The stimulus plan proposed by Barack Obama focuses on public infrastructure projects, which have a long history of cost overruns, corruption, and construction incompetence. Public infrastructure construction and maintenance is important, it’s just not an efficient use of funds if a quick economic stimulus is desired, or a suitable way to build long-lasting job growth. This misplaced focus is compounded by the “use it or lose it” component to Obama’s plan, which will force projects through state bureaucratic systems which are having trouble handling current projects.
There is one group, however, which must be dancing with joy at the prospect of hundreds of billions of federal dollars being thrown at large infrastructure projects: Organized Crime.
For decades organized crime has infiltrated the construction industry, particularly in and around New York City. In 2001, reporter and writer Steven Malanga noted the pervasive influence of the mob, and cautioned against the tendency to believe that law enforcement efforts had eliminated mob control:
Recently, criminologists have proclaimed that organized crime is dead in Gotham. This report is, emphatically, premature. True, over the last decade, prosecutors have at last begun to figure out how to break the mob’s hold; they have thrown some big racketeers in jail and forcibly injected economic competition into mobbed-up industries. What’s more, both Mayor Rudy Giuliani and Governor George Pataki have shown a lot more backbone in fighting gangsters than their predecessors and have gotten real results. But recent indictments in the construction industry are a stark reminder that the mob’s costly, malignant influence persists, so that prosecutors must intensify their efforts to clean up mob-corrupted markets and politicians must be willing to legislate changes that make industries less liable to mob influence. It will take unflagging political will to get the job done.
The fictional television character, Tony Soprano, on the HBO hit The Sopranos, was a caricature of a construction industry mobster, controlling labor at job sites in New Jersey. There was truth to the caricature. Commissions, task forces, indictments, and mass arrests have proven that despite the best efforts of law enforcement, the mob still has a stranglehold on large construction projects:
In 2008, despite years of indictments and law enforcement action, Steven Malanga again noted the continuing control over construction. Malagna pointed to influence over labor unions and the staffing of construction jobs as a key to mob control:
At the heart of the problem are outdated labor practices that leave construction operating like few other businesses. In most unionized industries, for instance, a business hires workers who then join the union. But in construction, labor law allows contracts between builders and unions in which unions have de facto power over hiring – letting a union enlist workers, then send them out on jobs.
Wise guys have used this control of hiring to dominate the industry in New York. Mobsters can place cronies in key positions, sending them to oversee construction sites – where these mob “associates” shake down contractors and enforce mob discipline among union members.
Most of the infrastructure projects to be funded under the Obama plan will utilize union labor (a fact trumpeted by supporters). The good intentions of state transportation officials and honest labor leaders will be tested as never before as the mob is drawn to the unprecedented sums of money being thrown at large construction projects on short notice under threat of “use it or lose it.” It may be enough to make Tony Soprano come out of retirement.
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