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Kleptocracy in America
[Bill Bonner] 06/12/09 London, England, Reading the obituaries is such a delight. First, it is a relief when you find your name not mentioned. Then, it is a joy when you find those that are. Not that we wish to see any man's name on the roll of the dead; still, the final audits are always the most revealing. Here on the back page, we admire honest scalawags...and learn from them. Thus was our attention drawn to Mr. Omar Bongo's exit from the mortal stage on June 8th.
Popular government has two major parts. One part is fraud. The other is larceny. As to the first, it is like a professional wrestling match - full of lurid threats, spilled beer, sacred cows, gaudy uniforms and self-delusions; the fans feel their private parts shrink when their man loses. If he wins, they feel they are winners too. But it is the other part, the more rational part - a balance of larceny and bribery - that interests us today.
Serge Dassault miscalculated. One of the richest men in France, he was stripped of his position as mayor of a Paris suburb this week. A court found he had made cash payments to voters in Corbeil-Essones, east of Paris, which could have influenced the outcome of a mayoral election.
We stand dumbfounded...mouths wide open...our fondest hopes for the progress of humanity dashed to pieces. How could an experienced, well-informed man of mature age and sound finances, have made such an amateur's error? He bribed the voters unfairly - that is, with his own money - but apparently not enough of them!
Mr. Serge Dassault, meet the late Mr. Bongo. France included in its 'mission civilisatrice' the cultivation of various public officials throughout Africa. Bongo was one of them.
The moment when destiny stuck her nose into Mr. Bongo's affairs was probably in 1964, when Mr. Bongo had gotten himself into the post of Minister of Tourism in the government of President Mba. That year was the one chosen by Jean-Hilaire Aubame to launch a coup against Mba's regime, which saw both Mba and Bongo confined together until French troops came and bailed them out. Being locked up with the president of a country can be good for your career; at least it was for Bongo. His ties to Mba were strengthened by the ordeal, says the TIMES, and he was subsequently made Vice-President, succeeding to the top post itself when Mba's last cartridge had been spent.
The TIMES described Bongo as "one of the world's richest heads of state." The Financial Times provided details: "An indictment...listed 39 properties, mostly in the chic 16th arrondissement of Paris, nine cars worth nearly $2 million, and 70 bank accounts."
And so the familiar question: "how is this possible?"
Mr. Bongo's percentage of Gabon's output must have been substantial. He took over the government of Gabon in 1967 at the age of 31, making him the world's youngest head of state. "For the next two decades," continues the obituary, "Bongo was able to rule Gabon almost as a personal fiefdom. With a relatively small population and benefiting from abundant natural resources - principally oil, but also uranium, manganese and timber...."
The man mastered both carrot and stick. With revenue from Gabon's natural resources flowing into his coffers, he was able to hand out lavish favors. "He placated students in 2000 by providing hundreds of thousand of pounds for the purchase of the computers and books they were demanding," says the TIMES. He could spend his own money when it suited him too - for he had so much of it. And when the working classes took the streets in 1990, he had plenty of goons in uniform to beat them with sticks.
Bongo did not suffer from the typical financing problem of modern democracy. When you rob Peter to pay Paul, Peter gets cheesed off about it. The next thing you know he's voting against you or plotting a coup. That is why it is better to bribe Paul with money Peter never earned. And do it on a large scale. That is how Bongo won an election as recently as 2005 with nearly 80% of the vote. Not even Obama can match that.
But politicians in modern, developed democracies are now bribing voters on a breathtaking scale - protecting their bank accounts, shoring up their houses, giving them jobs and health care. In the US alone total US government debts, obligations and commitments now come to $112 trillion. Congressmen risk neither jail nor insurrection. Cometh the old question; how do they get away with it?
Currently, 50% of every dollar spent comes from borrowing. This week brought news that the developing countries - led by China - are still adding to their positions in US Treasury bonds. The funds are spent immediately. The payer and the payee - neither of whom vote in current US elections - can worry about settling the debt later. What a marvelous invention is inter-generational government debt, funded by foreigners! Even Mr. Bongo, RIP, must have been impressed.
Kleptocracy in America was originally published in The Daily Reckoning, a free e-letter offering daily perspective on the global economy and how to prosper in the face of uncertainty.
About the authorAbout The Daily Reckoning: Now in its 10th anniversary year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. In short, The Daily Reckoning shows how to live well even in uncertain times. Published daily in six countries and three languages, each issue delivers a feature-length article and a guest essay from leading thinkers and columnists. Sign up free by visiting http://www.dailyreckoning.com
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