Gabriel Rossman: When the Invisible Hand Needs to Stay That Way

These practices are common in political and commercial bribery, going well beyond LBJ or payola. Brokerage was key to the Abramoff scandal and a majority of prosecutions under the Foreign Corrupt Practices Act.[9] Likewise Duke Cunningham served the longest ever prison term for a Congressman after engaging in bundling by selling his house at a hefty markup to a defense contractor. Nor are these practices limited to bribery. The distinction between a prostitute and a sugar baby (what scholars call “commercial sex work” versus “transactional sex”) is largely one of cash payment versus gift exchange. Likewise, in discussing Simony, Thomas Aquinas argues that seeming examples of legitimately buying spiritual services are gift exchange, not quid pro quo, and thus do not contradict the general ban on Simony.[10] A long tradition in Sharia law debates whether gift exchange, bundling, and brokerage really distinguish such Islamic financial institutions as bai’ al-‘inah, murabaha, tawarruq, and takaful from otherwise similar but clearly forbidden practices of interest-bearing loans and insurance.[11] Nor should these examples imply that obfuscation only occurs for violations of secular or religious law. Offering models as arm candy to wealthy customers at nightclubs would be legal even if it were done on a cash basis, but it nonetheless involves bundling (of bottle service with companionship), brokerage (with promoters mediating between customers and models), and gift exchange (promoters do not pay models a wage, but woo them with gifts).[12]

From: When the Invisible Hand Needs to Stay That Way | Cato Unbound