How Government Advancement Of "Fairness" Ends In Graft

Here in the capital of the progressive fantasy, the official groupthink holds that the fundamental duty of government is to promote fairness and equality through the exercise of government's coercive powers.  And now we have the simultaneous federal corruption trials of the ex-State Assembly Speaker Sheldon Silver and the ex-State Senate Majority Leader Dean Skelos.   These trials provide insight into how the progressive fantasy plays out in the real world.  How it plays out is graft.

At the current moment Silver's trial has completed presentation of evidence and closing arguments, and is in the hands of the jury.  At another courthouse literally next door, Skelos's trial is still in the evidence phase.  A fascinating aspect of the two trials is the common role played by New York real estate investor Leonard Litwin and his company, Glenwood Management. 

Glenwood is mainly in the business of owning and renting residential apartments.  Compared to the office and condominium markets, the residential rental business in New York is subject to far more government meddling.  To start with, we have rent regulation.  That's how we "preserve" "affordable" apartments to be sure that no "unfairness" occurs, such as that people like Mia Farrow and Bianca Jaggermight have to pay market rents for their multi-million dollar apartments.  Due to reforms enacted in the 90s under then Republican Governor George Pataki, the grip of rent regulation has loosened ever-so-slowly.  But rent regulation still covers about half of rental housing units in the City, or around 1 million units.  And progressive activists in the legislature are constantly agitating to tighten the regulations and re-impose them on the currently free-market units.  In addition, there are tax incentives for the construction of new rental units, particularly "affordable" ones, and those are set to lapse regularly.  Put it all together, and it's the perfect environment for pols to enrich themselves.

So there we have Glenwood, one of the largest rental owners and managers, a sitting duck for predatory government.  In today's market its holdings are worth billions, but that could be wiped out in short order by imposition of sufficiently onerous new rent regulations.  Do we really expect these guys to wade into these waters and then just wait for the crocodile to lunge?  Actually, we know that that's not how it works.  Still, the level of the protection money that the pols exact by explicit and implicit threats of predation is really quite stupefying.  Hedge Clippers here has a list of Glenwood political and related contributions in New York from 2008 to 2015.  As examples, Governor Cuomo's 2014 re-election campaign got $1,214,200; "Jobs for New York" (a real estate industry fund to support mostly City Council candidates) got $587,600; the NYS Senate Republican Campaign Committee got $450,000; the NYS Democratic Committee got $300,000; the Democratic 2014 AG candidate, Schneiderman, got $215,000, while the Comptroller candidate (DiNapoli) got $210,000; and so forth for dozens more on down the list.

Note that there is no particular ideology behind this.  Republicans get money for their Senate campaigns because they have mostly controlled that body.  Essentially, the contributions go to whoever Glenwood thinks will win.  That's who they need protection from!

Anyway, these numbers are public numbers for campaign contributions.  But the Silver and Skelos trials show how a pol can equally squeeze the sitting ducks for personal enrichment.  In Silver's case, he just suggested that Glenwood use his friend's law firm for its "tax certiorari" work.  ("Tax certiorari" means challenging annual real estate tax assessments.  That work for apartment buildings worth hundreds of millions of dollars can be very lucrative.)  Glenwood took his "suggestion."  Silver got one-third of the firm's fees as his "referral" payment, amounting to several hundred thousand from this source.  In the case of Skelos, the alleged personal enrichment via Glenwood is much smaller, consisting of one $20,000 "referral" fee going to his son Adam from a title insurance company.       

So what is the solution?  Plenty of commenters on this situation cheer on Preet Bharara and his prosecutors for exacting punishment for the alleged crimes.  But as I've noted multiple times, the line here between crime and non-crime is by no means clear; and indeed that is the essence of the defense of both Silver and Skelos.  Hey, our friends sent us some business!  So? 

Sorry, but the ongoing effort to achieve "fairness" and "equality" by government coercion is inherently corrupt and corrupting.  The most corrupt states are the ones that go farthest into the big spending "fairness" game (New York, New Jersey, Illinois).  There's probably no such thing as completely eliminating the problem, but the best way to minimize it is for governments to stop trying to achieve fairness or equality in human affairs.