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Business and Markets

Thoughts on Corruption

I’ve had many questions about what I think of the PhARMA meeting with the new administration, but I haven’t written about it yet. That’s largely because it’s been difficult to figure out what it actually accomplished – statements about it have been all over the place, and I get the impression that different people took different things away from the meeting. The same goes for all the talk of who the new FDA commissioner will be. So many names have been floated, and so much speculation has already been loosed, and we still don’t have an actual person with actual policies we can talk about. The current administration does not (or does not yet) seem especially disciplined and cohesive, probably because the person at the head of it is neither of those things, and that makes it hard to guess what might come next or when.

So in lieu of that, let me make a general point that may turn out to be of use over the next four years. I wrote briefly about this on the blog a few years ago, but it seems worth bringing up again. I think that there are, broadly speaking, three levels of corruption, and that they can be ranked in order of severity and destructiveness to the social order.

Level One corruption is the least damaging. I’m not saying that it causes no damage at all, but wait until you see the next two categories before judging too harshly. Level One is when you’re paying someone to do something that they wouldn’t ordinarily do. This is “Hey buddy, can you get me a good seat” stuff. You’re asking someone to do you a favor, something out of the usual run of things, and you will do something for them in return. That return might be a twenty-dollar bill applied immediately to the palm, or it might be (on a larger level) an expectation that you will be willing to bend the rules in turn at some future date to balance things out. It’s actually very close to the completely legitimate tiers-of-service business model, where you pay more to get faster internet service, or to get your US passport issued more quickly – the difference is when you’re asking someone to bend the existing rules. This sort of thing happens everywhere, and I’m willing to stipulate that it’s human nature.

Level Two corruption, though, is when you’re paying someone to do what they’re supposed to be doing in the first place. That’s not good. Friends of mine from several different foreign countries have recounted examples of this to me as how things are done back home. The court clerk is supposed to file your papers, but he won’t get around to it unless there’s some extra money for him. The delivery is supposed to take place on Tuesday, but it won’t actually happen close to that date unless you slip in some more cash. And so on. Now you’re bribing people just to stay even, not to get something extra. The deadweight loss to the economy and to society should be clear.

And that shades into Level Three, which is the most harmful of them all. This is where you’re paying them not to hurt you. It’s when a business or government turns into a protection racket. Nice little business you’ve got there – be a shame if we actually enforced the provisions of the tax code. Or if things turned out to require a Permit #81Q, which you haven’t heard of until now, have you? Now you’re not getting favors, and you’re not even just getting what the law or the contract says you should get. You’re actively trying to avoid harm, and thus you exist at the sufferance of whoever has the leverage on you. At this point the rule of law has truly broken down; the government is using its power as a stick with which to beat money and compliance out of its own citizens.

Different people have different thresholds about that last one. The literary critic Edmund Wilson seemed to feel that the US income tax was just such an outrage and went for many years without paying any, which worked out about as well as you’d imagine. (Watching someone who’d once been an admirer of Lenin turn libertarian when it came time to pay his taxes must have been quite a spectacle). Now, the coercive power of the state is a real thing, in any country you can name, but I still think that there’s a difference between the IRS and the way that business seems to be working in, say, Russia. The problem is that all three of these levels exist on a sliding scale.

Consider business/government relations. It is natural enough for a business to not have deliberately hostile relations with the government of its own country. It also makes sense that a business would lobby for favorable legislation, and to impede bills and rulings that they would see as unfavorable. These things can be done in a legal fashion, a legal-but-smelly fashion, or outright illegally. At the far end of the scale, if you’re having to propitiate a third world autocrat, then you’re going to be in those second two bins right from the start, by (for example) making one of the Big Man’s relatives a highly-paid consultant. In many countries around the world, this way of doing things is so entrenched that it’s just seen as the natural order of things and perhaps even a part of what government is for. Reading Chinua Achebe’s A Man of the People many years ago gave me an insight into this that I’d never had until then. You’d see these horribly run kleptocracies and wonder how they keep going for so long, but one answer is that as long as running the country is mainly a chance to extort, twist, and squeeze, then you might get your chance to do some of it someday. What a shame, then, if things were ever to get cleaned up before you and your group had made it to the trough!

The bottom-of-the-barrel examples are (or should be) well known. Read up on Macías Nguema or Niyazov, and there are plenty more where they came from. It’s been this way for a long time: Gore Vidal’s essay on the first twelve Roman emperors is a good illustration of that. But you don’t have to go all the way to these hair-raising histories to see vast amounts of harm being done. Adam Smith was right when he said that “there is a great deal of ruin in a nation”, but people tend to read that quote in two different ways. The glass-half-full way, which is how Smith himself meant it, was that it takes a lot to really ruin a place, and that a single act or a single politician can rarely manage it. The glass-half-empty way, though, is to realize that the ruination can just drag on and on.

The antidote is the rule of law. To stick with that company/government relations example above, if companies know what the rules are and why they exist, and if the rules bind both them and the government that regulates them, chances of a good outcome are far greater than if everything depends, ultimately, on the whims of the Big Man. The more people worry about the latter and make that the focus of their activities, the worse things will be. Something to look out for.

47 comments on “Thoughts on Corruption”

  1. Chad Irby says:

    The problem with relying on “the rule of law” is that bureaucracies tend to add rules as they go, and each time you add a regulation or law, you inch slightly up the scale from 1 to 3.

    After a while, even highly-expensive paid experts can no longer negotiate the system honestly, and the normal citizen has fewer and fewer options.

    Bribery doesn’t always have to end up in the pockets of the bureaucrat, either – sometimes, it can be “if you donate a large sum of money to a certain activist group, or if you buy a certain (expensive) product from an approved vendor, we can let that permit go through.”

    That’s a parallel input to the system – when you have to start spending more and more money on commercial products in order to stay compliant with the law, you’re moving up the scale in the same way.

    1. Patrick says:

      I think this is very real, and the election of the current administration (and what support – often tepid – it enjoys from serious and moral thinkers) is in many ways a reaction to this.

      The problem is, it appears to be worse than what it would remedy, because it’s absolutely about the whims of the “big man”, because that’s who got elected. A man who’s convinced he’s the biggest there’s ever been (and can therefore fix everything without ‘expert’ advice) and anyone who even suggests otherwise is some form of enemy.

      So, then. How do you solve this problem without resorting to stuff like “1 in, 2 out on federal regulations” rules? (To quote a writer at 538, “I’ve always believed that government governs best which governs like it was cursed by a witch in a German fairytale”). And that stupid rule is unlikely to do anything to affect the real problem, either, because what does “one regulation” *mean*? They can just get longer. It’s idiocy from people who think they can wave a wand and change the world.

      I don’t know what to do about that, but this sure as hell isn’t it.

      1. Anon says:

        There are examples where efforts to reduce bureaucracy with “1 in, 2 out”-type rules have actually worked. Linked in my username is an evaluation of the results of one such law in British Columbia, Canada.

        1. zero says:

          Why do so many people assume that regulations are automatically bad? Imagine if the EPA was only allowed to declare three things harmful. Which three will they regulate? Mercury, uranium and lead? Hexavalent chromium, asbestos and gasoline? As we learn more about the terrible consequences of our industrial choices, it is fitting that we act on that knowledge to preserve life, limb and nature.

          This applies to other areas such as the tax code. We all want a simple, straightforward tax code, right? Those quirks and complications aren’t in there to make the printed edition a better doorstop, they are there because cunning human minds found ways to exploit the system and avoid paying their share. The same cunning minds constantly seek to have the code revised and simplified as far as possible so they have a chance to use some of their old tricks again.

          Automotive and airline safety? Every one of those rules was written in blood and agony. Pharma regulations? Largely the same, though some are aimed at preventing financial fraud.

          These rules were written for a reason. Assuming we can ‘sequester’ our way into smaller government is a dangerous fantasy, one that will definitely kill people.
          Rules can be questioned, challenged, reversed if necessary. This is a time-consuming process *as it should be*; this activity should be one rule at a time, argued on the merits and the best available evidence. Nobody likes quotas; a quota of regulations eliminated is foolish and destructive just like a quota on arrests would be.

          1. Tom says:

            I’m only familiar with the NZ, UK, and German tax codes (and that familiarity is shallow) but based on that I’d say the single biggest problem is using a tax system as a tool for social policy: it becomes stuffed with classifications of goods and services with various rates and rebates applied, attempting to ensure that pensioners don’t pay too much for fuel or that schoolbooks are cheaper than comic books. And every new regulation opens two new loopholes: I bought a T-shirt in a small Scottish town and the proprietor gleefully snipped a small loop of cloth from the back, sharing the secret that in doing so he’d converted a child’s pinnafore (5% tax) to a man’s shirt (17.5%).

            Contrasting to that, in NZ 30 years ago the government managed to replace such a system with a global consumption tax: all goods and services taxed at 10% to the final purchaser, regardless of what they are or for what they are purchased. Cold pensioners and unclothed children were instead addressed by direct social subsidies, with happy results such as the annual personal income tax declaration becoming an eight page form easily completed within an hour, and the prices on shop shelves being always the final price to pay (rather than as in California being topped with sundry additional sales taxes, contingent on how and where and what with and by whom the bagel will be eaten).

          2. Dylan says:

            While I’m skeptical of Trump’s approach to cutting regulation (but looking forward to reading the BC study that Anon linked to), I think the general objection is implied by your post. Lots of regulations can look good when they are looked at in isolation, but when you add them all up together the cost can be more than the benefit.

            One small example from my personal life. My wife runs a very small one person craft business selling things online. Anything she sells to someone in our state needs to be charged sales tax. So far, so good, that makes total sense. But they need to be charged the rate of sales tax for their local jurisdiction. Again, that makes some sense as they are assuming the sale happens where the buyer is, and not where the seller is. But there are literally hundreds of different tax jurisdictions within the state, and many times even people in the same zip code will have a different rate. There’s also a rule that the sales tax must be displayed before the sale is made. Which again makes sense taken on its own, anyone should be able to know the full price before they buy. There is at least now a state wide database that lets you manually look up addresses and see what the tax rate is, but the online marketplaces that craft sellers use can’t link up with that database so there is no way to know what the tax rate is before you make a sale. The official government response when I called to ask how we can be compliant are 1)Don’t sell in your home state, or 2) Make the sale without charging any sales tax, then when you realize the sale is in your own state, cancel the sale, create a new listing with the sales tax added and ask her customer to purchase it again.

            There are of course some technological solutions to this particular problem, if the government database had an open API other services could link into it and the process could be just as smooth as when you order from Amazon. I only mention it as one small example that causes me personal pain. Friends who run small, but slightly bigger businesses than my wife, tell me stories regularly about the “Kafkaesque” red tape issues they run into when trying to get something done.

          3. Derek Freyberg says:

            IIRC, the GST in New Zealand goes even further back than 30 years.
            And one thing I remember from 50+ years ago in NZ was that one of the social welfare benefits, the benefit paid to the mother of a child on behalf of that child, was paid without regard to the income of the family getting the benefit. But the benefit was taxed as income. So the cost of administration was minimal, because the check for eligibility was simply a check on the existence of a child; and the benefit was progressive, because the poorest (those with the lowest tax rate) kept a greater percentage of it.
            Moral – it is possible to have a simple and fair system if you structure it right; and this may be why NZ has one of the lowest rates of corruption as measured by Transparency International.

          4. dearieme says:

            “it is possible to have a simple and fair system if you structure it right; and this may be why NZ has one of the lowest rates of corruption as measured by Transparency International”. I put it to you that the causation is the other way round. Because Kiwis are mainly honest and decent people they have found it possible to have a simple and fair system.

          5. Kaleberg says:

            An awful lot of rules and regulations are scar tissue. I remember the flap over the Army needed 20 pages of rules to define what a cherry pie was. Talk about regulatory overreach. Just about everyone knows what a cherry pie is without 20 pages of rules. Then I looked at the rules. There was a requirement for so many cherries to be in the pie as opposed to just thickened syrup. Guess why? Some company probably sold the Army cherry pies with no cherries in them, so the Army created a rule. There was a requirement about the thickness of the syrup, its sugar content, the requirement for at least a certain percentage of real as opposed to synthetic cherry flavor. There was a rule for counting the cherries using a specified sieve to distinguish cherries from cherry fragments. This went on and on, and, yes, there were rules for the crust, the overall size an appearance of the pie and so on. Despite all this text, I am sure there are still a few “cherry pie” providers out there poring over these rules figuring out how to game the system.

            If every scientific paper had a methods section that thorough, we would never have duplication problems.

          6. Kevin Menard says:

            “Rules are written for a reason” Yes, but that reason is often the continuation and expansion of the bureaucracy. That’s been the problem historically: expanding the roles so that bureaucrats always have jobs.

          7. fajensen says:

            Why do so many people assume that regulations are automatically bad?

            Because the experience is that much regulation is written by corporate lobbyists working for corporations. Instead of good regulation we end up with regulation that on the surface looks very comprehensive, but in reality, only works for the well-lawyered corporate entities who paid to have it written in exactly that way. Incomprehensible, of course festooned with legalistic hidden trapdoors and booby-traps to ensnare the unwary and provide get-out-of jail cards for the initiated.

            The result is reams of regulation that so obviously and blatantly serves only “Them”, not “Us”, “Society” or “Humanity”.

            This is not healthy, the word for it is “Regulatory Capture”. The 4’th kind of corruption, IMO.

            Sadly, regulatory capture is a widespread problem and corrosive to the respect for politics, government and the regulatory process in general. Which is why so many of the elections coming up will not be about much else than the enraged electorate deciding to pull the pin on a human concussion grenade and tossing it at parliament.

          8. fajensen says:

            Those quirks and complications aren’t in there to make the printed edition a better doorstop, they are there because cunning human minds found ways to exploit the system and avoid paying their share.

            I disagree. Tax code would be simple and therefore easy to “debug” if taxes were only applied to finance government spending and not also attempting to do everything else.

            This is clearly not the case, thousands of other things, even moralistic bullshit that would clearly be career ending if proposed as actual laws, are instead embedded into tax laws. In the hope that somehow this will steer behaviour. Of course this complexity just give more attack surface for frauds. In many cases Intended – when lobbyists gets in there.

    2. skeptic says:

      “The problem with relying on “the rule of law” is that bureaucracies tend to add rules as they go, and each time you add a regulation or law, you inch slightly up the scale from 1 to 3.”
      I think you’re at least partially right, but you’re also missing part of the problem. Whenever a bureaucracy or legislature adds a new rule, there is also a rush by many to meet the letter of the rule (or at least to get within plausible deniability of compliance) while evading its intent. And to deal with that, sometimes new rules are needed. There is a problem, but it isn’t only due to the bureaucracy.

    3. tangent says:

      If we accept that “too much law” makes “rule of law” impossible (is that a fair miniaturization of your argument?), I would just add, it does not necessarily follow that revoking some laws would tend to aid the rule of law. If the choice of which laws to revoke is driven by private interests, that isn’t helping.

  2. Kent Brockman says:

    I, for one, welcome our new cheeto overlord.

  3. DV Henkel-Wallace says:

    There’s another aspect to this scale of corruption. Given: everybody will have their own short term interest in mind, to a greater or lesser extent. What does not follow is that every actor will be malign.

    If you can operate on the basis that everyone is trying to get their own *while* trying for the greater good, then, for example, you can get advice from domain experts (typically of course industry experts) without assuming that every sentence coming out of their mouths is inherently self-serving.

    But if you have a Manichean world view, all experts are corrupt. Therefore all climate scientists must be in it for the money. Anyone who says “The FDA probably ought to experiment with some alternative approval mechanisms that might still give us safe and efficacious drugs but might get there faster” is just in it to rip off the public faster (or is soley there as an angel of liberation).

    And once you’re there…how do you get out?

  4. loupgarous says:

    Obama had his meeting with PhARMA in 2009, and in exchange for their support for Obamacare (measured in dollars according to some accounts), they weren’t made to bid or accept other controls on the price of medications for Medicare and Medicaid, Needless to say, it was a closed-door discussion, no “unprecedented transparency” involved.

    That happens to be a huge concession. Big Pharma’s the ONLY sector of the health care economy which doesn’t take a haircut in dealing with Medicare/Medicaid, or like the medical device industry, have a special tax aimed just at them (part of the Obamacare tax package we weren’t supposed to get). Ask your local hospital how profitable Medicare is – the number of physicians and medical device suppliers who’ll put up with the paperwork and diminishing pay for services increases every day.

    But the members of PhARMA don’t have that worry. Whatever happened in that meeting with Obama kept that wolf from their door, and laid the foundation for snowballing increases in the price of medication in the past eight years.

    So I’m not sanguine about this current meeting and its probable outcome, either. The only reassurance I have about it is that now, people are paying proper attention to what will happen afterward, and not cheering wildly as their pockets are picked by what happens after the meeting.

    1. loupgarous says:

      that ought to have read “-the number of physicians and medical device suppliers who’ll put up with the paperwork and diminishing pay for services decreases every day.” (I just learned some distressing family news and was distracted when I wrote that)

  5. pete says:

    Trump’s past forays into policy matters give him unpredictability that makes me wonder — for an idle moment — if he could fake out everyone and pull a Teddy Roosevelt. You know, “TR”, that well heeled Republican who pissed off a lot of rich business owners by signing into law the Hepburn Act (imposing limits on transport fees charged by colluding railroad owners) and the Pure Food & Drug Act (aimed at taking down purveyors of rotten foods & secret-ingredient “medicines”).

    But then again…Nahhh. TR didn’t serially dodge Federal & local taxes, didn’t serially skip out on paying contractors, didn’t serially run business ventures into the ground while grandstanding as a business genius.

    1. Hap says:

      The people who elected him or who didn’t really care don’t mind those things that much and don’t seem to mind the abrogation of the rule of law (perhaps others don’t mind it either, too). As long people either don’t mind ignoring laws they don’t like, or think the system of laws is rigged and needs to be destroyed, people will be voting for Trump or people like him. They may not understand or care about the consequences of that reasoning, but that won’t stop them.

      1. MAGA says:

        haha take that liberals!

        1. pete says:

          I think you mean:
          “that Liberals take haha!”

        2. RMAGA says:

          Joke’s on you man-TR was a Republican when they appealed to liberal interests. The current party alignment isn’t what it was 100 years ago…

      2. loupgarous says:

        Actually, the graft (not too strong a word when the US Secretary of State’s family foundation just happens to solicit multi-million dollar donations from countries with nuclear weapons aimed at us – “treason” may actually be more appropriate) and willful violation of Congressional intent where immigration law is concerned (Congress deliberated on changes to that law, and voted actively not to make the changes the then-President wanted, so he just lined through the laws he didn’t like with his pen and called Homeland Security on his phone and told them to stop doing the will of the people, as expressed by their representatives) is what influenced me.

        Eight years of that was eight years too much.

        If Trump-haters want to talk about the moral high ground, they might wish to occupy it, first.

    2. Barry says:

      Teddy Roosevelt had an established reformist/anticorruption record in New York before he got to Washington. He was made VP because the party bosses thought that was a harmless position where he’d have little influence. He was pretty well neutralized until McKinley got assassinated.

      1. “Matter! Matter! Why, everybody’s gone crazy! What is the matter with all of you? Here’s this convention going headlong for Roosevelt for Vice President. Don’t any of you realize that there’s only one life between that madman and the Presidency? Platt and Quay are no better than idiots! What harm can he do as Governor of New York compared to the damage he will do as President if McKinley should die?” — Mark Hanna on Theodore Roosevelt being McKinley’s running mate (from Wikipedia)

        1. skeptic says:

          Thanks! I never heard that quote before.

    3. loupgarous says:

      TR wasn’t particularly well-heeled. Theodore Roosevelt’s father left much of his estate to charity, and TR made most of his living from his writing (his tenure as New York City Commissioner of Police wasn’t particularly well-paid).

  6. Anon says:

    Is being forced to break the law because it’s too complex level 0 or am I thinking about that right?

    Because in some cases filing ones taxes ‘to the t’ correctly or going exactly the speed limit or adhering to every enviormental regulation is difficult. So we just choose to obey the laws that when we break them we get caught.

  7. Michael Nyman says:

    Speaking of Achebe you should read Things Fall Apart and Arrow of God, the first two books in his series to understand the origin of corruption in Africa and Nigeria in particular. In the traditional society it was ok to take a yam from a pile left by the field to sustain you on your journey as long as you didn’t take so much that the farmer would notice. Also you brought gifts(cola nuts) to an important person when you asked for a favor. Once you get to Anthills of the Savana set in modern times you can see how the society grew into the current situation we have today.

  8. AlanG says:

    I worked in the Science and Regulatory Affairs division at PhRMA until my retirement in 2010. I was there for both the Medicare Drug Benefit enactment and the ACA. All the discussions. PhRMA had very effective lobbyists but so does every other trade association in Washington. If the staff doesn’t look out after the interests of their member companies they are out of work pretty fast. Yes, PhRMA did get preferential treatment on both occasions. However, it’s also worth noting all of the extra resources PhRMA got for the FDA through the original Prescription Drug User Fee Act and the subsequent reauthorizations (I was involved in the first four of the negotiations with FDA). These resources have made a significant impact on the timeliness of NDA reviews as well as the preparation of new guidance documents.

    As Derek notes about the strange reports from the PhRMA meeting with President Trump, I’m left trying to figure out what the President meant by removing regulations. We still don’t have an FDA Commissioner nomination and perhaps any conjecture on the “new” regulatory climate can’t be adequately judged. Some of the things I’ve seen discussed would require changes to the statute (e.g,, the efficacy requirement) and I’m not sure that will happen.

    1. loupgarous says:

      We could do worse than go on the White House Web site and petition for specific FDA rules (such as the “incentives” Martin Shkreli and his emulators have taken advantage to make old, cheap medications expensive) to be abrogated or at least for the new President to ask Congress to modify the relevant laws to prevent that from happening in the future.

      I’m sort of surprised that Turing Pharmaceuticals, Mylan, and other opportunists never came up during the Presidential debates. It would have been nice to have Trump on record about how he’d handle that general problem BEFORE he was elected.

      1. Jane says:

        The problem with Turing has already been solved by the new 503B “outsourcing facilities” aka large scale compounding regulations. Basically after the disaster a few years ago with an uninspected large scale compounding manufacturer giving patients meningitis due to poor sterile procedures, the FDA developed the new 503B category. Common compounded formulations are much cheaper to manufacture in bulk than one by one. But generally aren’t a big enough market for the regular drug approval process. It usually involves things like making removing an excipient to which a tiny percent of the population is allergic or changing the formulation (an unconscious person can’t swallow pills for example). Since the volumes involved are too small for it to be economically feasible for a dedicated facility for which the FDA can inspect the both the process and the facility which the FDA does for regular drug manufacturing, the FDA only inspects the outsourcing facility to make sure sterile processes etc are being followed (i.e. to ensure no more meningitis disasters take place). In the case of Turning’s drug, it was almost always prescribed in combination with another drug. Multiple compounding pharmacies now sell a compounded version with both drugs in the same pill for a small fraction of Turing’s price. So much for Turing’s greed.

  9. Anonymous says:

    1. I had an African colleague planning to return home to an academic position. He stocked up on computer technology that would be hard to get there. But first, he removed the CPUs from the brand new computers and packed them separately. He explained: “When I arrive at the airport, they will seize the computers. They will want me to pay customs duty which is OK with me. But in order to get the computers to start moving thru customs (which can take a couple of weeks) I will have to pay a bribe of X which is too much. So they will try to deny me the computers and steal them for themselves. So I will show them that the computers are useless because they have no CPU chips. Then, I will only have to pay a bribe of X/10 to get my computers and we will both be happy.” Years later, he confirmed that was pretty much the way it went.

    2. Regulations, taxes, Pharma, social engineering. Years ago, while in college, I met someone who was introduced as a chemist working for a Big Pharma at their manufacturing plant in [non-US location]. He said that not much was done there. Some intermediate was shipped overseas to [location], moved around or was repackaged or labeled or something minor, and shipped back to the US plant. Why? Because it saved the company money because of regulations, tax incentives (or penalties?) that wanted to provide good jobs in a friendly [location].

    3. Complicated rules and regs: among the associated problems are the contradictions and conflicts between too many overly complicated regs. I previously used the non-governmental example of Chemical Storage: oxidizers here, acids there, reactive metals there … What about all of those chemicals that fall into more than one category? In govt laws and regs, the lawyers must be having a fun, well-paid time cross checking “every line of code” to make sure that they exclude or alter every special case in every preceding, still enforceable law. Also mentioned in previous topics, some countries allow for common sense interpretations and general statements to prevail. The US tends to be much more explicit to accommodate every (oftentimes paying) special interest and special instance and precisely defines every term. A one page law becomes a 1000 page unreadable, uninterpretable tome. (Made up numbers. I do not know of a specific 1:1000 example.)

    1. David says:

      From what I’ve read and heard about US law, this sounds accurate. I’m reminded of what I heard about the EU and several cheeses. Technically, several very famous and popular cheeses were inadvertently outlawed, because, well, they were partially made of mold. Oops.
      The importance of laws being well, indeed, very carefully, written, cannot be understated.
      Unfortunately, what we’ve seen so far from the current administration/session is concerning on this front.

  10. Earl Boebert says:

    Senate votes to kill transparency requirements for natural resources industries:

    Peter Thiel, Trump advisor, said to Maureen Dowd, “…there’s a point where no corruption can be a bad thing. It can mean that things are too boring.”

    Here we go.

    1. Pennpenn says:

      I know I speak for no one but myself, but I honestly think there are plenty of areas in life and governance that I’d want to be as boring as possible.

      1. loupgarous says:

        I have an almost infinite tolerance for boredom. One of the most potent curses in China is “May you live in interesting times.” One reason so many people were nostalgic for the 1950s is the unprecedented boredom index of that decade.

        1. Pennpenn says:

          Boring for some, a nigh unbearable period of indignity for others. It’s not like the things that made the 60s and 70s “less boring” just came out of no-where. And for those groups who suffered through that indignity, they see the attempts to turn back the clock as attempts to put them back where they were then as well (and in some cases they’re probably right…)

          Just don’t let your capacity to tolerate bordem turn into complacency against injustice.

          1. loupgarous says:

            It would be hard for me not to be aware of not just indignities, but full-on social injustice during that time period, several members of my extended Cajun family having been screwed out of mineral rights under their land just in time for the oil boom in south Louisiana. And we had it good compared to our neighbors down the road with darker tans.

            Not like I needed a primer on the subject from you.

    2. fajensen says:

      With a little deregulation we can make the operation of boilers, electrical installations and power systems a lot more exciting for everyone. What’s not to like /s.

    3. Duane Schulthess says:

      And conversely, there is a point where too much government is also extremely corrosive. I always like to look at the example of the stem cell company Tigenix.

      They received EMA approval, but did not get FDA approval. The company died as they didn’t make enough revenue in Europe.

      Were the decisions around their EU reimbursement corrupted by the hospital exemption which in many ways violates their marketing authorization? Certainly.

      Was the FDA justified in requesting another PIII after they had been approved by EMA? In my opinion, probably not.

      We’re the patients best served by not having that therapy commercially available in the US market? Do we really think that a cadaver knee is better in the long term than your own cartilage grown back through a stem cell therapy? Hardly…

      Between a safety system advocated by O’Neill and the current $650 million dollar Airbus A380 of drug discovery regulation, I’m certain there is a better model that can both maintain safety and harness real time monitoring to determine value at a MUCH lower cost in time and cash.

      The bottom line is though, that will radically reduce barriers to entry to the market. I wonder who benefits most from those barriers? Certainly not the small lean biotechs…

  11. Fenichel says:

    This discussion of bureaucracy would be much richer if it were informed by the lessons of James Q. Wilson’s book of 1989 (Bureaucracy; ISBN 0-465-00785-6). My quick description will scarcely scratch the surface.

    Wilson distinguishes among 4 different types of agencies, and observes that their respective bureaucracies will have different structures and hazards.

    A _productive agency_ (Wilson’s term) is like the Post Office, or the portion of the Social Security Administration devoted to retirement benefits. It’s easy to see how well its job is getting done, and it’s easy for its managers to see that employees are doing their jobs.

    A _procedural agency_ is like the peacetime army, or the courts. The managers can tell that employees are doing their jobs, but no one can tell whether the agency as a whole is doing its job.

    A _craft agency_ is like a medical service. To do their jobs, employees behave in accordance with craft-specific standards that their managers cannot change and may not even understand.

    A _coping agency_ is a hybrid, like the diplomatic corps or, in the context of this blog, FDA. Isolated successes & failures may be identifiable, but reasonable expectations as to overall success may be impossible to define, and there are craft elements that make it difficult for managers (let alone outsiders) to tell whether employees are doing what they should. When attacked, the usual stratagem of a coping agency is to claim to be procedural: “We had no discretion; we were just following the rules.”

    Read the book. It will change the way you think about things.

    1. tangent says:

      That does sound interesting. Does he restrict himself to talking about government agencies? Because those types of categories seem also applicable to management structure in non-government organizations. Where managers can judge the work and the circumstances, where managers can judge the work but not the circumstances, where managers can judge neither.

  12. Garrett Wollman says:

    As I understand it, the Foreign Corrupt Practices Act reaches conduct you describe as “level 1” and “level 3”, but *not* “level 2” — it’s not illegal (from a US law standpoint) if you pay a foreign official to do something that they are actually supposed to do anyway. These are sometimes distinguished from bribes as “facilitation payments”.

  13. tangent says:

    You’re describing more “retail” level corruption where an individual deals with one bureaucrat. This is bad, but in our system it’s still largely a distraction away from “wholesale” corruption where a lobbyist deals with a legislative aide. (Like how “fake news” is still largely a distraction away from plain old ignorant and closed-minded news.)

    There’s certainly a spectrum, it’s not all the most egregious private loopholes, some is ‘just’ defense of the old against the new, and at the other end even the best-made law has winners and losers. But I think most people of most political tastes will agree this adds up to a lot of shadiness.

  14. Alex says:

    I think you’ve missed a category, which is ‘paying them to hurt your rival’. What’s interesting about that is that a) it shows that corruption also corrupts the payer and b) your category 1. can shade into it with no discernable boundary.

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