Some American cities are rife with corruption. A key problem is the large volume and complexity of permitting, licensing, and zoning regulations, and the discretion it gives to officials to accept, reject, speed up, or slow down approvals.
A scandal in New York City highlights the problem. On September 23, federal prosecutors indicted two former fire chiefs for taking bribes to speed safety reviews. The indictment charges the pair with “taking over $190,000 in bribes as part of a scheme they are alleged to have engaged in while they were running the department’s Bureau of Fire Prevention.”
The pair teamed with
a retired firefighter who had an “expediting” business that offered businesses help with the process, the indictment says. The chiefs secretly partnered with the expediter, helping businesses working with him to get faster attention in the backlogged system, in which applicants are supposed to be dealt with on a first-come, first-served business, authorities alleged. In return, they got 30% of the expediter’s money, the indictment says. The chiefs, who were each making over $250,000 a year from the department, “let some people cut to the front of the line,” Williams said, “a VIP line that could only be accessed by bribes.”
In New York City, permitting and licensing have been scandal-plagued for decades. The New York Police Department was engulfed in a scandal a few years ago that involved cops speeding up slow approvals for gun licenses in exchange for cash and gifts.
A former New York prosecutor pointed to the slow and complex bureaucracy as a cause of corruption: “We have a system where they only handle so many (permit applications) per day. … The rules are arcane, and you have to hire someone for $1,500 to get a basic permit from your own government. That’s idiotic.”
An even more fundamental problem is that the city’s bureaucracies demand so many different permits, licenses, and approvals in the first place. A study by NYC’s comptroller found that businesses are subject to more than 6,000 regulations and that 15 city agencies impose 250 different licenses and permits. Nearly a third of new businesses in the city report waiting six months or longer to obtain needed approvals to open, and businesses get little feedback from the bureaucracies while they wait.
This is a perfect breeding ground for corruption. Time is money, and so businesses are tempted to bribe officials to speed approvals. Fire safety reviews are important but does the city really need to impose 250 different approval systems on businesses? The city should set a target of cutting the number in half and then speeding up the remaining systems with the freed-up resources.
Local permitting and corruption are discussed further in this Cato study.