How Pols Wring Money From Businessmen: Chicago Example

The other day, I posted an extraordinary story of abusive political power.

ZipDialog Post: Your property? Yeah, right, pal. I got friends who want it

First, the story in a nutshell. Then, the larger meaning.

Alderman Bullies Property Owner to Help a Friend

Chicago Alderman Proco Joe Moreno wanted to help a business [Double Door Music Hall] that had contributed to his campaign coffers. So he told Brian Strauss, a firefighter and property owner, to rent his building to the business or suffer the consequences. When Strauss refused to comply, Moreno made good on his threats, downzoning Strauss’s building and scuttling multiple attempts to sell the property.

Strauss is now suing, arguing that Moreno’s abuses of his aldermanic powers violate Strauss’ rights under the Fifth and Fourteenth Amendments. –Reason blog (Link here)

Fortunately, some of the strong-arm tactics were caught on cellphone video.

It has also been investigated and reported by CBS2 Chicago, but largely missed by the local media.

Chicago politicians acting badly is a “dog bites man” story in Chicago, just as it is in New Orleans or New Jersey–but not Minneapolis. Some jurisdictions are actually pretty honest; the voters demand it and toss out the miscreants.

 

The Larger Meaning, Beyond the Usual Chicago Political Stench

The larger meaning of the Moreno story is that politicians who can impose costly rules and regulations (or waive them), who can violate property rights and contractual rights with ease (or respect them) can use that discretion to extract benefits for themselves or their campaigns.
If I, as an alderman, can prevent Chick-Fil-A or Walmart from erecting a store in my ward, as Alderman Moreno also did, then I can either
  • Extract donations from Chick-Fil-A or Walmart
  • Extract donations from their potential competitors or others who don’t like them, such as grocery owners and their unionized workers in Walmart’s case.

Those political uses of weak property rights illustrates something significant–well beyond Chicago.

When most people think of strong property rights, they think (correctly) that they are essential for economic growth. Why invest if the state can come and steal your profits?

What they miss is a second implication: strong property- and contractual-rights constrain overreach by the state.

That’s why FDR had to knock them down in 1937. They were blocking his New Deal programs, which had been ruled unconstitutional because they violated citizens’ economic rights.

FDR told the Supreme Court Justices that, if they didn’t rule his way in the future, he would pack the court with more judges who favored him. This threat went beyond traditional appointments; there were no Constitutional limits on how many judges sit on the Supreme Courts, just as, at the time, there was only a norm (not a law) saying Presidents could not run for a third term. Faced with FDR’s threat, the judges caved in and began ruling New Deal programs were just fine with them.

Aldermen use the same logic in a slightly different way: they say, I already have the power to crush you. So, give to me or I will.

Bottom Line

Whether the rights are free speech, free association, property, or contract, the message is the same. The state will overreach unless its limits are well-specified and institutionalized.

That’s a Core Western Value. It ought to extend even to Chicago aldermen.

ZipDialog Roundup for Tuesday, October 17

Articles chosen with care. Your comments welcomed.
Linked articles in bold purple

Biggest story of the week is just under the radar: China’s Xi is consolidating his power to become most powerful leader since Mao

Comment: This week’s Party Congress, held every five years, is the moment when Xi will try to push aside many of the constraints installed after Mao to prevent one-man rule. He has already done a lot of that, installing his people in the military and using the anti-corruption campaign to remove adversaries (and leave political friends and family untouched).

By the end of the week, we’ll know if Xi has succeeded since some rule-breaking will be obvious by then (particularly waiving a rule that would require his political enforcer to retire because of age).

 No Cigar for the Drug Czar: Nominee Tom Marino Withdraws after news reports he weakened an anti-opioid bill (Washington Post)

The Washington Post/CBS 60 Minutes piece showed he not only weakened the bill, his office was very close to big pharma companies with interest in the legislation.

Comment: The swift move by Trump was inevitable after the report, given Trump’s focus on the Washington Swamp and the importance of opioid issues to the country and especially to his base.

 FBI Uncovered Russian Bribery Plot Before Obama Administration Approved Controversial Nuclear Deal with Moscow (The Hill)

  • Clintons were involved
  • The FBI kept it all under wraps

Before the deal was approved

The FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States, according to government documents and interviews.

Federal agents used a confidential U.S. witness working inside the Russian nuclear industry to gather extensive financial records, make secret recordings and intercept emails as early as 2009 that showed Moscow had compromised an American uranium trucking firm with bribes and kickbacks in violation of the Foreign Corrupt Practices Act, FBI and court documents show.

They also obtained an eyewitness account — backed by documents — indicating Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow, sources told The Hill. –John Solomon and Alison Spann in The Hill

Austria’s new leader: very young (31), very opposed to floods of new immigrants (x)

NYT headline: Austria Shifts Right as Refashioned Conservatives Win. Socialists finished third, slightly behind nationalist-populist “Freedom Party”

Under Mr. Kurz, the staid, traditionally conservative People’s Party was refashioned into a social-media-savvy political movement that attracted hundreds of thousands of new supporters in a campaign focused on limiting immigration and strengthening the country’s social welfare system.

Kurz will need to form a coalition government.

The most likely coalition partner appeared to be the nationalist, populist Freedom Party, which initial results showed winning 27.1 percent of the vote. The party complained during the election campaign that Mr. Kurz had stolen its playbook, seizing on issues like limits to immigration and the threat posed to Austrian identity by Islam.–New York Times

North Korea warns that “nuclear war could break out at any moment” (Bloomberg)

Comment: Kim Jong Un’s desire for a deliverable nuclear arsenal is comprehensible as a defense for his regime. These kinds of threats are not comprehensible–or are badly misjudged. Presumably, they are trying to move the US off any military option. But Kim’s statements do highlight the very real danger of accident or inadvertent escalation.

 Trump and McConnell show unity . . . at least for now

The New York Times story is here.

Comment: It is all tactical, and it’s all about the tax reform bill, which is essential politically for Republicans on the Hill.

They will also look for other areas to notch some wins, including judicial nominees, which have moved far too slowly through the Senate, as conservatives see it. Democrats have used every delaying tactic on the nominees and Republicans have let them get away with it.

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Hat Tip to

Clarice Feldman for the FBI-Russia story

The Cubs’ Troubles Described in 5 Words

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Those Five are:

  • Weak Middle Relief
  • Slumping Sluggers

Comment: The North Siders, down 2-0 in a best-of-7-series, are not out of it yet. The Dodgers are good, but so are the Cubs.

The Cubs have outstanding starters, an excellent defensive infield and catcher, and normally effective power hitting from the first- and third-basemen.

They have a good (one-inning) closer, though Los Angeles has an even better one who can go longer.

In Joe Maddon, we have a savvy, experienced, and calm manager.

But we’ve had erratic pitching between the starter’s exit (around inning 6 or 7) and the closer’s appearance in the 9th. We’ve filled the gap only partially by using starters as middle relievers. Los Angeles has a stronger, deeper bullpen.

And we will suffer offensively until Bryant and Rizzo return to form.

Here’s hoping the Friendly Confines live up to their name as the Cubs return home.

ZipDialog Roundup for Monday, October 16

Articles chosen with care. Your comments welcomed.
Linked articles in bold purple

◆ North Korean Cyber Threats: A Growing Problem

New York Times has a major article

What’s different about these hacks by a state actor? They are mostly about financial extortion.

The country’s primitive infrastructure is far less vulnerable to cyberretaliation, and North Korean hackers operate outside the country, anyway. Sanctions offer no useful response, since a raft of sanctions are already imposed. And Mr. Kim’s advisers are betting that no one will respond to a cyberattack with a military attack, for fear of a catastrophic escalation between North and South Korea. –New York Times

Comment: Since all of North Korea’s internet connections run through China and they house their “outside the country” hackers there currently, why does Beijing permit it? And why don’t we hold Beijing accountable? If they are in Tehran, then hold them accountable.

Comment #2: Some of North Korea’s actions are about security but this one is about money. For decades, the regime has used kidnapping, forgery, hacking, and all the other Tony Soprano techniques to get it. A side-benefit for them is that they acquire skills that could later be used for security-related attacks or defense.

Leading journalist in Malta who reported on government corruption killed by car bomb (Politico Europe)

Caruana Galizia, 53, had spent the last year publishing stories about allegations of corruption involving Prime Minister Joseph Muscat and his closest allies. The story first came to light in the Panama Papers scandal — a leak in April 2016 of more than 11 million documents from the Panama-based law firm Mossack Fonseca.

She subsequently published stories alleging that Muscat’s wife, Michelle, received $1 million from the daughter of Azerbaijan’s president through a company set up by the same law  –Politico Europe

Comment: When you  kill journalists very publicly in Europe, you are taking a huge political risk. That means the dangers from the corruption story must be very, very damaging.

Claude Rains award for being “shocked, shocked” to hear these allegation of corruption goes to Malta’s Prime Minister.

 Clinton Foundation decides to keep Harvey Weinstein’s donations (Washington Times)

Comment: These two are made for each other.

Neither one could find truth, integrity, or honesty if they were stapled to their butts.

Too Centrist? Sen. Diane Feinstein (D-CA) gets a primary challenge from the left (Los Angeles Times)

The challenger is Kevin de León, head of the state Senate. His campaign will focus on progressive issues and attack Feinstein as “soft on Trump.”

Comment: More on ZipDialog as the polling begins to emerge.

Bowe Bergdahl finally pleads guilty in connection with his disappearance in Afghanistan (Washington Post)

He pleads to charges of desertion and “misbehavior before the enemy.” Key facts:

  • He went AWOL after carefully planning the disappearance
  • He was held captive by Taliban for 5 years
  • Bergdahl was returned after Pres. Obama released five senior Taliban captives from Guantanamo in a controversial prisoner swap
  • Obama announced the deal in the Rose Garden, next to Bergdahl’s parents (who have consistently defended their son’s actions)
  • Obama’s National Security Adviser, Susan Rice, went on Sunday talk shows after the release to say, falsely, that Bergdahl had served with “honor and distinction.”
  • Thousands of US soldiers hunted for Bergdahl after his disappearance and some were killed in the effort.

Comment: Who has to break the news to Susan Rice?

 

 

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The Clinton Foundation Decides to Keep Donations from Harvey Weinstein

◆ Clinton Foundation decides to keep Harvey’s money (Washington Times)

It’s all about helping women, don’t ya know.

Comment: The Clinton Foundation consulted its moral conscience, found it missing in action, and went with the money.

Who’s gonna administer it?

According to a flurry of texts, the frontrunner is Anthony Weiner.

To call this move “tone deaf” is an understatement

Blues-Rock selection: “Never Make Your Move Too Soon”

The song was made famous by B.B. King.

Bonnie Raitt has done a fine version on the slide guitar (link here)

If you like blues-rock, you’ll love this version by the great Joe Bonamassa. Great sound quality; live recording with a strong horn section and redoubtable backup singers. Of course, Bonamassa himself is one of the best guitarists around.

He came by his BB King connections the right way. When Joe was 12, he opened for BB.

If you want to compare it to BB’s version, done live, enjoy this one. More rhythm-and-blues than Bonamassa’s rock. Great, as BB always is.

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Your property? Yeah, right, pal. I got friends who want it

The headline: “Chicago Alderman Who Told Businessman to ‘Come Back To Me On Your Knees’ Sued for Abuse of Power (Reason’s Hit and Run blog)

Chicago Alderman Proco Joe Moreno wanted to help a business [Double Door Music Hall] that had contributed to his campaign coffers. So he told Brian Strauss, a firefighter and property owner, to rent his building to the business or suffer the consequences. When Strauss refused to comply, Moreno made good on his threats, downzoning Strauss’s building and scuttling multiple attempts to sell the property.

Strauss is now suing, arguing that Moreno’s abuses of his aldermanic powers violate Strauss’ rights under the Fifth and Fourteenth Amendments. –Reason blog

The story Reason reports is grotesque.

The key for outsiders to understand: Chicago alderman hold tremendous power to zone buildings within their ward. That power to zone translates, naturally, into campaign donations from people with zoning needs.

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Strauss’ family has owned the building housing Double Door since the 1960s. It’s in a now-popular area. According to Strauss, Double Door had violated their lease and he wanted to evict them.

That’s when Alderman Moreno, the recipient of campaign donations from Double Door, stepped in–with rage and power:

“I’m tired of hearing about the sympathy of you and your family,” the alderman reportedly told Strauss and his attorney at one meeting. “Double Door is going to be in that building, there will never be another tenant in there, there will never be another sign on that building.”

Over the coming months, Moreno—in meetings brokered and attended by staffers for Chicago Mayor Rahm Emanuel—tried to get Strauss to sell his building to Double Door for $7 million, despite its market value of nearly $10 million.

When that failed, the alderman started introducing downzoning proposals for Strauss’s property that would have made it off limits for most business uses. In June 2017, Moreno even tried to reclassify the building as a residential unit, which would prohibit practically all commercial uses.

That failed, but in September the city council did pass a downzoning ordinance, which prevents Strauss from converting his property to a general restaurant, a bar, or even, ironically, its previous use as concert venue.

In a very public, and very disturbing, encounter with Strauss, Moreno made clear his zoning changes were all about extracting concessions.

“You can come back to me on your knees, which is going to happen,” he raged. “It’s gonna be an empty building with no income for you or your family.” –Reason blog

In fact, Strauss has tried to sell but he says three sales have fallen through because of the zoning changes.

Now, he’s suing, saying that Moreno’s “extreme and outrageous” conduct amounts to a taking of his property without due process.

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CBS2 Chicago investigated. Their findings confirm Moreno’s bullying behavior, some of it caught on cell phone video.

Their headline: [CBS] 2 Investigators: Alderman Threatens To Ruin Landlord’s Business

In the video, Moreno says he’s upset over the “tragedy” of the club’s closing.

“It’s a part of life,” Strauss says.

“Right,” Moreno says. “And part of life is also that you’re not going to have a tenant in here for three years.”

The fight reportedly stems from Moreno wanting to keep the Double Door, a campaign donor, in the building. –CBS2 Chicago

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Another news investigation, this one by a former Inspector General for the city, has reached the same basic conclusions (Project Six investigations)

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Comment: If the story reported by Reason and CBS2 is true, then the alderman’s conduct was “extreme and outrageous”–and utterly true to form for Chicago city government.

Alderman have extensive control over zoning in their wards. Fellow aldermen defer to each other, enjoying the benefits of reciprocity and fearing anything that would undermine it.

Their power to zone translates into the power to raise donations from anybody with real estate interests.

It’s the circle of life in politics.

My question: Why is this only a civil case? The actions alleged ought to be investigated as possible felonies by federal attorneys. (Expecting state attorneys to do such investigations of fellow pols is crazy talk.)

Thanks to Tom Elia for this story.

Scott Stantis’ Wonderful Cartoon on the Iran Nuclear Deal

My friend, Scott Stantis, draws consistently insightful pieces for the Chicago Tribune.

A member of their editorial board, he covers the full range of issues, capturing complex issues in a few well-chosen lines.

His latest–on the Iran’s peaceful intentions–is brilliant.

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