal instances are correct. but democracy is the system of corruption we think about government as its purpose or a nebulous you right into the view of government, that kind of corruption that everybody complains about. it is precisely the people live is complaining loudest of that corruption of the government to support the idea that this is a democracy not a limited constitutional republic. under a limited government government is limited to one essentials thing. protecting your right to live and be happy by preventing anyone from acting like the monster by abolishing the use of force. but the role and purpose of government is not to engage in legalizing plunder. it does -- when it does we cannot be surprised that people view that as the purpose of government. nothing personal it is just business. that is the type of cronyism and interest warfare that people complain with. >> and to limit government. the least take them away. it mixes together good and bad. but it is a massive injustice to perpetuate the problem of mobster gets to travel under the idea the real problem is not a monster of you trying to influence. so you get the blame. the second issue is that people are complaining about is baked into the concept of government. that lets is dividing as into war in factions are interest groups against one person or another or warring interest groups it is the only option. these are the terms they use. instead of crowding capitalism. the state is some is subordinated but actually that is redundant in my view. the essential evil is stated some. so to talk about cronyism it is the view that the state is supreme and individuals are supported it. to fix the problems of the only solution ultimately to be summed up as leave us the hell alone. but as produce gore trade. [applause] if questions? we will move across the room. >> but what crosses as self-defense or companies on the offense. but what is the moral difference? where they tend to cross the line, because when they start saying we just try to level the playing field to make equal for others. i have just seen this recently with the campaign finance law that in colorado they are subject to campaign finance laws but to use them as though what been even though he is the victim but this cross is a moral line. if you are no longer my ally. they were violating rights side want to be a part of this. but a threshold. >> that is a great way to put it. so the phenomenon is this. if you pull a knife people's the gun. it is a constant escalation. i will do with the same or worse. but i would say to points. has said general matter with other things being equal if other people does that it is inappropriate. but it can get really complicated to say think about it from the standpoint whole asking for a subsidy by competitor got one why a shouldn't i? >> the party's number three through 212 for also not getting subsidies. it just gets bad with a competitor but also the regulations to control him will also harm my other competitors. >> that is the metaphor all against all is a chain reaction video from what i was the kid with 1 million mousetraps. to show the chemical reactions. it goes from single examples in the 19th century with the railroads then today everybody does it. is self-defense i have to play the game to get by. so we will double down to the least common denominator everybody destroying everybody. you have to abolish the system. but definitely judge the people that use the law effectively to plunder other people. but you have to be sensitive to the context. >> did you use the arguments you have made tonight in your speech as a litigator? >> not really but as a campaign finance litigator i argued constantly the arguments i would make it in court for freedom of speech to influence the government if you limit the money that pays for this speech will livent the speech. within this field there is a specific view of corruption. it is not corrupt unless you literally give a campaign contribution as a quid pro quo. so our argument was there is no evidence that the support for that candidate yields a favor in return so a concrete example is to give you senator so and so as a contribution and you paid me back by voting on a given all. that would be seen as corrupt. but we would always argue it made good sense with legal terms not justifiable but correct but i have to draw a distinction between legally and morally correct but it was true. but this is not hard to understand. people say sure. go to a politician and you expect him to vote? how is that not corrupt? of course, it is. this is not how politics is supposed to work. and looking at the starting point the logical result it is restricting the of free speech and it just makes sense and you miss the big picture, people trying to influence government officials. you should not finance the campaign of the candidate. you cannot pay off that cop with a ticket but there is common sense. but to take that big picture approach that this is an issue of government power but it is monstrous and insane to restrict people's ability to influence this government. but such as the direction we are going with big government, put it this way we will have a government that influences everything that we do, controls everything that we do. it is insane not to mention and moral as a foundation for a free society but government will have this much power. but i cannot use this argument in court it is not strictly relevant but it is to convince people to maintain and preserve freedom that is a much more important goal behind -- and petty corruption. >> what do sure opinion on the auto company bailout? do you think that is corrupt? >> yes. into ways brought big industry this is not what government should do. it is probably an example of the influence of the car companies over government but i have not positive of that. i did not get into this that we need to think about government corruption first we need to have a view of what government should do before should not do. the cure and a proper review exist to protect rights in nothing more than that the auto bailout does not protect rights. so we will take money from taxpayers. that'd is government acting like a monster. where does it get off? that you have to support chrysler? not by buying up product but forced to support through tax dollars. that is really corrupt. it turns governor from a protector to a destroyer. that is legal plunder. but if that question is, if this is an example of influence by the car companies i would say probably. but not really looking at it you can assume because that is the way things work. especially with gm but is hard not to but to say i am just 75 percent sure. but there are stories you can read it just by reading "the wall street journal". it is not hard to figure out that the cozy relationships in though white house. business executives are called to congress constantly because their business does not go the way politicians want them to. why don't they say at halftime? ahead shareholders to worry about. because they have to if has so much power over them they have to be a bed with them there is no way to do it otherwise. now we will move onto the next one. >> is like back words so what point does the reaction lead to no ability to petition the government? >> absolutely. i am sorry to say but essentially we get closer all the time. the supreme court has done a very good job to protect the right to participate in politics. and i want to put my concerns before my representatives. as a free people have to have the right to influence its government? lobbying is a good example to petition and a government. that we talk about to influence government. and not withstanding the fact the supreme court has done a great job citizens united and the handful of other cases, the courts are doing some good working in this area. but today's young people do not understand respective free-speech. but consider how free speech is viewed today. 513 speech to be preserved have to show what it is about. and the adl that i don't like to want to restrict. we saw that with the commencement addresses that were canceled. this is an attitude i have no interest in frankly your ideas are the affront to me but that translates. the second development of those negative reactions to citizens united case. the last time you saw of reaction like that was roe v. wade. system and united is held out as the devil. people were referring to a lesser charge to first century so actually complete the unhinged from reality but it shows them a deep hatred for this idea to be entitled what the government has done. the manifestation of that but the effort to amend the constitution there was a serious effort about one month ago in the senate judiciary committee to amend the first amendment so congress could pass reasonable restrictions on campaign financing that means on the amount of money to spend on speech which means how much you get to talk. and if you get to. it was defeated handily because they needed a super majority but this issue has come up many times over decades and every timepiece's och -- every time it gains momentum. sometimes i think we have one generation of left of free-speech left. that is the scary phenomenon but i would be concerned if the amendment like that would pass. then they pushed over the domino they will follow the track then it is very bad. >> what would happen to a business executive with they said go to hell? >> i would be given one example, actually two examples. the gb morgan was fined in the billions of dollars for taking over countrywide bank not telling the government that you just asked us to take over is in financially difficult days. and day ticket over than the government said you did not tell us the problems which makes no sense. that led them to take over because of the problems but then said you did not disclose to us. there is a lot of speculation that was a direct shot at j.b. diamond who was the ceo of jpmorgan. they make the good case it is just payback for him to not play ball with the current administration. of the lawsuits against dander forced to downgrade the government credit, of what the hell is that all about? where does that come from? but the final example is if you read john allison's book but he opposes t.a.r.p. but in essence here is the story one day he basically said that is a good bank i would hate to see us change the capital requirements that would make you insolvency you might want to seek your opposition and of course, he had to except. this is what happens when you talk back. that is a real phenomenon. there are so many ways the government can destroy your business it is understandable that politicians don't do more. of sarah the business people don't do more. i would love to see more businesses stand up and speak out. whether they can get away with it is a separate question. i would like to see them do more but they are making life difficult for themselves if they do that. >> this made me think of the question of government, the fcc and the redskins. what is your comments regarding that? they will use their power because he has radio stations to force them to change their name? >> i think it is wrong to do that. the sec should have no power over broadcasters at all but i have to think more about that. is that in example of government using improper authority or an attack on a particular person? but from a good sense standpoint that should not matter but if you are is skiing -- asking if that is paid back with that vehement disagreement if they think of the term redskins. it is an example of public pressure coming to bear on a regulatory agency because people don't like that but in all events it is bad. if you think of the redskins as a mascot that sec there should not be one. let me put it this way. if their power is essentially is to grant the right to enter into all the million-dollar businesses to talk about the way government is she will have the authority to grant lices broadcasters. it is the mascot or a trade name there is no standard at all. of course, they will end up exercising its in the arbitrary manner there is no arbitrary principal way to do it. it should be settled is inevitable when to have people making power over public interest. >> the explanation given me a perspective. it seems then discussing the topic you open a pandora's box for influence that seems like you categorized earlier that there is an arms race of influence to have a positive outlook for just to achieve mutually assured destruction? >> unfortunately my answer is so long we've view government the way we do. our government is a constitutional republic. that is a fact. but we are a democracy and this is a country ruled by the majority and you can see that as the president has a mandate to do anything he wants. komer remember when obamacare was being debated? american people want it so it is automatically legitimate debate over. so long as that is the view i don't see how this possibly changes. there are so many ways those various pressure groups groups, because many are just out to plunder others others, there are so many ways they are so entrenched in the law enforcement process that if these enormously difficult. i will say there are positives. the tech industry is like lift war tesla in its effort to sell cars locally and to get around the state franchise laws to protect through the consumers and everybody knows what lifting is can pick those apps or services that they run into local to reservation but there seems to be a backlash. but to understand that proper purpose the people say waited minute if this is where regulation means that that is the aglimmer of hope it said the development. but this second step is what good do they do? fled to of the one hand people seem to be opposed with the regulations but on the other hand, the tech industry as whole by and large they just don't get it. most of these guys on a regulatory big government model and about public spirited regulations to protect people. and then with a business transaction. to find out what that obligatory process is all about. is a promising development people pushing back and any pushing back is good news with any kind of opposition at all. i wish i could give better news than that that one more development is the fact they talk about it is also positive. but the fact the even focus on its is a positive development but the government is putting the left back on its heels. they can see it is hard to defend this. whether it goes in the right direction or not it is hard to say. >> highlight the etf of the union's it is like it is the perfect clash of two cultures. >> the irony is that. -- that -- that. >> what about the horizon for what you talk about? >> it is hard to be terribly optimistic that i will try to find one to. [laughter] it is like my previous answer. you have to think about what is possible and as a positive development and not always that ideal so i have been critical of senator mike lee before but he gets a lot of it but he seems to understand it is a problem with government power. ted crews and ran the ball they push back against the monolithic view that government knows all but how flawed are they in their thinking pointed to problems. and what impact politics will have monoculture bets buy you cannot start with politics from the top down. >> with renewed interest in cronyism and to explain it to you aware of the public choice theory? >> there is quite a lot there is an economist that has written about this a lot. and he is quite good although there are issues with all of them from the economic standpoint. but specifically he wrote an article recently his point was academics have talked about this phenomenon for a long time. which by the way let me clarify that the real phenomenon that people need to focus on that they have been talking about the phenomenon for a long time. said there is a lot in the area that is quite good but the intellectuals that people don't pay attention to that we have not explained why a free market economics is in everybody's legitimate self-interest i am not an economist hour with all the literature but i have read about this since i was in my 20s, so 25 years is how to for a more think about the issue is the moral underpinning in my view. >> doesn't it seem like the incentives from the government some of the incentive is to do capture more money so let's get the agencies of government the purpose is to grow so they get a bigger budget. so it seems to me in "atlas shrugged" that have you looked at any of that? >> there is a perverse structure. if you add good principles you have good incentives with good structures. if you have bad principles the opposite hands. but then to inflate its the currency that bad money drives out the good it is this incentive structure to become necessary and fair by a morally appropriate. there are deeper feel -- philosophical reasons the one to start this is a troubling phenomenon. as soon as one per se gets away people think they defend their interests and they just have may have. so all to what they the solution is returned to first principles but what should government do as the path to what it should not do? i will close with that. thank you. [applause] >> we tend to volunteer wed rigo we need to. we step forward to take responsibility when times are hard. this is that moment in america. we look around to instinctively know we have to change the concept of citizenship. their vote and pay taxes but that is not what citizenship is it is no more than a covenant of a relationship between people with more responsibility to and for each other. citizens are jointly bound to take care of each other. instead of being small is what you are or about and what you do what you do and citizenship in america has eroded for lots of reasons but to the point we need to stop and look with the real problem. economic inequality in different parts of society but we want to fix it instead of going after each individual item. [inaudible conversations] >> good morning. i would like to welcome you to the panel discussion to the radio and nuclear program over the last few days in vienna. yesterday iran and the p p5 + 1 countries reached an agreement to hit the negotiations for the second time and agreed to seek a political agreement within four months to finalize the details by late june. during this period, the interim arrangement looked at in november 2013 will remain in place with the arrangements under a deal called the joint plan of action so the nuclear program will remain frozen and the sanctions relief will continue including the incremental repatriation that was held up by the banks mostly in asia. but the most impact to all of those economic sanctions of banking and oil remains in place. secretary of state john kerry had a press event yesterday and as the secretary made the case for an extension he said real and substantial progress over the past several days new ideas have been put on the table but was indicating there is some momentum in the negotiations. he said now we see the past resolving some issues. he went on to elaborate, a constrained the nuclear program and it is safer today than one year ago. and he indicated based on the reports that iran had complied with the interim deal that the most powerful sanctions remained in place for iran to come to terms on a comprehensive agreement that in general a continuation was very much in the interest of the united states and considering how far we had come into reaching a comprehensive deal it would have been a terrible mistake and other parties have expressed similar views. the president of iran indicated yesterday they he was more or less pleased with the extension that the deal could be concluded sooner or later. and other partners expressed similar views and even the israelis expressed relief that a hastily ill-conceived agreement had not been reached and they seemed content with the continuation for the time being. but at the same time while indicating progress had been achieved secretary carey said a significant gap remained on some of the fundamental issues. but he made it clear that it was far from inevitable. it as a spokesman have noted to demonstrate greater flexibility than previously demonstrated that iran had yet to do to demonstrate their realism required to close the deal. to anticipate on capitol hill s secretary perry said to give the administration the benefit of the a doubt the spokesman reiterated an additional sanctions would not be necessary or helpful or could be disruptive. reactions have been mixed so far some a said they're prepared to give the administration the benefit of the doubt but others have indicated no deal has been achieved did one year. the they have any hope to achieve it over the next several months that we obtain additional leverage and we can only do that with additional sanctions or legislation. with though lame-duck session so what is the al look? :is the likelihood a comprehensive deal will be achieved? what are the gaps? what kind of deal is in the best interest of the united states and its partners? how will the partners react to the extension? hello the administration respond? ann wyatt is the outcome -- what is the outcome between the executive and legislative branch? we have our panel today to provide answers to these questions. on the right executive director for research and a while ago was the senior white house official and was intimately involved in the negotiations. as the founder and head for is to shoot a science for international security for isis, the other one. [laughter] the good one. as you know, is the code to place to understand said technical side of the iranian issue. also we have said that i have known for many years and is the senior staff member from the senior foreign relations committee and how he approaches these issues better than anyone else. said he is joining us today. i will ask each to make opening remarks. i may ask a few questions or provide a few comments of my own then they will all been to the audience. gary thomas start us off. >> the first to want to compliment the secretary for managing a very difficult and complicated situation and that includes maintaining unity with our middle east allies and the most difficult of all was for the iranians. the failure to reach an agreement it is very important to understand the u.s. p5 plus 1 put forward a reasonable and even generous offer to the larger capacity and with the question of the past activities that is gore graduating sanctions but as it continues to take positions they refuse to give up, they insist on a much larger capacity and immediate sanctions relief. may be as we come near the deadline they need to show more flexibility and baby to come forward. but the other possibility is the supreme leader hominy does not have concessions to limit the efforts because in his view the iranian economy is stabilized under a joint plan of action. and the supreme leader says like the ukraine or others give sarah ran a much stronger bargaining point. . .

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