Dingell Loses to Waxman, and Auto Stocks Dive -- Call It What It Is: Corruption

By Joshua Holland, AlterNet. Posted November 21, 2008.

Purdue University economist Mara Faccio studied those ties in every country that had a functional stock market. Not surprisingly, Faccio found strong connections between business and government across the board, but she also noted that the value of those connections in terms of stock prices varied greatly.

In the United Kingdom, for example, stock prices don't move at all when a firm's political ties wax or wane. When Rolls-Royce Chairman John Moore was appointed to the House of Lords, it didn't touch Rolls-Royce's stock price. But in Italy the picture's quite different. When Fiat chief Giovanni Agnelli was appointed to the Italian Senate, Fiat's stock soared by 3.4 percent, adding millions of dollars in value to the company in a single day.

Now consider that headline once more -- "Waxman Gains House Energy Committee, Auto Stocks Drop." It says that we're a lot closer to Italy's infamous level of public corruption than we are to that of our British cousins.

One could argue that the Big Three's tanking share prices are simply a product of a representative from California knocking a local Michigan pol out of a key committee chairmanship. But in order for that argument to hold water, one would have to further claim that Dingell's five decades spent fiercely opposing  beefed up emissions and fuel efficiency standards served not only the short-term interests of the Big Three's bottom lines, but also the long-term interests of the rest of his constituents. That's a tough argument to make, especially at this moment in time.

It's also the case that Congress didn't give the Big Three the $25 billion in "bridge loans" they'd begged for, which no doubt hurt their share prices as well. But, as Fishman and Miguel noted, the pattern is well-established:

Numerous studies have found that the economic fortunes of well-connected U.S. companies mirror the political fortunes of their connections. When U.S. Sen. Jim Jeffords defected from the Republican Party and handed Senate Democrats a slim majority in 2001, Democratically connected companies benefited in the immediate aftermath. Similarly, the stock value of companies with former Republican lawmakers on their boards increased an average of 4 percent when the Supreme Court handed the 2000 election to George W. Bush, while companies with former Democratic politicians on their boards declined.

The take-away from all this is that while there's reason to celebrate progressives like Waxman increasing their influence at the beginning of the Obama era, we also need to keep in mind that the system in which they operate is rotten, and that there's still a lot of work to be done in order to bring responsible governance in the public interest to Washington. No matter who occupies 1600 Pennsylvania Avenue, there’s still an enormous amount of centralized power in DC, and Congress still has an incumbency protection racket and seniority system that allows industries to keep a loyal foot soldier like Dingell in a place of power for decades (in 1955, Dingell took the seat his father had held until his death).

What's more, we shouldn't dismiss public corruption as just so much "business as usual" when it's right there, staring us in the face.

See more stories tagged with: corruption, waxman, dingell

Joshua Holland is an AlterNet staff writer.

Liked this story? Get top stories in your inbox each week from AlterNet! Sign up now »