Our founders would be horrified at many aspects of our government, but I think the one that would offend them the most would be the way that our legislatures, state and federal, openly engage in actions that, were they indulged by private individuals, would be called criminal racketeering. For those unfamiliar with the term, racketeering is an age old criminal enterprise, dating back to the bandit gangs of antiquity, through which bandit gangs could gain a percentage of the wealth they would normally loot, without going to the trouble of actual violence. Rather than beat up innocents and take their wealth, the criminal simply asks the innocents for "protection money" to ensure nothing bad happens, the implication being that if the money is not paid, the protector would be the one doing the damage.It is a great deal for the criminal, as he doesn't need to do anything to get this wealth, there is no risk of being injured by a desperate defender, nor of being arrested by whatever authorities are around. And, for the shopkeeper or home owner it is not such a bad deal either. If they believe they cannot defend themselves, or the authorities will not defend them adequately, it is probably better to pay some of their wealth, rather than lose it all and get a beating in the deal as well.

But make no mistake, though there is no violence, and the exchange is ostensibly voluntary, even portrayed as "insurance" against harm, racketeering is still a crime. Why? Because, if the money is not paid, then the insurer will do harm. It is nothing but extortion of wealth through a threat of violence, just like robbery, the only difference being that racketeering takes pains to disguise the robbery as something else.

And it is just as much of a crime, or at least as much of a moral offense, whether the ones enacting it are criminal gangs or elected representatives.

Why do I allege congress engages in racketeering? Because I can see no other description for many of their actions.

Now, let me be clear, not all congressional misbehavior rises to actual racketeering. It may be morally questionable, but it is not actual racketeering. For instance, when they agree to delay any sort of tort reform in exchange for massive campaign donations from trial lawyers, they are clearly selling their votes, but as they do not explicitly say "support us or we will enact tort reform", it is not actual racketeering. Doubtless, were trial lawyers to stop giving this support, the situation may degenerate into such extortion, but for now it has not. Similarly, taking lobbyist money to maintain tariffs and quotas essential for various enterprises is not extortion either. Both situations set up conditions which are favorable to future racketeering demands, but as such lobbying and contributions are unlikely to ever end, it is doubtful explicit racketeering will ever be necessary.

No, what I call racketeering is when the government indulges in explicit threats of harm unless they receive benefits or concessions from specific individuals. For example, their repeated exactions of money from the cigarette industry backed by threats of lawsuits or outright banning of tobacco. Or, during the oil price spike last year, their repeated threats of "hearings" unless the oil companies "did something". What was being done was pretty explicit extortion. Either the oil companies helped their political cause by reducing prices, thus helping to ensure reelection, or else they would enact laws harmful tot eh oil companies.

Of course congress doe snot always need to engage in extortion to get what they want. As the cigarette company example shows, they also can get friendly courts to develop interesting legal theories, allowing them to extort through litigation as well*. Or they can always ask regulatory agencies to intervene. And that shows the true harm of government racketeering. Under traditional racketeering, the victim always can hope the authorities will intervene, or maybe he will refuse payment and hope he can defend himself. With government doing the racketeering, there is no hope. The authorities are the ones exacting money. And if you defend yourself, you are guilty of a crime. There is no recourse but to pay.

Of course, there is  a simple way to prevent this sort of abuse. As I wrote elsewhere, the reason the government can shakedown businesses, as well as the reason they receive so much money from lobbyists, is because they have powers which can be used to inflict economic harm or grant economic advantage. Were the state deprived of such powers, there would be no ability to shake down or to grant favor. A government limited to protecting rights could not act like a criminal gang.

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* As studies show smokers on average use less rather than more health care resources over a lifetime, even the dubious basis of the multi-state suit is incorrect, and the cigarette companies should ask for an adjustment of the ruling. However, as any reduction int heir payments would simply result in another suit, or congressional "hearings" and subsequent taxes or other penalties, the cigarette companies are cowed into inaction.

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POSTSCRIPT

My earlier writing on the same topic can be found in "Transparency, Corruption and Reform", "Power and Disorder",  "The Wrong People", "Fairness and the Free Market", "Planning For Imperfection", "Symmetry and Asymmetry in Government", "Greed Versus Evil", "Economic and Political Power Revisited", "The Most Basic Argument For Limited Government", "The Nature of Evil", "Why Term Limits Will Fail (And Should)", " Symmetry and Asymmetry in Government", " The Problem With Tort Reform", "Red Herring", "Who Will Decide" and "Bad Economics Part 5".