Greater Corruption, Not Tyranny, Is America's Past and Its Possible Future
Unless we do something
An otherwise placid, 2022 life history interview with “Sam” took a sharp turn into cinematic territory when he started discussing his early career as a bank manager in Youngstown Ohio in the early 1970s.
Sam had found himself the arbiter of “clean money” in a notoriously corrupt, dying steel town. It was routinely awkward, but the privately held bank expected him to refuse service to the “wrong” folks.
When he refused to open an account for an unsavory, well-known mobster, this individual drove by his house the next day while he was at work and threatened his wife (who had two preschool-age kids at home).
When Sam mentioned the threat to another Italian customer of his, Vitto, the mobster who threatened his wife, appeared dead in a nearby river a few days later. Honestly, Sam and his zero B.S. wife thought it was funny and “just” in a morbid sort of way.
I knew we had to leave Youngstown when Vitto then stood up at a charity event I was attending as a bank representative and said, ‘I’d like to let everyone know that Sam Parker is my banker! Wonderful guy! You should take your business to the ____ branch.’
I wanted to become invisible.
We packed up and left for California not long after.
This was the early 1970s in Youngstown, Ohio. In this former steel town, Irish and Italian clans still battled for control over illicit drugs, gambling rackets, money laundering sites, and legitimate business interests. Italian and Irish clan loyalty remained a strong feature in everyday life, a lingering vestige of pre-World War II America, when clan-based corruption was endemic throughout the United States at the local level (including among Anglo-Saxons who incorrectly remember themselves as more pure than others). A local Sheriff and former U.S. Representative, Jim Traficant, was the last gasp perhaps of this corrupt world of ethnic patronage and corruption.1
Youngstown in the 1970s was simply a vestige. Very few Americans today seem to understand the extent of organized crime and political corruption in America during the 19thCenturyy particularly during the period of rapid industrialization from 1880 to 1930. This was an era when family and ethnic connections to police, judges, and businesspeople afforded numerous social privileges and employment opportunities unavailable to the majority of the local population (without kin or ethnic connections). And when organized crime families could offer similar privileges to any ‘loyal’ recipient.
Most educated Americans today navigate their lives under the assumption that you have to follow the law, earn a straight living, can not bribe your way around local laws, or deploy a family name or ethnic identity to create a loophole. While the wealthy and highly educated still have all sorts of unfair social advantages, deploying clan or ethnic affiliations to undermine law and order is generally not one of them. America’s plague continues to be corporate corruption at the highest levels of federal government (e.g., unfair bidding, corporate lobbying, contracts for buddies, dark money via 501c (4) nonprofits, etc.).
The idea that an uneducated or working-class person could avoid a fine or eviction notice or jail time based purely on their last name is a lost form of social advantage whose loss we under-estimate at our own peril as a nation.
Why?
Because there are millions of Americans today who would very much like those sources of social advantage to return. I’ll explain more in a bit.
An Ultra-Brief History of Corruption in America
NOTE: If you do not want to read this section, please watch Gangs of New York for a more entertaining, R-rated explanation of 19th-century corruption in America.
In the 17th century, the colonists who settled the East Coast arrived one boatload at a time. Each boat contained extended families leaving one of many Motherlands, often fleeing poverty, war, famine, ethnic harassment, religious persecution, or disease outbreaks. In this era, Europe and America featured family-based social networks as the focus of everyday life in villages and towns. Industrialization had not begun. Life was rural. Much of the world operated based on kin networks and deployed kinship as the currency of social advantage, or even just basic employment. “Nepotism” was not a source of public debate (or one that inflamed hearts).
This was also a time before mass social mobility could create enormous changes in individual circumstances within one lifetime. Maintaining family connections was more about survival than having scintillating conversations and ‘liking’ everyone. You put up with a lot of family nonsense because you had to. And, I suspect, you did not inject unnecessary nonsense nearly as much as we do today for the same reasons.
When family is the primary locus of control and social mobility is rare, you have ideal conditions for rampant political corruption:
The United States, in both the pre-Civil War 1850s and the post-Civil War 1870s, looked a lot like many modern developing and transition countries in terms of the extent to which corruption was both systemic and intertwined with the operation of the political system.2
By the turn of the 20th century, muckraking journalists and accumulated public outcry over the sins of industrialization (e.g., child labor in factories, steel factory abuses, and egregious pollution of rivers near slaughterhouses) had built an early popular audience resentful of government and private sector moral corruption.
After all, the “masses” in the Gilded Age did not participate in social mobility aside from that obtained by shifting from field to factory line (i.e., minimal). So, the rapid wealth creation they witnessed in the cities among the robber barons was not spreading to them. And there was no large-scale federal taxation and entitlements system to redistribute that concentrated wealth either. In this way, 19th-century America was far more primitive than contemporary India (where entitlements abound, especially in the civil service).
The turn of the 20th century is when political currents in America started shifting away from open corruption. Teddy Roosevelt, of all people, does not get enough schoolbook credit for his anti-corruption leadership. In his 1903 Address to Congress, he dropped a historic line for an American public official- “There can be no crime more serious than bribery.”3 It’s sad that this even needed to be said, but it did.
America passed progressive legislation at the federal and state levels from the 1890s onward, most notably introducing the secret ballot and transforming the federal civil service from a patronage-based system to one that was 90% merit-based. This ended the “spoils system” that originally spread under President Andrew Jackson (probably the closest approximation to “Trump” in our early Presidential line-up).
Campaign finance laws also went into effect in many states to track who was getting what.
The media and publishing industry spread muckraking investigations into public corruption that astonished and infuriated the public, often involving private companies in the oil, railroad, and other lucrative industries.
Congress began to investigate corrupt Congresspeople and published their crimes:
The most infamous of these scandals was the so-called Teapot Dome affair of 1922, in which Interior Secretary Albert Fall took bribes from oil company executives to arrange for leases that gave those companies drilling rights in the U.S. Navy’s oil reserves in Teapot Dome, Wyoming and Elk Hill, California.
The advent of the FBI in 1908 also coincided with this Progressive era and enabled the U.S. federal government to continually investigate and prosecute state and local corruption cases as a continued deterrent.
Yet, some other crucial social changes would happen after WWII that legal historians too easily dismiss as major reinforcements of our now standard expectation of low corruption in American public life.
Cultural shift from Family Life to Individualism - Youth culture, permanently low birth rates (compared to the 19th century), and highly willful romantic marriages were subtly splitting families apart. The plausibility and attractiveness of pulling up your stakes and pursuing personal dreams not to your family's liking became a mass, middle-class reality in large part because family had lost its financial grip on individuals’ fate, especially their chances of social mobility. Here is a chart of the explosion of the word “nepotism” in printed English after WWII (source: Google’s ngram service)
A
Steep Rise in Educated, White-Collar Work - American culture underwent significant changes at the grassroots level due to shifts in labor markets, labor market incentives, and a mass reprioritization of culture away from family toward individual careers. By the end of World War II, returning GIs had far less incentive than their parents to utilize kin networks and patronage to secure blue-collar employment. They had strong counter-incentives. The normalization of high school diplomas and the acceleration of the bachelor’s degree led to the rapid expansion of white-collar deskwork, which paid better and was safer. This led to the explosion of the merit-based private sector workforce. Family and kin became a last resort for employment, not the ideal choice of the upwardly mobile. Upward mobility was significantly more possible in the post-World War II period due to a rapidly growing economy. The rise of modern hyper-individualism, combined with merit-based white-collar employment, made “merit” the new sign of elite status, fueled by higher education.
Mass Taxation Begins in 1942 - The Victory Tax Act during World War II was crucial to funding eventual victory and established federal income taxes as a mass, social reality for all but the poorest Americans.4 When you pay federal taxes, eventually, at some point, you develop strong opinions about what the federal government should do with that money. You vote more actively. You have skin in the wealth re-distribution game. You have an incentive to minimize corruption and waste with “your” money.
Anti-corruption as a politically activated, mass belief is more likely to spread when a society provides a) merit-based social mobility opportunities to the historically ignored (e.g., the working classes), b) taxes their wages, and c) weakens the kind of family and ethnic ties that make nepotistic corruption likely and attractive.
The Real Source of Mass Corruption is A Lack of Private Sector Social Mobility
In most of human urban history, your social position did not change during your lifetime. Only perhaps in the wake of epidemics, famine, or invasion could you fall or rise due to temporary circumstances. Low to no economic growth was the ultimate root cause of this immobility. Wealth in pre-modern times was hoarded and concentrated. That hoarding required a lot of violence and corruption to occur in the first place and to maintain it over time (as well as corrupt use of legitimate means of violence).5 A tiny elite became easily tempted to dispense patronage and favors, because so many were asking for them both; you had to ask for favors to get ahead. This sets in motion the wheels of corruption by creating demand for patronage below and concentration of power above. Change either, and the corruption dynamic weakens.
Wealth concentration, combined with an underdeveloped and low-growth private sector, makes the state the primary vehicle for the underprivileged to achieve social mobility. Those in government positions that regulate the public, especially, become tempted by this demand and their sense of financial stagnation, to offer favors to those they like or could gain something in the future from helping them today (e.g., votes for elected officials and private favors later for the unelected). This was the reality most Indians lived with until economic liberalization in the 1990s (and per capita GDP did not accelerate much until the 2000s). And this is also what happens in failed economies with totalitarian governments like Russia, Iran, Venezuela, and so forth.
When I was living in southern India in the late 1990s, not a week went by without the gossip streams feeding me some new anecdote of petty corruption related to obtaining local government employment (e.g., police, bus drivers, etc.). In low-growth, socialist economies like India’s at the time, the Government and its millions of jobs formed the primary avenue for social mobility among those who did not have mone, or come from landed or merchant families. A good government job - working somewhere in India’s vast civil, police, or military ranks. - was also the objective of most upwardly mobile working-class adults I met. Why? Almost every job came with a lifetime pension, guaranteeing a quick transition from peasant misery to financial security in a country with no social security safety net for the elderly.
One of the more common “corruption tales” I heard related to someone trying to obtain a job as a city bus driver. At the time in Madurai, this involved long shifts in un-airconditioned vehicles, inhaling leaded fumes, dust, and aerosolized cow dung. This may not sound glamorous to you and me, but chests swelled with pride back then when a working-class Tamil husband could finally secure this kind of job. The problem is that many others had the same idea. The government, therefore, established numerous hurdles and exams to secure a position as a simple bus driver. And, you had to wait for a position to open up. In the late 90s, once you finished waiting for a slot to open up, you then had to fork over a cash bribe to secure a position. The bribe back then was as high as Rs. 50,000, or say five months’ salary for a high school teacher; feasible, but painful for a working-class family. This is a sum you have to spend years accumulating and guarding.
The fact that government workers felt they needed to extract bribes from bus driver applicants (!) to upgrade their income and lifestyle reveals the inherent limits of any government bureaucracy to fuel social mobility without inviting the demon of corruption. Government salary scales are NOT designed to reward tenure or performance as fast as the private sector (or a criminal gang) can. And they certainly did not in India at that time. So, government jobs had long-term benefits, but could not satisfy a ‘modern’ consumer lifestyle very easily. Desire for consumption outpaced salary growth. This was a constant grievance I witnessed back then.
I participated directly in the other form of petty corruption in societies like this - government employees using their authority to illegally extract surplus cash or “end of the month cash.” One common practice involved city traffic police who controlled the four highway “gates” into and out of the city limits. I lived in a suburb just beyond one of these gates and went through it multiple times a week. At the end of the month, when government employees’ cash at home was running low (they were paid monthly), it was not uncommon for a bunch of traffic cops to set up barricades at one of the gates and stop every single vehicle to look for proper registration and a driver’s license.
The ‘narrative’ given at these sudden traffic roadblocks was often something about looking for smugglers, terrorists, or the criminal-of-the-month. In reality, they were about collecting bribes for minor infractions, such as driving without registration, a license, or a current license. At these traffic stops, the goal was not enforcement. The goal was to acquire numerous small bribes. 50 Rs. 60Rs. Whatever. When I got stopped once, I realized what was happening a bit late. I did not have a licence to drive my moped. The cop yelled at me, expecting me to slide him some cash. Instead, I started speaking English extremely fast, he got confused, then angry and frustrated, and waved me on using the rude verb form of “Go!” Others around quietly slipped cash and drove onward. Locals treated these roadblocks less like ‘corruption’ than a pop-up tollbooth, more or less. The difference being that these bribes were used to fund family ear-piercing ceremonies, a new refrigerator, or repairs to a policeman’s personal motorbike.
When I conducted an informal focus group with a middle-class Tamil youth clique I had networked into, my first question was: How many of you have a parent with a Government salary? 3/4 of their hands went up. Government was the vehicle for social mobility. The private sector was reserved for high-caste adults who had centuries of socioeconomic privilege, social skills, and wealth to become entrepreneurs or corporate employees in the global multinational sector.
The allure of government employment remains strong in India as a means to initial social mobility for less privileged castes and the urban working class who can access higher education. Employment and education reservations for less privileged castes continue and ensure this utilization of government as “a step up.”
Across the world, however, multiple generations of Americans have grown up under the magical spell of private sector-fueled social mobility as if this is normal everywhere else. Which it isn’t. We led the way on the global stage in the late 20th century.
But…what if this democratization of social mobility in America started to reverse itself? What if social mobility continues to decelerate and corruption becomes more and more attractive to those left behind and to those occupying government positions?
America is Slipping…
India’s economic growth in the past twenty-five years has been unprecedented in the country’s history. The size of its Westernized, English-speaking middle class has also grown in parallel. Poverty and illiteracy have dramatically reduced since my fieldwork there in the late 1990s.6
Yet, India remains highly corrupt, according to internationally trusted metrics from Transparency International, scoring 38 out of a possible 100. It could be a counterfactual case for my thesis above, but I also think that the state remains too useful a path of social mobility for the majority of Indians who lack the connections to access loans, set up businesses, and achieve higher education. They remain a large audience seeking favors and government positions to join the global middle class. In addition, lifestyle expectations have most likely risen beyond the capacity of the average wage (even with high GDP per capita growth). This process began during my time there.
India has never exorcised its demon of corruption in government or business.
America’s recent, steady decline in its score, however, is far more concerning, because we have done better. We know better. This decline in integrity coincides interestingly with acceleration in wealth concentration in the 2010s AND the rise of MAGA, not to mention an openly corrupt political machine run by the Trump family (though this does not imply correlation). Since World War II, Americans have generally sought high moral character in their elected politicians. However, this has changed rapidly for the worse.
Where are we headed?
How Ideological Tribes Could Replace Clan-Based Corruption In The Future
In the 21st century, we have a steady decline in the middle class as a proportion of the working population (no matter how you define it) and ever-concentrating wealth and opportunities for advancement. Even the advantaged status markers of my father’s generation - an Ivy League degree stopped opening doors automatically in my generation.
Our current oversupply of educated, meritorious workers means that access to enhanced power and income through education is no longer guaranteed, as it was in the 1950s and 1960s. When you preach intergenerational social mobility to everyone and suddenly it slows down or stops, it does not matter that most people are still far better off than their grandparents. If you aren’t moving upwards in America, you feel something is wrong. This immobility frustration may be culturally arbitrary, but it fuels modern forms of elite corruption in business and government by creating demand ‘to skip the line.’ It also encourages those at the top to become corrupt in order to maintain their social status (e.g., the 2019 college admissions scandal).
But, in most corrupt societies historically, it is lines of caste or ethnicity or just family affiliation that get deployed to spin the wheels of corrupt reciprocity. Americans have, for the most part, destroyed or deprioritized those bonds.
Instead, we have replaced kin and clan with an explosion of lifestyles in the past fifty years. As I discuss at length in my book, this has fragmented the country in unprecedented ways, erasing any clear sense of social norms or even an ability to mark the boundaries of shame. During this post-family period, extreme ideological belief systems have taken advantage of this collapse of norms and normative groupings to allow the formation of extremist subcultures on the left and the right. Friendship circles now more easily observe lifestyle criteria for admittance, including lifestyles driven by extremist ideologies that do not allow for any center (e.g., QANON, white supremacy, climate change doomsaying, anarchistic libertarianism, charismatic Christian apocalypticism, etc.) Family relationships that survive are more easily discarded for ideological reasons.
Rather than deploying family connections or cash to curry favor and patronage, today, activist groups representing any lifestyle can deploy extremist ideologies not only to seize control of local, state or national party organizations through sheer bullying of centrists in those organizations but we can also use extremist ideological affiliation to extract favors and patronage from elected officials (e.g. Steve Bannon, My Pillow guy, Andrew Cuomo).
This is the anti-merit backlash we unwittingly invited by not policing social norms effectively since the 1960s. We thought economic growth would continue forever and that all this lifestyle diversity was academic, apolitical, and incidental to our individualistic pursuit of social mobility.
What we failed to see is that individualism, as a belief system, almost inexorably leads to an equivocation of all lifestyles and moral systems, a sort of moral relativism by sheer passivity. This effectively erodes the stability of the public sphere or civic commons, which is necessary to minimize corruption in business and government, when the engine of social mobility starts winding down and mobility frustration grows.
Alienation of our specific variety in America easily lulls voters into disinterest until ‘my kinda guy’ is running, a lifestyle-affiliate who we would feel comfortable asking favors from and ‘skipping the democratic line’ to our advantage.
It’s an evolving hypothesis, but I conclude with the idea that extreme lifestyle affiliation can serve as an effective replacement for clan-based social identity as a fuel for corruption.
https://www.nytimes.com/2002/02/28/opinion/notes-from-youngstown-the-angry-voice-of-a-city-left-behind.html AND https://www.washingtonpost.com/archive/politics/2001/05/09/the-junkyard-dog-can-still-bite-hard-constituents-say/dc07c3ed-d685-439e-b4e9-00861deba4a1/
“TAMING SYSTEMIC CORRUPTION: THE AMERICAN EXPERIENCE AND ITS IMPLICATIONS FOR CONTEMPORARY DEBATES”, MARIANO-FLORENTINO CUELLAR* & MATTHEW C. STEPHENSON**
Ibid
In 1939, only about five percent of American workers paid income tax. The United States' entrance into World War II changed that figure. The demands of war production put almost every American back to work, but the expense of the war still exceeded tax-generated revenue. President Roosevelt's proposed Revenue Act of 1942 introduced the broadest and most progressive tax in American history, the Victory Tax. Now, about 75 percent of American workers would pay income taxes. Because so many citizens paid the tax, it was considered a mass tax. To ease workers' burden of paying a large sum once a year, and to create a regular flow of revenue into the U.S. Treasury, the government required employers to withhold money from employees' paychecks. Additional taxes were put in place in 1943. By war's end in 1945, about 90 percent of American workers submitted income tax forms, and 60 percent paid taxes on their income. The federal government covered more than half its expenses with new income tax revenue. Source: https://apps.irs.gov/app/understandingTaxes/teacher/whys_thm02_les05.jsp#:~:text=In%201939%20only%20about%20five,with%20new%20income%20tax%20revenue.
Readers interested in the global history of macro-economics should read Thomas Piketty’s famous book - Capital in the 21stCenturyy. In it, he first published the first attempt at an accurate timeline of economic growth from antiquity through the 2000s. The most shocking discovery for me is how recent a high growth economy capable of mass social mobility really is. Most of us have little idea of how lucky our birth timing has been.
Sources: https://www.statista.com/statistics/271335/literacy-rate-in-india/; https://www.indiatoday.in/diu/story/india-poverty-reduction-gdp-transformation-policy-measures-government-data-economists-2555188-2024-06-19
Oh my gosh, I was just reading an article about cynicism and corruption before I read your piece. Suddenly a bright light bulb switched on. What great insight!!!
You always write some of the best stuff on substack. Just pure education instead of another nonsense trendy internet-vomit hot take.