National Security & Defense

American Republic Lost?

Jay Cost diagnoses the problem, with a lot of help from James Madison.

Jay Cost’s new book is about political corruption. Not Watergate or blue-dress corruption but the kind that is often not illegal. A Republic No More: Big Government and the Rise of American Political Corruption is “about corruption as a permanent, institutionalized feature of our government.” This has happened despite the fact that “our Founding Fathers were frankly concerned about corruption, so much so they designed a system to prevent it from occurring.” Cost knows politics, and his book is a chronicle of history and is honest about reality. We talk a bit about A Republic No More and its implications. — KJL


Kathryn Jean Lopez: How bad is corruption in America? So much so that we are a “Republic No More”?

Jay Cost: I came to that conclusion as I wrote the book. An unhappy one, no doubt. My original title was going to be The Violence of Faction, taken from Madison’s Federalist  No. 10, but as I studied contemporary policy more and more, I realized that the regular, accepted, established ways of doing business are just so fundamentally contrary to the ideals of the Founding that something essential has been lost.


Lopez: Corruption in America is “a permanent, institutionalized feature of our government”? And yet your book is explicitly not a rant against “a hopeless, immoral cesspool where everybody is out for themselves and nobody does what is right, and the only thing to do is await the cleansing hellfire unleashed by the Almighty.” What’s your practical goal? How can this book lead to more clear thinking about politics and how corruption happens and how things can be better?

Cost: My practical goal was to connect two dots — how the growth of government leads to the growth of corruption. And not because we elect bad people. The problem is that as government grows and expands beyond the boundaries of the Constitution, our system’s capacity “to break and control the violence of faction” (James Madison’s phrase) begins to erode. The government just can’t help itself, regardless of whom we elect.

My hope is that this gets people thinking about our institutions of government, not just the personalities who inhabit government for a time. For instance, conservatives are very frustrated with congressional Republicans. Many believe they have been betrayed. This book kind of shifts the emphasis — maybe this is just the best anybody can do, given the rules of the game in Washington. And if we want real reform, we have to start thinking about those rules, rather than finding people we think can play them more effectively.


Lopez: What’s most misunderstood about corruption?

Cost: I think the biggest misunderstanding is that it has only to do with law-breaking. Law-breaking certainly is corrupt, but there are so many ways to be corrupt without breaking the law.

For instance, suppose you are a lobbyist and you give me $50,000, which I then put in my freezer, and later on I make sure an appropriation worth $250 million to you gets passed into law. If caught, I would go to jail.

But what if you contribute $2,000 to my campaign, your PAC tosses in another $5,000, affiliated PACs and individuals kick in more to get me to $50,000, which in turn goes to family members whom I employ as campaign workers. You hire my good friend to work as your consultant. And when you are looking to buy a piece of real estate in Georgetown, you use my nephew as your broker. And then you offer me a seven-figure salary for a consulting gig after I leave office. And I make sure an appropriation worth $250 million to you gets passed into law. If I got caught, I would not go to jail. In fact, I would probably get calls from my colleagues asking if I could fundraise for them as well!

Which one is “corruption” and which is not? I think they both are, but if we limit our understanding to law-breaking we’d say the first was corrupt and the latter just fine. But the latter is just as bad.


Lopez: What does Calvinism have to do with it?

Cost: Madison had a Calvinistic view of human nature. If you read his essays in the Federalist, especially 10 and 51, you can see how little he thought of mankind’s capacity for good behavior. That matters because his question was: How do we get a bunch of selfish, potentially violent people to coordinate for the public interest? He rejected the alternatives of public education in virtue, civic religion promoting virtue, or a small city-state of homogenous interests. He thought all of them would eventually fail because human nature is so intractable. His solution was to use that nature against itself — to have “ambition counteract ambition,” as he put it. Our Constitution reflects that view.


Lopez: What were our first big mistakes? And how did it become habitual and institutionalized?

Cost: The argument of the book is that big government breeds corruption because it grows the state’s power beyond the capacities of its institutions to manage it. The Constitution was like a finely calibrated Swiss watch. Powers were distributed across institutions — “checks and balances” — to make sure that the selfish forces that enter the body politic are checked by and balanced against one another. When we grow the power of government beyond the original grant, we threaten to disrupt that balance unless we think carefully about whether our institutions can handle the new powers given to them.

It’s in that latter regard we’ve failed. Our first big mistake happened early in our country’s history — with the First Bank of the United States. This required an expansive reading of the Constitution without much due consideration for whether the new power could responsibly be exercised by the institutions the Constitution created. (While the Supreme Court eventually upheld the First Bank, the Convention explicitly voted down a chartering authority.)

The First Bank was pretty well run, but it set up the precedent that has been followed again and again: Some new problem emerges, federal authorities decide the powers of government should expand to meet the new challenge, but they do not pay attention to whether the existing institutions can exercise the new powers responsibly. So often, our institutions cannot. And that yields corruption.


Lopez: You focus on the maldistribution of federal resources as corruption. How so? You also talk about the problems of government expansion in various areas. Could this be a conservative/tea-party manifesto?

Cost: That was a choice I made to narrow the focus. I couldn’t write about everything — e.g. corruption in the states. I think it often parallels federal corruption, but it would make for too big and unwieldy a story to make that point.

And the book was written from a conservative perspective, although I think there are things liberals might appreciate (e.g. I mostly catalog ways corruption favors the wealthy and thus engenders inequality). The hope was that this would provide conservatives with a new argument against an ever-expansive state. Conservatives typically approach the problem in the abstract — big government in general creates problems of inefficiency/waste, encroachment on individual liberties, structural deficits, etc. What I wanted to argue was that our government in particular creates unique problems. Specifically, it yields corruption — in addition to those general problems enumerated above.


Lopez: Is your book essentially a lesson in bad stewardship? Are Americans bad stewards?

Cost: I think so, unfortunately. To be a good Madisonian steward requires us to think hard about whether our institutions are well designed. And that means thinking about whether they can handle the powers we have given them. Collectively, that is something we have not really been concerned about. Politicians advertise the growth of government as a tonic to whatever ails us, and people again and again have consented — and all the while, hardly anybody stops to think about whether our government as designed can handle those responsibilities.


Lopez: What’s so violent about factions? And what do we do if that’s often the lifeblood of politics? (Isn’t that a main theme of your first book?)

Cost: That is the conundrum at the heart of republican ideology — Madison called the remedy (whatever it may be) “the great desideratum in government.” Human beings are self-interested, prone to factions, and inclined to take what they can get even at the expense of somebody else. So, how do you get a nation, composed of such miserable creatures, to coordinate on behalf of everybody? Madison’s solution was: good institutions.

And factions literally can be violent. Madison saw that in his own day. Creditor-debtor disputes had literally flared into open rebellion in Massachusetts (Shays’ Rebellion), and there were fears that it would spread throughout the rest of the nation. Madison thought that a lack of good institutions is what pitted these factions against each other in ways that created such violence. A well-designed government could channel them to constructive ends.


Lopez: Why do you point out early that the book is not “a tale of heroes and villains”?

Cost: There was never a time when corruption was not a feature of the body politic. And in most eras, practices that in other ages would be (rightly) identified as corrupt were simply accepted as the way political transactions should be handled. That tells me it really does not matter whether we have a lot of good people running the government, or bad people ruining it. It gets down to the rules of the game. That, to me, is the essential question. A very Madisonian one, at that.


Lopez: You point to Madison for solutions. How can he help us?

Cost: Madison was writing in a pre-industrial age, facing different dilemmas and challenges, and the range of solutions open to him was quite different than what we have. Still, there is a timelessness to his philosophy because he was dealing with the problems that human nature poses for a well-governed body politic.


Lopez: How far have we strayed from the Founders? Does the straying suggest they could have thought this out better?

Cost: The Constitution was a political compromise hammered in a moment of crisis. Society was coming apart at the seams in 1787, and the existing authority (the Continental Congress under the Articles of Confederation) no longer enjoyed the confidence of the people. Moreover, this was a pre-industrial era, and a country that was fragmented, disconnected, and hardly even a nation as we today understand it. The Constitution was meant to work for that place in that moment.

What this means is that we cannot go back to the Constitution as it was understood. It makes for a good talking point, but it is simply impractical.

We have strayed in the following way. Society evolved and changed, facing new problems and challenges. When the Framers came together, they debated for months on end figuring out how to expand governing authority in responsible ways — respectful of individual liberty, mindful of the inherent limits of governing power, and fearful of the ways that power may be abused.

How did subsequent generations respond? Very differently. Look at the New Deal and the Great Society. They were hodge-podge, shambolic pieces of government activity that massively expanded federal authority and yet were implemented without due regard for those bigger questions. Usually, the priority was simply to acquire enough votes in Congress while the president’s job approval rating was still high. And while those are extreme examples of our history, the general pattern holds: Whereas the Framers were careful and considered in designing the original charter, we have been careless and hasty in redesigning it.


Lopez: Even as you don’t do villains and heroes, who comes closest in each category?

Cost: A hero is certainly George Washington. He was as close to the constitutional ideal of a president as we have ever come. He was impartial in executive appointments. He was judicious in considering the proper course for public policy. And he walked away from the job in 1797, creating an important precedent that helped keep a lid on overbearing executive authority for another century.

A villain would probably be Andrew Jackson. I have never seen another leader so thoroughly and completely mistake his own prejudices for the national interest, which is really saying something because that is a common error many leaders make. But that is not all. The real danger with Jackson was that he pursued those prejudices with total commitment, regardless of what the law said or what the effect on the national good might be. That made him a hypocrite, and a dangerous one at that. He threatened the South Carolina Nullifers but then looked the other way as Georgia violated a treaty the Cherokee had with the feds. He railed against the partiality of the Second Bank of the United States, but after he took federal deposits from it he distributed them to “pet” banks that were loyal to him. And in so doing, he kept the United States from having anything approaching a sensible monetary policy until Salmon Chase became treasury secretary in the 1860s.


Lopez: Who can we most learn from through your lens on Jacksonian America, the Gilded Age, and so many other big moments in corruption?

Cost: The reformers of the 19th century have the most to teach us. There was always corruption in that era, and it did get worse as the century moved on, but there was almost always a vibrant reform movement putting pressure on the status quo. Some of them were on what we today would think of as the left; others on the right. Some had great ideas; others had terrible ones. Most of the time they were unsuccessful. But they were always there, doing the hard work of speaking truth to power, and coming up with (occasionally) good ideas on how to fix things. And then — almost in the blink of an eye — they would have a brief moment to reform the system. They took their shot, and they succeeded.

This is how the patronage regime of the Gilded Age was destroyed. As late as 1880 it looked insuperable, and yet the assassination of James Garfield in 1881 gave the reformers an opening, and they managed to get a good reform law passed.

We have to have the same approach. We have to do our homework, hammering out sensible reform measures. We have to keep pressure on the status quo, reminding them that we are here and trying our best to keep them in line. We have to build alliances with the other side when and as we are able, never sacrificing our core values. And then we have to be patient, wait for our opening, and take the shot when we have it.


Lopez: What does Medicare have to do with it?

Cost: Medicare is a great illustration of how we cannot understand corruption if we think of it merely as heroes vs. villains. Everybody involved in Medicare is by and large quite sympathetic — doctors, nurses, hospitals, senior citizens, etc. But it is corrupt. Why? Not because these are bad people, but because they are factions that the government cannot manage responsibly. They are not the problem. The government is.

So we talk about “waste, fraud, and abuse” of the Medicare system, as if this money just disappears. But it does not. It flows systematically to interest groups that lobby the government aggressively to make sure the money is not well spent.

And the problem is not with those groups per se. They are doing exactly what anybody would be expected to do. The government is providing them a benefit, they are working hard to protect and extend it. Who can blame them? The problem is with the way the government manages, or better put, mismanages those groups. Is it guiding them to an end that serves the public interest, as Madison envisioned? No. It allows them to dominate public policy for their own benefit, and the common good is sacrificed along the way, in the form of tens of billions of dollars that are misspent every year.


Lopez: What’s corrupt about the New Deal? How can that be a constructive observation?

Cost: The New Deal is still encircled by a host of FDR hagiographers who have worked hard to defend it over the years. This is why Amity Shlaes’s The Forgotten Man was so important, because it made the very good point that a lot of New Deal policies were nonsensical and counter-productive.

I extend that argument to make the point that the New Deal also systematically benefited well-positioned interests in society. For starters, all those works projects that liberals still celebrate? They were used by congressional Democrats to secure their political positions. FDR used them similarly — transforming them into patronage to support or destroy urban political bosses based on whether they backed him in 1932. The New Deal also suspended civil-service laws that had been in place for half a century by then, giving Democrats another opportunity to ensconce themselves in government.

Then the big social-welfare/regulatory programs — on farm subsidies, industrial regulation, wages/hours — all of these were captured, to varying degrees, by interest groups. Farm subsidies favored the wealthy plantation gentry in the South, at the expense of poor, usually black sharecroppers. And not because the gentry deserved it, but because they dominated congressional agriculture committees. Industrial regulations favored big businesses over small business and consumers. The facts of the Supreme Court case that ultimately brought down the National Industrial Recovery Act are really obscene. The government was basically looking to ruin a small poultry business because it sold a handful of “unfit” chickens. But that was life under the NIRA. And then even social-welfare programs like Social Security and the minimum wage were originally built to favor factions in Congress — the Southern agricultural gentry and Northern manufacturing concerns, respectively.

All of this is either excluded or excused in the traditional story you read about the New Deal. But when you add it all up, it is a really striking amount of favoritism and, yes, corruption.


Lopez: Why should 2015 Americans care about things like tariff laws governing sugar in the 1890s?

Cost: Well, for starters, it is just entertaining as hell. I mean Chapter 5 of the book, where I deal most extensively with that, was easily my favorite to write. The tariff laws bankrolled the late 19th-century political machines, and they were run by some colorful characters. Boies Penrose alone is worth the price of admission.

But beyond that I think there is a lesson there about how public policy works. The tariff regime was begun with the noblest of intentions. The point was to help develop the national domestic economy and bring about broad-based prosperity. It took about 100 years, but it eventually devolved into a deeply unfair logroll that helped the wealthy at the expense of the middle class, and inhibited the nation’s economic potential.

That is why it was replaced with the income tax, which really did reform the system. At least for a while. It took about 100 years, but it eventually devolved into a deeply unfair logroll that helped the wealthy at the expense of the middle class, and inhibited the nation’s economic potential!

History has repeated itself when it comes to our tax code. I think that says something very important about the way our government functions, not just day to day, but generation to generation. It gets beyond the personalities who are in government at a certain point in time and gets to the institutions that guide and control their behavior.


Lopez: Is the most important audience for your book policymakers?

Cost: Probably not. I certainly did not write it for them. They are bound by the rules of the game, and I think those rules are broken. The question becomes: How do we change them? If you look through the pages of history, the answer almost always comes back: through outside pressure. So the book is really written to the disinterested citizenry — the people who pay attention to politics yet who do not draw a living from it. They are deeply frustrated with the status quo, as am I. And the point of this book is really to help explain my own frustrations, and hopefully theirs as well. And the better we understand the nature of the problem, the better pressure we can apply to the government.


Lopez: Can an aspiring presidential candidate and his staff take this book and run with it?

Cost: Doubtful. The unfortunate reality is that the way political campaigns are financed today is so fundamentally tilted toward special-interest groups that the eventual nominee will be duty-bound to misbehave, for lack of a better word.


Lopez: Do you have a favorite to watch? Someone we’re not watching whom we should encourage?

Cost: Our better point of emphasis is probably the Congress. As Article I opens, “All legislative powers herein granted shall be vested in a Congress of the United States.” Rather than think about the sleeper, would-be presidential candidates, I think our time would be better spent looking at which Republicans on the Financial Services Committee are taking money from the big banks — because that will impact whether we can get rid of “too big to fail.” Or how about which Republicans are in hock to the insurance industry? A lot of them are, and the insurers are working like the dickens to protect Obamacare, they are working Republican members over, and we might suddenly meet some resistance from our own on our “repeal and replace” agenda if we win in 2016.

Put another way, when we focus relentlessly on the White House, we miss so much misbehavior in Congress. Right now Congress seems impotent because of Obama, but over the long run Congress is supremely powerful. And we have to view its chronic misbehavior as our No. 1 problem.

That is not to say the presidential office is not important. Of course it is. The point is that we tend to view the president as the center of political life, when in fact Congress is.


Lopez: What’s typically wrong with presidential-primary season, and how can it be done better this time, even at this relatively late date?

Cost: So many things are wrong with it. Bottom line, it privileges minority factions within the party at the expense of the larger GOP electorate. The Iowa caucuses favor a type of voter that does not represent the broader party, especially in terms of priorities. And Iowa so often sets up the debate moving forward.

Infinitely worse than this, though, is that the campaign itself systematically favors the donor class and the consultant class. They ultimately decide which candidates are deemed viable and which are not, which means that their importance is wildly disproportionate to their numbers. And their views, for instance on immigration, are often out of sync with the broader GOP electorate, much more so than the average Iowa caucus-goer’s.

Unfortunately, I think nothing can be done. Jeffrey Anderson and I worked our butts off to put together some solid reform ideas back in 2013, when the rules for 2016 were still in flux. And the response we got was a deafening silence. The grassroots did not seem too interested, and of course the powers that be did not want to change things. The rules are now in place. It is too late. The earliest date for meaningful reform must therefore be 2020, and if a Republican wins in 2016 we will not see major changes to what I think is a dysfunctional system until 2024.


Lopez: Seriously, what’s ahead for America? How can 2016 be, to use an overused term in politics, an actual game changer in terms of this corruption you cover in the book?

Cost: The status quo is a very powerful force in our system. It exists for a reason, namely because a critical mass of important groups/interests finds it preferable to any feasible alternative. We cannot underestimate it.

Historically speaking, reform comes when the status quo hits a breaking point, and groups that historically had been on the outside looking in finally have a shot at reform. This explains civil-service reform in the 1880s. But it also accounts for the progressive triumph of 1912/16, the New Deal, and the Reagan revolution. Maybe the election of 2016 will be such a moment, maybe it will not.

I wish I could say, “We need to do this, that, and the other to make it become such a moment.” But really, it is just a matter of patience because these things are governed by forces outside of any individual, or group, or movement’s, control. What we need to do is the hard work of putting together a reform agenda so that we are ready for when the status quo breaks down. In that moment, our side might be given real power to remake the body politic, and the question we’ll confront is: Are we ready? So that means we need to think not only about how to fix education, health-care, and energy policy, but how do we reform the system itself? We have to start thinking about that.

We can’t think about how to make 2016 the next 1980, or as if it is our version of 1932. That is totally beyond our control. What we can do instead is make 2015 like 1978 was for conservatives, or like the 1920s were for the liberals. Those years were not politically successful for the sides in question, but they were also the times when they worked through their ideas so that when their once-in-a-lifetime opportunity came, they could make the most of it.


Lopez: One gets the sense that you love the mechanics of politics. Why? What got that started? How does that continue, knowing what you know about it?

Cost: Generally, my experience in graduate school was not positive. Nevertheless, I took some fascinating classes on political economy, game theory, rational choice, etc., that just gave me an enormous appreciation for the rules of the game.

I’ve always loved history — it really is my first love — and when I combined rational-choice theory with history I came to understand that the rules of the game evolve over time and are indeed susceptible to influence by people who want to change them.

There is an impulse to just take the rules as a given and try to do our best with the rules as they are. But when you combine history and rational-choice theory, you begin to see that (a) we should not take them as given and (b) better rules yield better results.

This is something that I think Madison understood on a very deep level. And a few years ago I taught a course on the Constitution for Robert Morris University here in Pittsburgh and really read his writings in the 1780s with care for the first time. And I just became drawn not only to his insights, but also to his priorities. There were a bunch of thinkers from the 18th century who began to understand the essentials of rational-choice theory — Condorcet, Hume, Smith, etc. Madison was one of them as well, and he took it to a level of practical application that was simply unmatched in his day.

And I am just overwhelmed by Madison’s brilliance. And the book reflects my efforts to work through the problems that he presents us.


Lopez: How do we get to the work of the actual common good when there seems to be no agreement on what that is?

Cost: This is a really great question. From a philosophical perspective, it seems almost intractable. A thousand different people will have a thousand different viewpoints on a thousand different questions. And Madison’s primary commitment was to the process. Set up the system properly, and the thousand different viewpoints will produce something that will resemble the common interest.

But when we move from the philosophical to the practical, it is not hard to see. The waste in farm subsidies is outrageous. The way Fannie Mae and Freddie Mac captured the regulatory process — again outrageous. The ways that political-economic policies of the Gilded Age screwed the farmer, who by the way was still a majority of the work force — outrageous. There are, of course, instances when the public interest is harder to divine — but there are plenty of instances where it is as clear as day.

My book focuses on the latter, relentlessly — even to the point that it may frustrate some conservatives. I do not deal with Obamacare because, frankly, I do not yet know how that policy is going to play itself out. I have some strong suspicions, and if you read my work at the Weekly Standard you know where I stand on that question. But there remains a lot of uncertainty on Obamacare, so instead I focused on Medicare, where you have 50 years of history and some pretty solid consensus on the ways and means interest groups get paid off. Similarly, I avoid questions about monetary policy pretty studiously, even though I know a lot of conservatives are frustrated by the Federal Reserve’s policy in recent years. I am, too. I think there has been mission creep at the Fed, maybe even regulatory capture, to the point that it is basically propping up the S&P 500. I don’t like that. But those are nebulous questions lacking certain answers. On Fannie Mae and Freddie Mac, however, only the most diehard of partisans will deny that something was deeply wrong.

So time and again, politics tends to divide itself 50/50 on big questions like: What should the top marginal tax rate be? But I think the agreement in the public at large is 99/1 on the question of: Should a highly profitable Fortune 500 company receive net tax refunds after lobbying Congress relentlessly? If you look through my book, you’ll see most of the policies are just plain outrageous for anybody who is disinterested – that is liberals, moderates, or conservatives who are interested in politics because they care about the common good.

— Kathryn Jean Lopez is senior fellow at the National Review Institute, editor-at-large of National Review Online, and founding director of Catholic Voices USA


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