Corruption Close to Home

State and Local Government Buildings (clockwise from top right: MA Statehouse, Gorham NH Townhall, NY City Hall, NJ Statehouse)

Most of our discussions with others about politics center on what is going on at the National level.  What goes on at that level is certainly a source of valid concerns.  But there are problems at the lower levels as well.  I once heard someone say “If you think there is corruption in Congress, you would be shocked to find out what is going on in the State Legislature”.  I agree wholeheartedly with this statement.

Most political positions in the United States are at the State and Local level.  The vast majority of these positions are part time, with very little monetary compensation in return for the time and effort it takes to run for office and then work in that office if elected.  On the other hand, the power and authority invested in these “part time” and “volunteer” positions, is quite extensive.  They have the power to tax, the power to spend, and the power to regulate.  All of this makes for VERY fertile ground on which corruption can spread.

Most of the corruption at the State and Local levels involves Real Estate.  This is due to the power of elected officials from the Legislature to Town Councils to drastically effect the value of land and property.

There seem to be two common forms of Real Estate corruption.  The first is to buy land that is zoned for one purpose (say “light industrial”), and then get those in local power to rezone it (say to “multi-family housing”).  The zoning of land, meaning what the owner is allowed to build on it, has a dramatic influence on the value of that property.   In this example, I could potentially buy a “light industrial” lot for say $500K, get it rezoned so that I could build an apartment complex on it (rezoned to “multi-family housing” ), and suddenly the lot could be worth $2 Million. I don’t even have to build the apartment complex; I could just sell the land to someone else who wants to do that.  In doing so, I just made $1.5 Million.  All I had to do was convince some politician friend to make the zoning change.  And what do you think influences this low level politician to do that?  All too often the answer is simply “corruption”.

The other common form of Real Estate corruption is to buy land out in the boondocks, where there is little to no infrastructure (few roads, few utilities, no sewers).  Then use tax funds whose expenditure you are responsible for to build improvements and provide infrastructure out to that land.  The land is now worth a lot more, as it now has attributes and access it did not have before.  In this case, I could buy some land out in the countryside for say $100K.  Then I use my “influence” with the town council to have streets and sewer lines expanded out to my property.  Then I sell it for $250K, more than doubling the value of my investment.  Again, the mechanism for raising the property value is “corruption”.

There are plenty of other ways for corruption to take place at the State and Local level.  Anything that involves tax rates, revenue expenditure, and of course, regulation, can easily also involve corruption.  Those that want a specific expenditure or a specific regulation change too often are involved in “influencing” what they want by finding a way to corrupt the officials involved.

What to Do

First off, it is just as important to be involved in local politics as national politics.  At a bare minimum, we need to know who are local officials are and what they are doing.  We need to scrutinize the changes they make, and ascertain their motives.  We need to work to quickly get rid of anyone trying to personally enrich themselves (and/or their friends) at the expense of the rest of us.

We need to make it that the time/effort spent in public service is worthwhile.  I think that everyone should be properly compensated for work, and work in government should not be an exception.  A decent salary today for someone in management is around $100K per year.  This is roughly $50 an hour.  When salaries or compensation are below this level, good people don’t want to do it.  Unfortunately, the people that will do it have found other ways to get money.

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