Thursday, September 4, 2008

How Unscrupulous Politicians Can Cash-Out On Big Budget Construction Projects

By virtue of their position, politicians are privy to a wealth of information. Some unsavory members of the political profession have unscrupulously used their access to knowledge, to line their pockets.

When public works and major construction projects are being planned, politicians are right in the thick of things. They are either major participants in constructing the blueprints, or at the very least, they have a ringside seat that grants them insider information. If the politician lacks integrity, they can use their inside position to benefit economically. They can also use their knowledge to barter favors with other powerful entities.

The below excerpt from, "The Power Broker: Robert Moses and The Fall of New York" By: Robert A. Caro, tells how politicians can personally benefit from the construction of parkways. From this excerpt, it is easy to see how a money-lusting out-for-self politician can cash-out on any high budget construction project.

[SIDEBAR: Think about how this ties into gentrification and all of the "development" that is going on in the major cities- particularly New York.]

"The construction of parkways- like the construction of conventional highways- was a potential source of great wealth to politicians. Parkways meant construction contracts. Politicians who had a say in which firms received those contracts could expect financial remembrances from a successful firm, if indeed they- or a relative or a trusted associate known in political terminology as a 'big man'- did not actually own a piece of it. Parkways meant real estate transactions, generally either purchase or condemnation, both methods under which landowners could expect to do well financially; state public works officials, anxious to begin construction and not too concerned about price because the money they were offering was not their own, were traditionally more generous than private buyers.

If politicians were the landowners- if they brought the land at pre-parkway prices, from owners who didn't know the parkway was coming, and then sold it to the state at right-of-way prices- they could expect a large profit. It took longer to get one's money through condemnation, but the rewards could be even greater; the success of politically well-connected attorneys in winning high condemnation awards from Court of Claims judges who also had risen through the ranks of political machines was an open secret in legal circles in New York State during the 1920's- as it would be in the 1960's.

Parkways meant development: Sleepy countrysides long static because of their inaccessibility suddenly became desirable locations for factories and housing developments when a parkway brought them close to a large town. Land in these areas bacame suddenly valuable. Land near the parkway's exits, automatic focal ponits for development, became particularly valuable.

The politician who brought this land at pre-parkway prices and sold it as or after the parkway was being built could reap great profit, and the politician who brought the land but instead of selling it developed it himself, buikding himself the houses and factories, could reap a fortune. Moreover, in terms of development, the impact of a parkway spread in ever-widening ripples: stores and laundries and gas stations and insurance brokerage firms for the residents of the houses, subcontractors and material-supply houses for the factories. This meant a burgeoning in land sales, insurance premiums, legal fees- in all the areas in which politicians grow fat...

To take advantage of the financial opportunities provided by a parkway, a politician had to have foreknowledge...And polticians had a weapon they could use in obtaining such advance information; if they did not get it, they would not approve the buildindg of the highway." -From, "The Power Broker: Robert Moses and The Fall of New York" By: Robert A. Caro

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