Just as Charles Ponzi’s name became synonymous with the Ponzi scheme. “Madoff” is a perfect container for all his regulatory enablers, and legal gamblers who bankrupted the country in a symbiotic relationship between Public and Private entities. Through the 1990’s and well into this century we have seen an explosion in these types of relationships. These networked partnerships allow for all sorts of unscrupulous activities, from wall street investment firms, to community block-grants, enterprise zones, TIF districts, regulating safety, and the environment. 

Case Study: Environment
Pre-1990 regulatory regimes found themselves ineffectual in bringing about improved environmental practices by industry. The system was oppositional, and industry was quite happy and successful at gaming it. Thus instead of chasing uncompliant industries, in the 1990’s, the USEPA changed approaches and began to partner with these industry’s interests. This led to two decades of meager incremental improvements, creating unsustainable communities e.g. East Chicago, and placing humankind at odds with maintaining a life-sustaining environment on earth. The same industries who gamed the environmental regulatory regime from the outside (pre-1990) are now gaming the regime from within.

I am not against these partnerships - I think it is necessary to base these types of relationships on common interests. They just are not incentivising the the desired result, and we are not getting the desired result. Incrementalism has not worked. It just puts off the difficult work ahead. 

<jump to media>The media is creating the myth of Madoff as a lone criminal in the private sector. At $50 billion, this was a criminal enterprise, extending well into the halls of government. We are now discovering hundreds of Madoff’s in the investment banking sector. What we are not doing is naming the hundreds Madoff’s in Government. These criminals can be found up and down our political culture and at the local level.

There is not just one hole in our boat, there are thousands of holes.

Here is one:

<jump to East Chicago> George Pabey: Mayor of East Chicago.

• In a community of ~30,000 George amassed and spent > $1 million in the last election (mostly as undisclosed street money).
• Gave BP $165 million tax abatement - Residents 0 (at %8.5 East Chicago has the hightest property tax rate in the state)
• Funneled government contracts to cronies 
• Used School City funds to payoff political IOUs
• Used City workforce to do construction work on Lakefront home in another community. 

Thomas Economics, Local