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11A083
Shakedowns
by Jim Davies, 3/25/2011
Yesterday's shock-horror revelation in the New York Times was that Qaddafi has been amassing billions by taking huge kickbacks from US and other foreign firms wishing to do business in Libya: "As American and international oil companies, telecommunications firms and contractors moved into the Libyan market [after it was re-opened in 2004] they discovered that Colonel Qaddafi or his loyalists often sought to extract millions of dollars in 'signing bonuses' and 'consultancy contracts' — or insisted that the strongman’s sons get a piece of the action through shotgun partnerships." Disgraceful! Worse yet, this government head demanded $1.5 billion from them to recover his costs of compensating PanAm 103 victim families, which was part of the 2004 agreement; thus, he (allegedly) ordered the airliner bombed, then got caught and blamed and made to pay compensation if he wanted to re-renter the club of nations, then tried to pass that cost on to companies wishing to buy his oil etc. What a sorry excuse for a human being, a pariah among governments! Hang on with that "pariah" bit. He's not the only
government creep bleeding productive companies. I happen to be
re-reading Thomas DiLorenzo's excellent book How
Capitalism Saved America The kickbacks aren't demanded in exchange for permits to do business, but in exchange for the favor of not making doing business more burdensome. The trick is for a Congresscritter to sponsor a law that would add such a burden, then wait for lobbyists of the affected companies to show up and offer generous campaign contributions, parties, lavish speaking fees, exotic vacations etc in return for his withdrawal of support for the proposed restriction, ie for his reversal of intention. That's a shakedown, American style. It differs from the Libyan kind only in the thickness of its disguise. On Capitol Hill, says DiLorenzo, this practice is so common as to have nicknames: "juicing" the re-election funds, or "milking" the target company. The politician wins both personally (the parties and speech fees) and professionally (the campaign contributions, using which he can prolong his enjoyment of power.) Now we know how so many Pols can salt away multi-million dollar fortunes, after a career whose good salary comes with heavy expenses. DiLorenzo also relates the Microsoft example. Here was a phenomenally successful company that had sold its products by the hundreds of millions worldwide, made fortunes for its founders, gained leadership in its market, yet all the while reducing its prices substantially faster than its many competitors. This was not a monopoly by any definition, nor was it harming its customers - who could stop buying any time we wished; yet because Bill Gates had not shared his wealth with the Federal Mafia, the Godfathers in D.C. charged the company under their anti-trust laws in the 1990s and set out to break it up; even worse, the whole attack had been initiated by the company's jealous and less successful competitors! It cost Microsoft many millions of dollars and a whole lot of management attention, to de-fang these predatory attacks - which did, ultimately, fail; but that diversion of resources cannot but have damaged both the company and us, its customers. So who pays, for all this shaking down? - you do. Bribing government is just another cost of doing business, and all business costs are built in to the price charged to customers. The net effect is to transfer wealth from us to the parasites, and depress our standard of living. When government evaporates, that dead weight holding down our prosperity will disappear with it.
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, whose
concluding chapter has a section called "Political
Extortion." I may refer to that book again in future
ZGBlogs, but this one explains how something very similar to
Qaddafi's corruption is occurring daily here in America.
