Price Rigging
Categories: Econ, Ethics/Morals
Collusion. That's what this one's about.
The government is building a dam. There are only 3 local union contractors capable of building it. And all 3 have known each other for years. An RFP (request for proposal) goes out, seeking bids from the companies that conform to government standards.
The 3 guys (and yeah, in this world, it's still almost all guys) get together in a basement, smoking fat stogies and more or less aggreeing to pad their prices. Labor costs $27 an hour, not $23. Shipping? It's 8 bucks a pound. Storage? More costs. Supervision? A minimum of 33 people on deck, um, supervising.
When all 3 bids come in at about the same price levels, the government assessors just assume that, well, "This is about what it should cost," so they pay the higher-priced, rigged bids with taxpayer money. And maybe they received that nice trip to Hawaii or 14 pounds of salami in a nice basket for their good work in choosing the winner, so why was it in their best interest to actually negotiate prices? Yeah, it's not. And price rigging in government contracts is a thing. Lots of union workers affected. And like...who votes, right?