Has the American State Been Captured?

By Neil Cosgrove

Americans often express concern that their government has become too much in the thrall of ideologies, of ways of interpreting the world so extreme that the ideologues in question cannot acknowledge, much less accommodate, different viewpoints.  But what if that isn’t the main source of dysfunction in our government?  What if the main problem is that our state has been “captured” by people motivated primarily by the desire for economic power and personal gain?

Operatives at the World Bank began using the term “state capture” around the year 2000, when one of them defined “state capture as the efforts of a small number of firms (or such groups as the military, ethnic groups and kleptocratic politicians)” to accrue private gains by such means as “purchase of legislative votes, executive decrees, court decisions and illicit political party funding.”

The bank was concerned at the time with the activities of “oligarchs” in central Asian countries following the collapse of the Soviet Union. But the term “state capture” has since been used by protesters in Bulgaria and Romania, and in a most sustained and concentrated manner by the opposition in South Africa, unhappy with President Jacob Zuma’s style of governance.

“State capture” differs from more ordinary forms of political corruption in that the outcomes of the actors’ efforts are more certain, focused, and systemic. In South Africa, for instance, business associates of Zuma’s son, Duduzane, the three Gupta brothers, are perceived as having strong influence over the president’s decision-making. More generally, according to The Economist, Zuma is seen as putting people in charge of “state-owned enterprises and other governmental institutions” who then allow Zuma, his sons, and the Guptas to “loot public funds.”

The Economist further reports that South Africa’s “state capture” features the firing of “principled individuals,” thus weakening institutions that might otherwise oppose corrupt practices and uphold the law. For example, in 2015 Zuma endured a serious political backlash when he attempted to replace a highly respected Finance Minister with a flunky. Zuma did eventually manage to rid himself of that troublesome minister, Pravin Gordhan, in March of this past year.

The effectiveness of the South African Revenue Service’s “research and investigations” arm has been severely compromised, according to The Economist; particularly after a tobacco smuggling and tax evasion scheme involving another of the president’s sons, Edward Zuma, inexplicably faded away. (The Revenue Service will come up 51 billion rand short of its targets this year, after increasing tax revenue on bank profits from 1% to 21% during this century’s first decade.)

Gordhan alleges that “state capture” has now spread through “law enforcement, the state-owned enterprises, the revenue service, the Treasury and now the central bank.” Despite hundreds of counts of corruption accumulated by the National Prosecuting Authority against Zuma himself, related to an arms deal, no charges have been brought, while evidence against the Guptas has also been ignored.

We’re guessing, at this point, that all of the above is beginning to strike our readers as uncomfortably familiar, rather than political machinations in a distant country of a kind President Trump speaks of dismissively. South Africa has one-sixth of the U.S. population, and over one-quarter of its labor force is unemployed, while the American economy seemingly thrives, at least if you are among those fortunate to possess an ample income. Still, the question nags: Is the American state in the process of being “captured?”

We do have our oligarchs, whether they be the Koch brothers with front organizations like ALEC (American Legislative Exchange Council) on the national level, or Art Pope of North Carolina on a state level. Many Republicans seem confident they can retain power by using their donors’ deep pockets to purchase an alternative narrative they can relate to voters, despite the woeful unpopularity of their tax and health care policies.

As for our justice system, President Trump seemingly fired the FBI director after failing to strong-arm him into dropping an investigation into the activities of his campaign organization, and he routinely denigrates both federal judges and his own Justice Department. Appointment of federal judges has apparently been turned over to the Federalist Society, a highly conservative group of lawyers dedicated to an “originalist” interpretation of the Constitution (while still somehow managing to identify corporations as “persons”). Enforcement of environmental and tax laws are undermined by ongoing cuts in budgets and staffing at the Environmental Protection Agency and the Internal Revenue Service. Regulations meant to fight abuses in banking, consumer services, and resource extraction are habitually rolled back, to the applause of people who contributed directly to the campaigns of those now in office.

Sometimes the connection between policy and kleptocracy is obvious, as in the President’s recent waiver of punishments levied on Deutsche Bank, to whom Trump owes as much as $300 million, according to the Financial Times. Sometimes, as with the claim that the tax overhaul was a “jobs bill,” there is at least an attempt to justify an action as more broadly beneficial. (Nevertheless, Treasury Secretary Steve Mnuchin’s one-page set of platitudes claiming to be an “analysis” of the bill’s effects was a clear expression of contempt for both Congress and the truth.)

As a review of evidence in support of the assertion that “state capture” is occurring right here, in the U.S., we’ve only scratched the surface. We’re sure readers can come up with plenty of other examples on their own.

Neil Cosgrove is a member of the NewPeople editorial collective and of the Merton Center Board.

Categories: News, Politics, US, US Government

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