Economics has been around for almost four hundred years as a field of study.
For most of its existence, it was known as “political economy.” Glasgow University was the last academic holdout, only changing the name of its department to “Economics” in 1998. Too bad. Or maybe not.
Maybe we’ll need to save that name to be able to describe our Supreme Court and the results of its wildly activist view of free speech and the “persons” who have that right. If you think you saw too many negative and dishonest political ads these past couple of months, I predict it has only begun.
The 2012 Presidential campaign will begin Wednesday this week, and it will be dirtier and more expensive than any campaign in our living memory. Unfortunately, the governing we’ll get from that campaign will also be dirtier and more expensive than ever.
//Rant On, and fair warning not to continue if you want to believe the Tea Party isn’t just another way to manipulate us by a pack of even greedier thieves than the current bunch.//
Political ads and contributions are really cheap call options on the taxpayers’ collective purse, and it won’t just be defense contractors, agribusinesses, oil and gas, utilities and pharmaceutical companies draining us through subsidies, tax breaks and taxpayer-provided services before we fix this problem. Wall Street is convinced it can get more out of us, and they know how to get it. The corporate media aren’t going to settle for only a billion or two in revenues from our elections, and they know how to get it. Security companies, software contractors, telecoms, hospital companies, real estate developers and law firms will all be angling to get “their” pounds of our flesh.
It’s all become a matter of maximizing shareholder value, after all.
Consider what Massey Coal did — spending $3 million to elect its very own state supreme court judge (in a race where total spending other than Massey was around $2 million). Once elected, that judge cast the deciding vote to reverse a $50 million judgment against Massey on a case that was already on its way to that very court.
That’s seriously asymmetric as a return profile.
Not all cases will be that simple. For example, the majority of the state legislators who voted to support Arizona’s “show me your papers” law had gotten campaign contributions from Corrections Corp of America, the same company that wrote most of the law, and not coincidentally, has the Arizona contract to hold detainees awaiting Immigration Department disposition or deportation. I guess they thought of it as a kind of marketing plan. Pretty clever when you think about it. State legislators are probably very grateful for contributions of even a couple thousand dollars. CCA could probably get their private meetings and/or support from a decent majority for less money than they get for holding a couple of extra “privatized” inmates.
Once again, a single company stood to make millions or even tens of millions by making political contributions that were just a tiny fraction of the upside.
Now, with Citizen’s United making anonymous unlimited direct political spending the law of the land, any company or union can affect the outcome of elections, and they won’t have to deal with the potential trouble their shareholders or customers or the public might give them if they knew who was paying.
The beauty of the whole scheme is that the people who execute the political hatchet jobs can be nicely compensated, too. Consider the sordid story of the Tea Party Express. That organization is run by a long-time political influence peddler who takes both corporate and individual contributions. Sal Russo tapped into genuine populist anger and fear when he took in millions from the health insurance companies and for-profit hospitals in 2009 and launched his anti-reform campaign.
The resulting law was most of what Russo’s sponsors wanted; they got the tax dollars paying for tens of millions of new customers, and didn’t have to compete with a public alternative. Russo was able to siphon off more than a million of that to other operations controlled by his wife and himself while setting up a nationwide network of angry people who had theirs, but were afraid of losing it.
Russo’s Tea Party Express played their game as if they weren’t spending corporate money, but rather were expressing the outrage of the grass roots of America. Well, the initial sponsoring corporations got what they wanted (almost everything), and Russo got something even more valuable, a list of 400,000 potential donors. A year after launching his effort with insurance company seed money, Russo has collected over $5 million in donations, and widened his target choices.
That’s enough money to be a kingmaker in small ponds. In Delaware, for example, Christine O’Donnell got the 30,541 votes she needed to become the Republican nominee for US Senate over the objection of the Party. Russo’s spending? Just $237,000. In the Alaskan primary, Russo spent $600,000 putting his candidate into the nomination over the sitting Senator. In the Nevada primary, Russo spent $800k.
As a “grass roots” effort, the Tea Party Express foot soldiers took a surprisingly comfortable path. For example, it wasn’t too awful for the cadre of door-knocking young people he sent to the Great White North to help perennially unshaven Joe Wilson defeat Murkowski. They got to eat and sleep on a three-star Holland American cruise ship while they did their “boots on the ground” imitation of earnest young Alaskans working on the campaign. It’s almost as if they were getting the 21st Century corporate version of “marching with Martin” street creds. I’m sure the Russo’s don’t need to fly commercial any more, now that they have the checkbook for one of the more visible “grassroots” political movements.
Even in much larger Nevada, it only cost $800K to defeat the party-selected candidate and replace her with Angle, a wacko so far out there that she was famous in the state legislature for regularly voting alone against the entire (very conservative) House she was part of.
So what do these candidates that Russo chose have in common? At first glance, not much, other than the support of some of the thousands of separate (and often feuding) groups who call themselves Tea Partiers.
They all say they revere the Constitution, but have different interpretations. Angle thinks the Second Amendment is there so we have “remedies” if elections don’t go the way we want them to. O’Donnell thinks the First Amendment doesn’t enshrine separation of Church and State. Wilson, a lawyer, thinks the Constitution bans unemployment insurance, social security and medicare, except when he and his family are collecting those benefits.
They don’t share religious beliefs. O’Donnell is a radical anti-sex Catholic who first appeared on the national scene pushing an anti-masturbation agenda. Angle is a fundamentalist who draws her policy choices from a late 20th century political-religious movement called Christian Reconstructionism. Wilson calls himself a non-denominational Christian.
They do all say they want to reverse the “socialist agenda” they fear. But that’s just good old fear-mongering, and not rooted in reality. After all, the two most hated items passed by the “Pelosi” Congress were a cap-and-trade energy bill and a private health insurance mandate that follow almost to the letter proposals that came out of that famously Marxist organization, the American Enterprise Institute. Funny, that.
If we were actually “going socialist”, we’d be launching a free national health service supported by general tax revenues, as they have in other democratic countries. Or we would at least pay for everyone to go to private doctors as they do in most developed economies. Of course, that might actually give us more freedom and a stronger free market economy by having insurers and health care providers compete, and by freeing entrepreneurs to strike out on their own and start new businesses. It doesn’t escape my notice that Germany has more of its citizens working for small companies than we do. Without the burden of health care to worry about, they are free to do what many of us can’t.
The energy bill, the other big “government takeover” so hated by Tea Partiers is another example of distinctly un-socialist action. As Newt Gingrich said in a one-hour interview with PBS way back in 2007, cap and trade is a “free enterprise” solution to the carbon emission problem modeled after the successful Sulfur Dioxide cap and trade system the first President Bush put in place to deal with acid rain — again, hardly the stuff of Lenin and Mao.
So that leaves me wondering how particular candidates in these statewide primary contests got chosen. What policies do they support that could roll back the terrible socialist tide? Where do they get their ideas? For Rand Paul, the answer is simple — the apple fell near the tree, though not quite as honest. For all his conspiracy theory tendencies, Ron Paul is consistent. His son Rand espouses even more radical Libertarian ideas, except when it comes to paying him and other doctors from the government trough. Then they should be able to enjoy “a comfortable living.”
Angle gets her policy insights from praying. The real reason Russo chose her in the primary was probably related to his fealty to his corporate sponsors — Sharron Angle was the only candidate for the Senate Republican nomination (among five) who felt there was no need to regulate Wall Street, even while the financial meltdown was fresh in everyone’s memory. She also says she wants to privatize Social Security (can you imagine how much extra money the fund managers and stock brokerages will make off that?) and to eliminate Medicare and privatize the VA hospital system, since those kinds of programs make the people worship the False Idol of government. Wilson gets to the same place from his peculiar reading of the Constitution. Think of the bonanza as we continue to uphold our commitments to veterans and retirees, but hand everything off to private companies to run for profit.
O’Donnell is pretty vague on everything, including how she pays her own personal bills when the only money in her world is campaign contributions for her serial runs for office. I’ll have to take her statement about regulating Wall Street from her official web site, since she has spent most of her time in the limelight explaining how she “dabbled into witchcraft” got access to Top Secret information on a Chinese plot to take over America, and where the companies might be that she said had created mice with fully functioning human brains. Maybe those positions are the reason there has been no more Tea Party Express money since she won the primary and all the old video came out to haunt her.
Just for the sake of completeness, here are O’Donnell’s positions on jobs, taxes and the economy from the website http://www.electchristineodonnell.org:
Christine O’Donnell believes that jobs are created when business’ of all sizes are freed from the red tape and taxes that big government forces on them. Christine is pro business and will fight for reduced taxes and smaller government.
She will fight to lift the overwhelming burden that the current tax code has placed on American business and families in Delaware and around the country. She wants to simplify the existing tax code and put the power back into the people’s hands, instead of a bloated government.
Christine feels the current out of control government spending is eroding the freedoms that make America so special. This spending is leading to a destruction of our economy and giving up our future to foreign debt holders like China, a communist country. When elected, Christine will fight for our economy and work to restore America’s position in the world.
Not much substance, but clearly she will support corporate priorities if given the choice between that and government. Her positions during the primary are harder to determine because her official website was wiped clean a few hours after she defeated moderate Mike Castle.
While not part of the Russo posse, Rand Paul takes the worship of all things private enterprise to a whole new level. He even believes that coal companies shouldn’t have the restrictive force of government safety regulations. Owners of private property open to the public shouldn’t have to accommodate anyone they don’t want to, so the Civil Rights Act is out. So is the Americans With Disabilities Act, since owners of small multi-story buildings with doctors offices have been forced to provide access to wheelchair-bound patients. With Rand, it doesn’t stop there. He thinks voluntary charity should replace Social Security and Medicare for the indigent, and everyone else should just suck it up and take care of themselves. If a family has a child with an expensive chronic illness, that’s just too bad.
So let me suggest that we put Rand Paul and every other politician who claims to support free markets and cutting government “interference” to a simple test. I know that they all (and most other people in the country) find something inherently distasteful about limiting profits, except in the cases where a company has a government-enforced monopoly.
The question is, are those same “free marketeers” willing to let the free market give the private enterprise unlimited losses? Obviously that didn’t happen with the banks, brokerage firms, Fannie, Freddie and AIG in 2008 or the car companies in 2009.
So maybe it will be different with the new crop. And then again maybe not.
If they don’t want government dictating to business through regulations and oversight (see Rand Paul’s statements on mine safety regulations for the extreme version), then they should also let anyone damaged by a corporation or person have unlimited potential to extract compensation for their damages. In other words, every politician who claims to support free markets but wants tort reform to limit damage awards is simply lying, and using the free market banner to hide their agenda supporting government-imposed limits to corporate liability. In the cases of mine owners, literally giving them a license to kill, if the economics favor that.
Asymmetric economics, in other words. In the vernacular, “Heads, they win, tales, we lose.” Not a bit different from the Wall Street bailouts, in my mind, and certainly not consistent with the claims of every Tea Party supporter I’ve met.
It gets even more extreme when we look at the foolishness surrounding the privatization agenda. We somehow missed the lessons to be learned when smaller governments (states, cities, etc.) gave up their publicly owned utilities and roads only to find themselves trapped in a cycle of inflating user costs and declining levels of service. I’d be very happy to hear from anyone pleased with the result a few years after their local government sold its water company or highway to private companies.
But we’ll entertain the notion that Social Security or even the VA should be privatized. Why? Do we somehow think Wall Street will work for free when it starts “helping” individuals manage their Social Security private retirement accounts? Do we think they will do any better protecting the interest of millions of individual investors than they did providing safe investments to pension funds and cities in Norway with the structured finance AAA bond scam? Didn’t we notice that the NASDAQ is still way below its peak more than ten years ago?
Maybe potential future Governor of Florida Rick Scott’s old company (HCA) will take over the most efficient hospital system in America with the highest patient satisfaction (the VA)? Rather than put them out of business when they committed the largest single party fraud against the taxpayer in US history, Scott’s HCA was fined $840 million, or about a third of a year of cash flows, in a business that currently sports gross profit margins of nearly 80% (without overbilling) and selling, general and administrative (S,G&A) costs amounting to 64% of revenue.
I’m just guessing here, but I think those doctors and administrators at the HCA hospitals have nicer compensation packages than their VA counterparts. The 24% net profit margin also doesn’t make me think that taxpayers will get a very good deal turning the VA over to the largest private operator. If I were at HCA and charged with putting together the powerpoint presentation to my hand-chosen Congress chattel, I would do what Old Man Rockefeller did when he decided to vertically integrate and take over new territories. Just set the price below the level the competition (in this case the government) can stand. Run at those prices until the competitor goes out of business. Then raise prices. Rinse and repeat.
Would it be unreasonable for HCA to support candidates favoring privatization of the VA, or more to the point, dishonest negative advertising against their opponents, especially if they could do so behind the veil of a “non-profit” with a patriotic name like Americans for Freedom? A few million spent in a dozen or so key races around the country could pay off with literally billions of dollars in future profits, so I would fully expect them to try. And it’s not as if the Veterans themselves will pay for their own care under any of the trial balloons floated by the radical candidates this year. That would still be on the taxpayers’ dime. But it would be a dime subject to corporate fraud and waste, first.
The sad part of this whole equation is that the benefit of not having a single corporation or concentrated industry rip us off is so diffuse that no one can justify spending the big bucks it takes to counter the efforts of the profiteers.
Teddy Roosevelt recognized this when he broke up the industry trusts. In a way, he recognized it also by establishing National Parks, Monuments and Forests owned by all of us. That doesn’t stop the asymmetric economics from tempting companies to even ruin that legacy, however. In the last year of the Bush Presidency, a proposal that was not subject to Congressional approval was making its way through the Bureau of Land Management. That proposal was to permit “hard rock” mining in the upper reaches of the Grand Canyon National Park. That’s right. But for an organized protest of those leftist anti-American conservationists, we almost got the chance to see an “accidental” toxic mine waste spill come flooding down the Grand Canyon. But at least the mining companies took their shot at maximizing shareholder value.
The same goes for giving all these new political entities tax exemptions. Since when should all 0f us subsidize their politicking? They need to disclose who their donors are, and how much they gave. They need to disclose when those donors dictate where the money gets spent. They need to pay sales and property taxes like the rest of us.
It still won’t level the playing field, because the concentrated benefits of a government handout for a company so outweigh the benefit of not getting ripped off once it’s spread across the entire population.
But as I’ve said many times now, much of what our government does is protect and improve private property. If the Tea Partiers get their way, that’s all the government will do. That concentrated benefit can and should be paid for by the beneficiaries as much as possible, and in proportion to the benefit they gain. It worked pretty much that way until 1913.
But the Tea Partiers I’ve spoken with don’t like the idea of oil companies paying tariffs to support the US Navy. They would much rather have all of us pay for their corporate subsidy with a gigantic sales tax. It would, after all, maximize shareholder value.
Same goes for giving our jointly owned resources away to the highest bidder to exploit as they see fit. Can we really say that rem0ving one mountaintop only affects the value of that mountain, and not the surrounding mountains, valleys and downstream watershed? Give me a break. And if a holding pond of tailings and toxic water lets go, it will turn out that that a special purpose company was formed for just that mountain, letting the people who made the decisions walk away. Asymmetric economics at its finest.
The Tea Partiers really don’t seem to like Article 1, Section 8 of the Constitution, where it explicitly gives the Congress the ability to levy taxes to provide for the common welfare of our citizens. They have no problem at all when it levies taxes to provide for the specific welfare of non-breathing corporate “persons.”
The problem is, while “competition” sounds good to all of us, in a lot of industries competition was replaced by collusion a long time ago, and there’s simply no customer more ripe for the fleecing than the taxpayer. And the cost is pennies on the dollar, as long as those pennies buy the right ads for the right candidates.
Political economy, indeed.
Don’t forget to vote. If you don’t vote, your license to complain will be suspended for the next two years.