In third world countries, economies suffer when a small group of families approach the political class and hand them envelopes of money to pass policy. There is no public vetting. Everything is done behind closed doors. And before you know it, the economy is regulated to such an extent that only a few sellers are allowed to supply the needs of the vast book of the population.
This takes place across the board whether we’re talking about water, power, internet services, telecommunications, countries that don’t do all that well are heavily monopolized. The problem with monopoly is that they generate few jobs.
You’re a lucky employee if you know people and are well connected enough to work for a monopoly company. But the problem is a monopoly company can only hire so many people. But they control so much of the economy.
This means that the rest of the economy suffers. Also, when economy is monopolized, there’s less selection and the service tends to be poor. It is no surprise that monopolized economies, when it comes to broadband and internet services, tend to have the highest prices while offering the crappies services and slowest internet connection speeds.
Pathetic, right? This is exactly the product of corruption. Corruption really boils down to using an informal network. Maybe your godfather through a wedding is a politician and because you can grease that person with a few million bucks, they can pass special laws crippling your competition.
They can pass high tariffs or high taxes so you don’t have competition. You can even get out from under the tax laws if you know the people in power. What I just described happens in Eastern Europe, Southeast Asia, South America, Mexico and everywhere else.
The countries that do really well are the ones that have a more open political system. But here’s the problem. In the United States, campaign contributions by lobbyists are beginning to warp the previously open political process.
Now, we’ve gone a long way since the early 1800’s where a lot of decisions were made in smoke filled rooms. These decisions were not small things. A handful of people decided who the next presidential candidate for their party would be. They decided who’s going to rule certain states.
It was really bad. But thanks to the rise of activist politics in the United States and a more open view of democratic participation starting with the presidency of president Jackson all the way to the presidency of Theodore Roosevelt and the bureaucratization of the system under Franklin Delano Roosevelt, America has changed dramatically.
A lot of people were saying that the 1950’s was basically the height of American political openness. Well, unfortunately, there is a recent trend towards campaign contributions by lobbyists.
Please understand that the US has very strict lobbyist reporting rules. Not only must lobbying firms report their activities and who comprises their board as well as the funds they collect, they have to report all sorts of other activities.
A lot of observers think that this opening is enough to prevent abuse. Unfortunately, the opposite is actually true. Since ‘transparency’ requirements give lobbyists the right to operate freely, they use their ‘transparent filings’ as a cover for aggressive lobbying which can lead to warped laws that unfairly and negatively impact consumers.
And this has really changed the game. Now, lobbyists only need to contribute to the campaign of a senator and if that senatorial candidate wins, they have that person in the back pocket. What do you think happens?
That’s right. The same stuff that you see in third world countries are happening in the United States. Some companies are given tax exemptions. Other companies are basically given de facto monopolies. It’s a mess!
This is not what America is about. America is really all about competition. It doesn’t matter what you look like. It doesn’t matter whether you speak with an accent or not. It doesn’t matter where you come from.
What matters is if you’re applying for a job, can you do the job better than everybody else? Because if you can do that, the value of the work you do gives more profit to your employer and this incentivizes that person to keep you by paying you more. Because if you don’t, their competitor will snag you up because you obviously produce superior product. It doesn’t get any simpler than that.
Unfortunately, the rise of campaign contributions as well as the institutionalization of the lobbying industry in the United States is threatening a lot of the internal processes that have made the US such a success in the first place.
Om fact, when you look at cities like San Francisco, Los Angeles and New York, it’s abundantly clear that given the monopolistic trends and regulations that America may be turning into a third world country.
Now, don’t get me wrong. Usually, when people think of third world countries, they think that everybody is poor. That’s not true. If you go to any typical third world country, there is a 1% or 2% that is very rich. It’s as if you never left America.
If you go to certain places in Venezuela, it’s as if you are in Beverly Hills. The same applies to the Philippines. There are certain places there where you feel like you are back in the US. But for the rest of the population, we’re talking about 98%, it’s a struggle.
There’s 20% that’s middle class and another 20% that’s working class. But for the rest, it’s really bad. Just how bad? Well, people eating garbage. That’s right. Heating up garbage and eating it.
This happens quite a bit throughout the third world. Unfortunately, if the United States keeps going the way it’s going with campaign contributions and the institutionalization of lobbying, it’s only a matter of time until it creates such massive inequality that it can qualify as a third world country.
America would still be rich overall, but you better hope that you are in the top 10% of the population.