The Blagojevich Saga: the Psychology of Power, and Rent-seeking

Lynne Kiesling

Two items have kept my attention over the holidays with respect to the Blagojevich fiasco. First, back when the story first broke, our local NPR station interviewed my colleague Adam Galinsky on the psychology of power. Adam’s research is fascinating, and in this interview he communicates very effectively how positions of power affect individual incentives and decision-making: “putting people into positions of power basically alters their psychological processes.” People in power start to feel more invulnerable and focus on their rewards and ignore potential pitfalls; this change leads them to make more risky decisions. I heartily encourage you to listen to this interview; it’s superb.

And it ties in to the second item, which relates to the endemic corrupting incentives that arise from political power. Don Boudreaux’s Christian Science Monitor column last week does a really good job of turning the whole Blagojevich fiasco into a “teachable moment” on rent seeking, as Josh Wright calls it.

Tullock’s insight is that the very ability of government to create lucrative special privileges diverts resources from socially productive pursuits into wasteful ones.

Knowing that government is willing and able to impose tariffs that will protect them from foreign competition – and knowing that such protection will raise their incomes – sugar farmers understandably spend some of their resources farming government rather than farming their land. …

… And the larger the potential gain from being granted such a privilege – that is, the larger the rents – the more intense will be rent-seekers’ incentives to chase after them. That puts tremendous pressure on – and gives tremendous leverage to – politicians.

It’s easy to look at the Blagojevich case and see a failure of personal ethics. It is about character. But it’s also about how government itself creates the very conditions for corruption. Think of all the special privileges governors can bestow: subsidies for stadiums, public-works contracts, special taxes and fees, not to mention myriad regulations with myriad loopholes. Chief executives – mayors, governors, and presidents – are supposed to be the chief enforcers of the law. Today, though, they are also chief bestowers of privileges. As such, the trading of favors is intense, leaving little bandwidth for actual public service. Society loses.

See also Brian Doherty’s comments at Reason Hit & Run. These commentaries are all consistent with my observations when this first broke: lobbying/rent seeking and political corruption are different in degree, but not in kind.