Corruption is a constant threat to the free market. As we have seen countless times in the past—from the rampant bribery of the Gilded Age to the shady deals that led to the stock market crash of 1929—when government officials are influenced by private gain, the public suffers. Things like education, infrastructure and health care receive a lower priority while robber barons and industrial conglomerates get to avoid regulation or gobble up public resources on favorable terms.
One neglected dimension of corruption is “capture,” which occurs when powerful firms bend the nation’s political, regulatory and legal institutions for their own benefit. This is often legal, but it has dire consequences. It’s different than a business bribing a local bureaucrat to obtain a permit or a lobbyist seeking to influence legislation because it involves more money and higher stakes.
This kind of legal corruption is often invisible, but it looms large in the U.S. For example, harmful Supreme Court decisions whittled down campaign finance regulations and narrowed the legal definition of what counts as corruption—and allowed ultra-wealthy individuals to dominate politics in ways that would be illegal or unacceptable elsewhere. Partisanship and scorched-earth politics have eroded norms and fueled cynicism about the political system. In addition, President Trump’s brazen transactional approach to power warps the meaning of what counts as corrupt. All of this adds up to a pervasive environment of government corruption that threatens the financial markets, the economy and our civil liberties.
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