Belmont Club

You can't beat City Hall

How’s this for a dramatic first paragraph? The Washington Post describe a Conga line of mayors, legislators, assorted bureaucrats and men of the cloth from the New Jersey area all heading for the courthouse.

NEW YORK, July 23 — A two-year federal probe into a money laundering operation taking place between the New York area and Israel ballooned into one of the biggest bribery and corruption sweeps in New Jersey history, netting three northern New Jersey mayors, two members of the New Jersey Legislature, a raft of local officials, five rabbis, and a Brooklyn man accused of trafficking in human kidneys, U.S. prosecutors said today. …

A Brooklyn man, Levy-Izhak Rosenbaum, known in his circles as “the kidney salesman,” was also arrested as part of the sweep and charged with enticing vulnerable people in Israel to sell one of their kidneys for $10,000, and then charging waiting transplant patients in this country up to $160,000. He admitted brokering kidney sales for a decade, federal prosecutors said in the complaint.

One of the attractions of being in the underworld is that you get to choose a cool moniker, like Mumbles, Two-Shoes and the “Kidney Salesman”. It beats being plain old Hank. And a lot of interesting guys were on display. The Washington Post describes what the FBI found under one rock.

According to a release describing the operation, an FBI informant in 2007 began helping agents uncover a money laundering operation between New Jersey, New York and Israel. According to the complaint, the rabbis used registered charities linked to their synagogues to launder money from illegal goods, such as counterfeit handbags. The person wishing to “wash” illicit proceeds would write a check to the charity, then receive cash — minus a handling fee of 5 to 10 percent kept by the rabbis. … The informant pretended to be a developer interested in building high-rises, but who needed expedited permits and approvals. The complaint says Khalil made the introductions to people he called “players” in restaurants around New Jersey, and the informant would then pass envelopes stuffed with cash in the parking lots afterward. The amounts were usually in the range of $10,000 to $15,000, going to housing inspectors, planning officials, health department workers and politicians.

Prosecutors said much of the money was being solicited for the closely contested election campaigns for city council and mayor earlier this year in Hoboken and Jersey City.

So is corruption of this magnitude an isolated incident? Or is it part of a phenomenon people need to be concerned about? Fred Siegel, writing in the City Journal, argues that these kinds of shenanigans were precisely the things the architects of the Constitution worried would undo the Republic. In an article titled Madison’s Nightmare, he noted Madison warned against the emergence of a permanent political class who in time would become robber barons in their own, with their own retinue of crooks, armies of enforcers, and legions of publicists and pitch-men. That would inevitably occur, Madison believed, when there was only one boss left on the block.

James Madison’s Federalist No. 10, the template of the American political system, warned the “People of the State of New York” about the “violence of faction”—the seizing of government control by powerful special interests hostile to the “permanent and aggregate interests of the community.” Madison understood that “liberty is to faction as air is to fire,” so interest groups could never be eliminated without stamping out freedom itself. But if factions were sufficiently numerous and diverse, he argued, narrow interest would clash with narrow interest, with none gaining the upper hand, and the broader public interest—and republican government—would be protected from oppression.

Siegel believes that New York — admittedly a different state from New Jersey — was more dynamic when the political ecosystem was more diverse. Now it is completely overrun by a single noxious growth which stands unchallenged and unremovable from public office. And in that kind of atmosphere there is the tendency to conclude that You Can’t Fight City Hall.

It wasn’t always like this. Fifty years ago, New York’s economic interests were far more varied, producing a more diversified, Madisonian politics. True, Gotham was the New Deal city, confident that government had an answer to every social problem. Democrats long ruled its politics. But the Democrats of Tammany Hall still represented a variety of interests and could sometimes lose elections, as when they were defeated by Fiorello La Guardia in 1933. This state of affairs lasted until the sixties, when the public-employee unions replaced Tammany as the basis of the Democratic Party, withering the city’s political culture. …

Political parties have also become increasingly irrelevant in post-Madisonian New York. The Democratic Party today is less influential than the public-sector unions. … As for the Republicans, corruption scandals in their former stronghold of Nassau County, the declining upstate population, and a statewide outmigration of the middle class have left the GOP a shell of a party, as beholden to the special interests as the Democrats.

The problem in such cases is to find a way out. Back in school many of us may have come across the idea of an absorbing Markov state. “An absorbing state of a Markov chain is a state such that once entered, the process never leaves. A state i is an absorbing state if and only if Pii = 1 (and thus all of the the other Pij = 0).” It is the Hotel California of mathematical objects. You can check in any time you like, but you can never leave. And while the FBI is to be commended for arresting these suspected crooks in New Jersey, it is like shoveling s**t against the tide. The only lasting way to prevent corruption from becoming runaway and chronic is to revisit James Madison’s original concern: how to re-architecture politics in order to prevent the emergence of an absorbing Markov state. There might be a debate about the best answer, but I think there can be little doubt about the validity of the question.

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