A Company’s Government Cronyism – Should Be Considered in Government Contracting

Seton Motley | Less Government | LessGovernment.org
Seton Motley | Less Government | LessGovernment.org
Cronyism Should Preclude

We less government types have long championed the outsourcing to private companies the work government wants done.  Contracting out, as it were.

Under the perfectly reasonable impression that greater private sector involvement – and conversely less government involvement – will ostensibly improve quality and performance.

Unfortunately, this is becoming an increasingly dubious proposition.  With governments at all levels as huge and powerful as they are – cronyism has run wild and is incessantly rampant.

So we absolutely should incorporate another factor in the government contracting process we have thus far neglected to consider:

How much government cronyism each prospective private sector contractor receives.

Cronyism: Is government’s favoritism in policy and practice that one private company receives – that its competitors and others do not.

Cronyism is an awful government practice – which we should as best as we can eradicate.  (The best way to move towards that end – is to reduce the size, scope and sphere of influence of governments everywhere.)

But in the meantime, we should consider how much cronyism each government contract bidder receives – when they are applying for contracting gigs.

In part because it will highlight cronyism – and thereby help us identify…and hopefully limit it.

And in part because a cronyism-gifted contractor – is able to submit a government-subsidized, unfairly lower contractor bid.

Thereby creating second-level cronyism.  It’s cronyism – funding additional cronyism.  It is yet again unfair to the crony company’s non-crony competitors.

And it undermines the value to We the Taxpayers of contracting out.  We hire a lower bidder – whose bid is lower in part…because they are bidding with our crony money.

And ALL levels of government and their cronyism – should be considered with government contracting at any level.

A state-government-cronyism-recipient – is aided in its federal government bidding.  And vice versa.  So too is it with county and municipality cronyism.  Municipality money warps state and federal contracting as well.

Government cronyism from somewhere – warps government contracting everywhere.

As an alternative example:

To my mind, one of the best parts of last year’s President Donald Trump-Republican tax reform – was the cap on State And Local Tax (SALT) deductions from federal returns.

For decades, high-tax state and municipal governments – got to duck full culpability for their ridiculous tax rates by having their ridiculous taxes offset as deductions from We the Taxpayers’ ridiculous federal taxes.  (That practice is now capped at $10,000.)

It is patently absurd to force wise-and-reasonable low-tax states and municipalities – to subsidize the ridiculously-foolish high-tax states and municipalities.

So too should it be with cronyism.  State-and-local cronyism – should cost you federal contracting gigs too.  And vice versa.

Perhaps the greatest cronyism recipient of all – at all levels of government – is Amazon.

Amazon – is a monster (Market Cap: $947 billion).  A huge company – that is VERY good at securing huge cronyism from all levels of government.

For example, Amazon is looking to site a second headquarters.  Cue the state-and-local cronyism.

It has been positively nauseating watching the endless conga line of government officials falling all over themselves to throw billions of our dollars at Amazon.

Amazon has dragged this process on for months – thereby allowing more time for the governments to continue to again and again out-bid each other…with our money.

Now, were Amazon to bid for a federal government contract, the massive amount of state-and-local-government money they receive – would absolutely warp the federal bidding process.

Now, does this mean Amazon is missing out on federal government cronyism?  Heavens no.  To cite but one titanic example:

The Post Office Gives Amazon A $1.46 Subsidy On Each Box:

“Amazon is big enough to take full advantage of ‘postal injection,’ and that has tipped the scales in the internet giant’s favor.

“Select high-volume shippers are able to drop off presorted packages at the local Postal Service depot for ‘last mile’ delivery at cut-rate prices. With high volumes and warehouses near the local depots, Amazon enjoys low rates unavailable to its competitors.

“My analysis of available data suggests that around two-thirds of Amazon’s domestic deliveries are made by the Postal Service. It’s as if Amazon gets a subsidized space on every mail truck.”

Amazon delivers three million packages – A DAY.  Two-thirds of those – two million – are delivered via the USPS at its subsidized rate.

That is a daily government cronyism discount to Amazon – of $4,380,000.  Times 360 delivery days per year – is $1,576,800,000.

Did you get that?  Amazon gets – in just federal Post Office shipping cronyism – almost $1.6 BILLION per annum.

That’s a lot.

So when Amazon puts in a $10 billion bid for a Defense Department (DoD) cloud computing contract – they are able to pitch a MUCH lower bid…because the federal government is round-the-clock shoveling our money into its wallet.

And so too soon – will be the state-and-local governments that land Amazon’s HQ2.  So Amazon can bid lower still – on guaranteed spec.

This is cronyism – begetting more cronyism.

It is Amazon receiving multi-government-level unfairness – to secure even more government unfairness.

This is AWFUL government policy.  Squared.

Which also totally eviscerates any benefit culled from the government contracting process.

While we try to limit government cronyism – we should at least stop doubling up on it.

This first appeared in Red State.

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