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Baked-In Corruption: Not Just an Oklahoma Problem

June 1, 2018

by Byron Schlomach
June 1, 2018

In Federalist No. 10, James Madison said that ““No man is allowed to be a judge in his own cause, because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity.” James Madison hadn’t encountered modern legislative practice.

In fact, naïve legislators are constantly allowing individuals to judge their own cause by putting them on boards and commissions that oversee areas of extreme interest to those very individuals. Licensing boards – everything from cosmetology to dentistry to building trades – are overwhelmingly populated with individuals working in the professions they regulate. It should be no surprise when they pursue policies in their official capacity that benefit them personally. Faced with such temptation, licensing board members, of course, often take a bite at that apple.

Oklahoma’s Department of Health Board, with at least four of nine members required to be physicians, was recently found to have been sleeping at the wheel. That department received a $30 million special appropriation to solve a fiscal crisis within the department. Then, the state auditor and a grand jury discovered there was never actually a crisis since officials had squirreled state money into federal accounts to keep it from being swept. Three of the board members justified their hands-off “oversight,” saying they considered themselves “passionate advocates for healthcare” and not protectors of the public purse. It’s interesting that their self-described role happened to benefit the healthcare industry.

As the 1889 Institute’s recent publication, Baked-In Corruption: The Need to Reform Boards and Commissions points out, legislatures have created, and continue to create, boards and commissions whose statutorily-defined members automatically have conflicts of interest. Government officials, regardless of the office, have a fiduciary duty to the public, but their own pecuniary interests can get in the way. Even when they aren’t consciously letting their own interests interfere with the public good, they are subject to groupthink and short-sightedness due to their limited perspectives made large in their eyes by their own interests.

So while cosmetologists destroying economic opportunities for hair braiders, or dentists doing the same to teeth whitening businesses, might result from licensing boards telling themselves they’re protecting the public, they are acting immorally. They are so corrupted by a poorly considered and poorly designed institutional structure that they don’t even know they’re corrupt. The same happens with boards intended to oversee agencies, school boards with their odd election dates where they are effectively chosen by teachers, and, dare I say it, the attorney bars that are so often incestuous in their roles and policies that often are not subject to legislative oversight.

The memberships of boards and commissions need to be replaced with public-spirited but otherwise disinterested individuals. Expertise can be hired and consulted. If that turns out to be impossible, then boards might not be the right governance structure. In that case, more straightforward governance, with one person in charge, might be appropriate. In many cases, though, especially with licensing, legal monopolistic bodies should be replaced with competition. That is, let’s get rid of some of these boards and commissions altogether. Americans have an amazing capacity to self-govern in market contexts. Let’s let them do it.

Byron Schlomach is Director of the 1889 Institute



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