Posts tagged with: corruption

tradingplacesFor most of my life, much of what I’ve learned about the world came from watching movies. This was especially true in 1983, when I was in junior high. That was the year I learned about astronauts (The Right Stuff), thermonuclear war (War Games), and ewoks (Return of the Jedi). I also learned about financial crimes—specifically insider trading— from the Eddie Murphy/Dan Akroyd comedy, Trading Places.

If you’ve forgotten the plot, here’s a brief summary by Gary Gensler, the former Chairperson of the Commodity Futures Trading Commission. In testimony before Congress, Gensler said,

In the movie “Trading Places,” starring Eddie Murphy, the Duke brothers intended to profit from trades in frozen concentrated orange juice futures contracts using an illicitly obtained and not yet public Department of Agriculture orange crop report. Characters played by Eddie Murphy and Dan Aykroyd intercept the misappropriated report and trade on it to profit and ruin the Duke brothers. In real life, using such misappropriated government information actually is not illegal under our statute. To protect our markets, we have recommended what we call the “Eddie Murphy” rule to ban insider trading using nonpublic information misappropriated from a government source.

Turns out I wasn’t wasting my time on a silly comedy—I was learning about a future commodities regulation.

Yet aside from the “Eddie Murphy” rule, I don’t actually know that much about insider trading. I also hadn’t given it much thought since watching Gordon Gekko get rich off inside information in Wall Street (1987). But this week I listened to an intriguing Planet Money podcast about the topic. The show’s hosts, David Kestenbaum and Jacob Goldstein, ask a question that I hadn’t considered before: What makes insider trading wrong?

Let’s first define what we mean by the term. As the Securities and Exchange Commission explains,
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Blog author: jcarter
Thursday, November 19, 2015
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Corruption-bribe-5-x-7_-123rfWhen Americans think of corruption, we tend to think of third world countries where getting anything done often requires bribing local government officials. We tend not to have such problems here; our corruption is more subtle and sophisticated, and often involves state level lawmakers.

For instance, over the past few years there have seen corruption-related charges or convictions of the house or assembly speakers of Alabama (bribery, misuse of campaign funds), Rhode Island (bribery, misuse of campaign funds), South Carolina (misuse of campaign funds), and New York (bribery, fraud, extortion, etc.). The former governor of Virginia was convicted for taking a bribe and the governor of Oregon resigned because of corruption charges.

That’s one of the reasons why states need systems and laws in place that can help prevent and expose corruption. So how are individual states doing in regards to transparency and accountability?
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Great and powerful Oz

Great and powerful Oz

According to Merriam-Webster, “cronyism” is ” the unfair practice by a powerful person (such as a politician) of giving jobs and other favors to friends.” For instance, former Detroit mayor, Kwame Kilpatrick, surrounded himself with friends and family members while in office, as he cheerfully plundered the city’s coffers, sharing the wealth with his entourage.

It’s easy to think that cronyism is like Oz: far, far away. Yes, there are tricky creatures there, but heavens, we here in Kansas won’t be affected by shiny streets and glowing horses.

Not true. The economy shapes the culture. What happens in Oz, if you will, is felt in Kansas. And not only felt in Kansas, but eventually begins to seep into the Kansas culture. Why shouldn’t I have an army of flying monkeys to protect my farm? Why shouldn’t I sidle up to the Wicked Witch and make sure she’s on my side? You never know. Michael A. Needham and Ryan T. Anderson state,

While cronyism is most recognizable when it generates economic windfalls for the favored few, conservatives would do well to explain that it also operates in other realms. Indeed, for decades, the Left has been seeking special advantages from government in its effort to reshape the character of American society. So, if you’re against the government arbitrarily picking winners and losers in the economy, you need to be against it doing the same in the culture. If Solyndra and the Export-Import Bank are a problem, so too is government funding for Planned Parenthood and government discrimination against Catholic Charities.

We call this sort of government special-interest-seeking “cultural cronyism.”

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A Cambodian boy working on a Thai fishing vessel

A Cambodian boy working on a Thai fishing vessel

It is no secret that Thailand is rife with human trafficking. It is the world’s number one destination for sex travel. (Yes, that means people travel to Thailand solely for the purpose of having sex with men, women and children who are trafficked.) Thailand’s fishing industry is also dependent on human trafficking, often using young boys at sea for long periods of time, sometimes working them to death.

Quartz is reporting today that the EU is considering a ban of Thailand seafood because of the industry’s use of slave labor. (more…)

military-spendingWhen it comes to spending on national defense the political debate is often presented as a simplistic, binary contest between those who want to spend more and more (often conservatives, who want a strong military) and those who want to spend less and less (often liberals, who want to use the money for social welfare purposes). While those discussions are important, they are also incomplete. Conservatives, in particular, should be more cognizant of the way cronyism can undercut military readiness.

In an article today at The Stream, I argue that we need a broad-based agreement about the most effective ways to spend defense funds based on the true needs of the military:
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bribeIt is no secret that rule of law in places like Slovakia is weak. Corruption, pay-offs, bribes and twisted use of power often pass for “rule of law.” However, this problem has infected  health care as well, which means those who are able to bribe the doctor or health care worker is the one who will get the care.

The Economist describes Communist-era corruption as a holdover infesting much of central and eastern Europe, and not just in health care. However, it’s one thing to bribe an official to get a building permit; it’s quite another to have to do it for live-saving surgery.

In Latvia Valdis Zatlers, an orthopaedic surgeon who served as the country’s president from 2007 to 2011, accepted what he called “gratitude payments” from patients without declaring them to the tax authorities. He was fined just 250 lats ($466). A European Commission survey in 2013 found 28% of respondents in Romania and 21% in Lithuania had made informal payments to doctors, compared to an EU average of 5%. (more…)

Blog author: jcarter
Wednesday, December 17, 2014
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Political-Corruption-Bigger-Threat-than-TerrorismPolitical corruption is the use of legislated powers by government officials for illegitimate private gain. While it isn’t as endemic in the U.S. as it is in some countries (Somalia, North Korea, and Afghanistan being the most corrupt), the problem still exists. According to the Justice Department, in the last two decades more than 20,000 public officials and private individuals were convicted for crimes related to corruption and more than 5,000 are awaiting trial, the overwhelming majority of cases having originated in state and local governments.

But measuring corruption based on convictions can be tricky for a variety of reasons, ranging from inadequate data to partisan bias. One alternative measure is to use perceptions, especially of state and local governments. Oguzhan Dincer and Michael Johnston surveyed the news reporters covering state politics in addition to the investigative reporters covering issues related to corruption during the first half of 2014 to gauge their perception of state corruption:

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