Warning: Wrecking Crew at Work
The story seems designed to repel your attention, like the wrong end of a magnet; the story is, at the same time, exactly what this election ought to be about. It is a perfectly formed artifact of conservative misrule, a little gem of market-based merde.
It seems that, over the years, an obscure Federal agency called the Minerals Management Service--a public agency, remember, that supposedly serves you and me--grew quite chummy with the private businesses it dealt with. Specifically, these private businesses were oil companies; the MMS's job was to collect royalties from them when they drilled on public land; and the oil industry's natural inclination was to pay as little as they could.
Naturally, the two became great friends, industry and business getting together in the kind of entrepreneurial synergy that conservatism has been telling us we needed for years. Every year the MMS would have a party in Houston at which they would hand out awards to oil companies. Executives went back and forth from the federal operation to the (far more lucrative) private one. Federal employees apparently got gifts, took trips, and even got laid courtesy of Big Oil.
It matters for two reasons: first, because this obscure little office is the second-largest source of revenue for the Federal Government after the IRS. What they let slide you and I will have to make up on April 15.
Second, because this bungle-dee-botch is what government looks like when you make it "market-based," as George W. Bush once put it. This kind of government answers not to the public but to the party with the most money. It's the same virtually wherever you look in conservative history: The FAA describing the airlines as its "customers"; officials at the Labor Department thinking of business as the "primary customer"; officers at the FDA allegedly regarding Big Pharma as "our client"; and, back in the Reagan years, even officials at the EPA speaking of business as the "primary constituent."
A third reason: Because this is not democracy. It is plutocracy.
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Their is a real commitment to "drilling" in the MMS.
I agree. This truly is "payment in kind." The taxpayer gets "Puntang for Petroleum.
And wow...what a funny coincidence that the oil companies made record profits this year.
While I dislike scowling upon sex and drugs, they have their place and this obviously isn't the framework for effective job performance but cause for immediate dismissal, as well as for those accountable for their performance. It prompts one to wonder how many other similar instances are yet transpiring in other agencies. Moreover, what does such revelation suggest about where our Congress has been for the past six or seven years?
A good piece and accurate comment about what "market-based" or laissez-faire gov't looks like.
To Thomas Frank:
Thanks so much for explaining this relationship. You've saved me a lot of research!
Sounds like the perfect place to work. I'm applying for one of the vacancies.
Man, talk about a great work environment!
Reminds me of the Savings and Loan bailout. I think it was Reagan (correct me if I wrong) deregulated the S&L's which up intil this time were "thrift organizations" that started out by customers saving money in a savings account and when they have enough they could buy a home with the S&L. providing financing. The deregulation allow them to invest their money on other things besides home mortgages and could determine their own underwriting. The was basically minimal oversight and it also was more of a government/client relationship,
Reagan's "deregulation" included allowing S&Ls to lend for things other than mortgages, *and* changing accounting standards so S&L's could continue to carry bad loans on their books and still stay in business. This did not, however, include removing FSLIC (and later FDIC) responsibility to make good on their debts to their depositors, nor did these federal insurance institutions charge more to insure riskier lenders.
Because of disintermediation and new financial instruments, the S&Ls were failing in the late Carter administration. What Reagan (and Bush 41) did was make the situation far worse than simply cutting our losses would have made it. Total losses from this debacle were $150 - $500 billion (it depends on how you count the interest). Until recently, the S&L bailout was the worst public scandal in U.S. history -- far worse than, say, Teapot Dome. Of course this was before Iraq.
How bad was it? The Reclamation Trust Corporation (RTC) -- the organization formed to purchase and re-sell the failed S&L's properties -- was the only federal bureaucracy at the time that had no whistleblower protection. In other words: "It's so bad we don't want to know."
Well, yes and no. Ownership was opened up to real estate developers and some abused the system. (I worked for one which was founded in 1982 by developers, kept its business straight, and survived the 80s.)
In the late 70s with inflation running in excess of 10%, the industry was dying because of its portfolio of 5% mortgages from the 50s and 60s. You can't stay open if you earn $4 for every $13 you pay to the savers. To address the problem, Reagan eased restrictions on ownership and relaxed regulations on suitable investments. New institutions, without old loans would be profitable and older institutions could offset the drag with non-home loan income.
Some s&ls jumped all over junk bonds. These paid a high return because they were admittedly riskier, but their champions argued they were not as risky as those stodgy stick-in-the-mud types made them out to be. Turns out they were riskier, especially when factoring in the insider trading,
As I said, there was corruption (for yuks, look up the Keating 5), but there was also a drop in energy and mineral prices. People in the West lost jobs and abandoned homes, which lowered values. A lot of new borrowers who expected to refinance before the teaser rate expired had negative equity and could not afford their payments.
What do you call deja vu when it's the first time you see it?
Pas Encore Vu
I am a retired Fed. Many years ago I was at a training conference for employees of many different agencies. One of the people was an auditor for the Agency responsible for financial institutions. He was complaining about how the new admin (Repub) had been cutting staff and number of audits they were doing. Not much thereafter the savings and loan scandels hit. So this does not surprise me. All Government Agencies - at least while I was working up till 2000 had numbers one could call and report ethics problems. Maybe the current employees are not sure if the Bush hires would protect whistleblowers since it took so long for someone to complain.
What we now see at MMS is a straighforward conflict of interest; much like we have seen in all the other regulatory agencies under the Bush Administration. Instead of working for the interests of the American people, these employees were working for themselves or their future employers, the oil companies.
If you hired a lawyer and found out he or she made a deal that benefited the other party against your interest, you would sue that lawyer for malpractice. The same would be true of a real estate agent or anyone else who is supposed to be acting on your behalf.
The amount of corruption in this administration is astounding; whether or not Obama could bring it under control is problematical, but no doubt under a McCain/Palin administration, the concept that government works for the people will continue to be pushed aside.
As Michael Moore said on Charlie Rose when asked why, if France was such a great place to live, the people were often out in the streets demonstrating against the government, he restated what someone he interviewed for Sicko told him : “the people in France get all this because here the government is afraid of the people while in the States the people are afraid of the government
It is no wonder that Sarah Palin and the GOP belittle community organizing-the last thing they want to see is the American people organizing and demanding that their government listen to them.
Please keep these stories rolling! We need continuous critiques of what's happened within these agencies under Republican administrations, in particular. Their most damaging work is done with subtle changes to enforcement "policies" and the re-direction of funds away from critical government functions. And that doesn't even get to the blatant, in-your-face, disregard for the taxpayers' interests and corruption pointed to in this particular example!
Well put, sir! Loved "The Wrecking Crew"!
This is what happens when you turn government over to people who've told you their agenda
was to destroy it. I think the exact words were," drown it in a bathtub.". Would you hand your
keys over to a drunk who told you he wanted to wreak your car?
This is as disconcerting as it is revealing. I actually had not understood until the Bush administration how corrupt some of our own federal agencies have become. We heard the Reaganites complain about big government. So they replaced it with unregulated capitalism. Governement ceased during this administration to serve the interests of the people, or worse, redefined the interests of the people as synonymous with the interests of big business.
Thomas Frank, you have once exposed a dynamic which has been poorly understood, and inadequately investigated. What is the matter with Kansas? Hell, what is the matter with Unregulated global capitalism.
Giordy
Remember the game Monopoly? It was a microcosm of what unregulated capitalism leads
to. One person ends up owning everything. In the macrocosm it leads to a minute percentage
of a vast global population owning or controlling everything. So when does the new game
start. I can see that this one is almost over.
Bravo!
Well, I agree generally with Franks, but I would just quibble about his description of the Bush Administration's governing model as "plutocracy," i.e. "rule by the rich."
While that is an adequate description, it does not fully capture the full magnitude of the damage Bush, his cronies, sycophants, true believers, and enablers have done to this country in the past 8 years (and which McCain/Palin will surely continue if they are elected to office, as now seems probable). The correct, most accurate description of the Bush form of government is "kleptocracy" -- i.e, "rule by thieves."
See: http://dic
I think that definition pretty well sums it up.
How about a kleptocratic plutocracy. That explains where the wealth and power comes from.
Thomas, So Let Me Guess? your answer to this Government Bureaucratic Breakdown is a BIGGER Government Bureaucracy, to get broken down? . Gee! . bet you didn't think Mr. Average knows how.
Yes, the government, our Government, should be much more pro-active in the "market based" economy. It is obvious in many areas--health care, energy production and delivery, extraction of resources and rebuilding the infrastructure (to name a few) that a market based economy is NOT working..
How about the same ol' "little bureaucracy" serving the citizens instead of the corporations.
Did you even read the article? Your response absolutely makes no sense.
It is a good Republican talking point, but is not a real response to the article.
It is what my old debate coach use to call a red herring.
That (which is called regulation in the real world) has proven to be necessary throughout history, ours in particular. Balance must be maintained between the companies making the money/jobs and the people who make it happen for the companies. Only ignorance or greed can deny this fact.
ChiMan1
It is amazing how deceptive people like you are. Mr. Frank's argument never called for bigger government. What he is critical of is the mismanagement of a government agency, intended to look out for the common good, by making it operate as a business. You right wingers are so skilled in deceiving "Mr. Average" in thinking that running a for profit government, where all the profits go to a few business owners, is really beneficial to "Mr. Average" (and Ms. Average) citizen. Your snide remarks convinces me that you know that Mr. Frank touched a nerve by exposing the idiocy of running a government for the benefit of private business. The end result of such a government is corruption.
During my career in transportation and aerospace, there were two facts that amazed me. First, the revolving door. Each and every industry that fell under the Code of Federal Regulations got the benefit of a doubt when they violated the CFR. Why? The federal inspector, if he held his welfare higher than his honor, knew that "giving the industry a break" could lead to a job offer from the industry involved. Auditors and inspectors were wined and dined with exuberance. When an RFP (request for proposal) was released by the government, potential bidders had no bottom line when it came to entertaining the government officials involved in selecting the winning contractor. In fact, the government evaluators expected to be wined, dined and whores. More amazing...
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