Corruption: DC vs. Maryland jurisdictions

In response to the corruption scandal in Prince George's County, Maryland, where the County Executive and his wife (recently elected to County Council) were arrested by the FBI over bribes (see the editorial from the Washington Post, "Cleaning up Prince George's"), Harry Jaffe in the Examiner, "Corruption charges in P.G. shine light on the District," is right that corruption isn't necessarily as bad in DC as it can be in Maryland but typically, he doesn't really explain why this is so, and doesn't discuss the instances of where there are serious problems in DC with regard to corrupt or unethical practices, because the right controls aren't in place.

Not to mention that Jaffe glibly calls misuse and direction of contracts to the favored and connected by Mayor Fenty not a problem even though investigation found that prices for services in the contract were marked up significantly to the city over the actual cost, and that except for the profits, the actual work performed was mostly by other entities. Also see the past blog entries, "The good, the bad, and the ugly: the way "business" gets done by government in DC" and "DC's culture of corruption."

As Molotch explains in "City as a Growth Machine: Toward a Political Economy of Place":

A city and, more generally, any locality, is conceived as the areal expression of the interests of some land-based elite. Such an elite is seen to profit through the increasing intensification of the land use of the area in which its members hold a common interest. An elite competes with other land-based elites in an effort to have growth-inducing resources invested within its own area as opposed to that of another. Governmental authority, at the local and nonlocal levels, is utilized to assist in achieving this growth at the expense of competing localities. Conditions of community life are largely a consequence of the social, economic, and political forces embodied in this growth machine.

What that means in practical terms is that in typical jurisdictions, real estate development is the most important business there is.

Historian Burton W. Folsom discussed what he terms political entrepreneurs and market entrepreneurs in his book, The Myth of the Robber Barons: A New Look at the Rise of Big Business in America, about the "robber barons."

According to an opinion piece "Bring Back the Robber Barons: There's a big difference between entrepreneurs who make a fortune in the market, and those who do so by gaming the government" from the Wall Street Journal:

Market entrepreneurs like Rockefeller, Vanderbilt and Hill built businesses on product and price. Hill was the railroad magnate who finished his transcontinental line without a public land grant. Rockefeller took on and beat the world's dominant oil power at the time, Russia. Rockefeller innovated his way to energy primacy for the U.S.

Political entrepreneurs, by contrast, made money back then by gaming the political system. Steamship builder Robert Fulton acquired a 30-year monopoly on Hudson River steamship traffic from, no surprise, the New York legislature. Cornelius Vanderbilt, with the slogan "New Jersey must be free," broke Fulton's government-granted monopoly.

When you have defined procedures guiding what can be done or not with regard to real estate development, you have a situation that favors rules-based "market" entrepreneurs. But when big chunks of your development procedures are undefined, "political" entrepreneurs are favored, and the conditions for graft are multiplied.

In DC, proposals for large scale rezoning, approvals of what are called planned unit developments, and similar projects follow defined procedures that come under the purview of the Zoning Commission, which is a legal body separate from the City Council or the Mayor.

In most Maryland jurisdictions, large scale rezoning proposals (supporting intensified development) including "planned unit developments," are initiated and/or approved not by an independent planning commission, but by the County Council.

Obviously, political entrepreneurs are favored in such a scheme and graft and corruption is a real problem.

This also happens at the state level in Maryland, where legislators can hold up things needed by agencies to get what they want. E.g., a very corrupt auto repair business in PG County was able to maintain its license because the local Senator made it very difficult for the particular state agency to withdraw the license. Similar, Sen. Currie is facing corruption charges with regard to his work for Shoppers Food Warehouse in getting disproportionate benefits with regard to state highway-related work and alcoholic beverage licenses.

Now, there are areas of DC planning and zoning regulations and other government activities that are inadequately defined, and opportunities for skullduggery, if not absolute graft or corruption, occur regularly. These areas include:

- tax abatement requests, which are initiated not through a defined public process, but directly by City Council members -- one such problem came up with regard to a proposed permanent tax abatement for Union Station (see the past blog entry "Tax breaks, developers, etc. and Union Station, DC");

- sale of DC Government owned property and the various debacles in the West End with regard to the sale of the library and now the sale of Stevens Elementary are examples of that;

- definition and provision of "community benefits" related to "planned unit developments." Because the process isn't well defined (see the past blog entry "Community Benefits Agreements") in terms of creating a public process and defining a direct monetary value of the benefits, deals behind "closed doors" are typical and impropriety is not out of the question (e.g., the allegations of impropriety with regard to Councilmember Thomas and a group controlled by him receiving community benefits monies from a developer after the developer's project was approved--although note, always, after a project is approved is when community benefits are actually given and received);

- use of eminent domain authority, which require City Council approval, but can be initiated by Council (a la the Florida Market debacle, see the past blog entry "An aha! moment about why DC Government is "problematic""). This entry also cites the very good Boston Globe article, "Make eminent domain fair for all;" and

- contracting. There are significant problems with contracting in DC, but there are review procedures, and there is a bit less (but it isn't gone completely) shenanigans with regard to the letting of contracts for goods and services, compared to other jurisdictions (e.g., the pay to play problem with government leases in Prince George's County, as discussed in the Washington Post editorial, "Pay to Play in Prince George's").