Tag Archives: Obama

Why Politicians Are Like Copper Thieves

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Washington is a criminal enterprise, which is not news. Politicians regularly dole favors to their donors in the form of grants and loan guarantees (Solyndra), theft of private assets for bailouts (Chrysler), and mandates for the use of worthless commodities (corn ethanol). The corruption is endless and goes back to Byzantium; governments are always corrupt because men are corruptible. Due to its size, however, Washington is the greatest criminal enterprise ever assembled. Still, what manner of thief has Washington become? The worst kind.

Popular culture lionizes certain classes of criminals, such as jewel thieves and bank heist masterminds, while it demonizes dirty crimes like armed robberies. Why the difference? Isn’t a thief a thief? Not entirely, and for good reasons. A jewel thief takes from the rich, who by popular belief can afford a loss. He sneaks into a mansion, barely breaking a single window, removes the jewels, and disappears. Nobody is injured, nothing much is damaged, and the jewels go on to flatter another wealthy owner; at least in the movies. Economically, this theft is highly efficient. Wealth is transferred from one person to another with little collateral impact. It is as if the rich victim just handed a stack of cash to the thief.

Dirty crimes involve a high degree of collateral damage as a part of the transfer of wealth. When an armed robber steals a few hundred dollars from a convenience store, the collateral damage is tremendous. People are often murdered, and customers lose faith in the store’s safety, so they shop elsewhere. The damage caused by dirty and unpopular crimes greatly exceeds the value to the thief; people instinctively say “what a waste” when they hear of these crimes.

A particularly wasteful crime trend is copper thieves. Copper thieves steal from construction sites by cutting down installed copper wires and pipes in order to sell the valuable metal as scrap. In doing so, they destroy the value of the labor that installed the copper as well as the finished value of the wire and pipe. Stealing copper whose scrap value may be a few hundred dollars can cause hundreds of thousands of dollars in collateral damage. Economically, copper thieves are among the worst criminals because they cause so much harm for a relatively small personal gain.

So, is Washington’s culture of corruption more like a jewel thief or a copper thief? Washington causes incalculable collateral damage while directing wealth to its friends. As Peter Schweizer’s Throw Them All Out documented, a few hundred thousand dollars thrown at a politician results in tens of millions in graft in return. From the investor’s (i.e. donor’s) point of view, political gamesmanship is the best investment of all. From the taxpayer’s perspective, Washington corruption is nearly a crime against humanity.

Consider corn ethanol. Because each State is equal in the Senate, a swath of low population states that grow corn wield extreme power over Congress’s appropriations. These corn states have forced politicians to mandate ever more corn ethanol in gasoline because it drives up prices and demand for corn. Congress has outlawed the importation of Brazilian sugar and ethanol because it is too competitive. If the goal were to reduce CO2 emissions, Brazilian sugar and ethanol would be the choice, but the goal is to benefit comparatively rich plain state farmers. The result is world hyperinflation in food prices. Corn prices rose from under $2.50 per bushel to $6 thanks to Washington mandates. Since cattle feed on corn, steak prices are rising at 10 times the rate of general inflation. Worldwide prices of substitute staples like rice also rose, causing a food crisis where most people spend most of their income on food. Just like copper thieves, Washington politicians, largely Republican in this case, do not care how many people they hurt to get a few thousand campaign dollars.

On the Democrat side, consider Pres. Obama’s harassment of Chrysler bondholders. In order to bail out his UAW base, Obama stole from the bondholders whose rights were senior to those of the labor union. Obama called on the bondholders to “sacrifice” to benefit the greater good, but his version of the greater good was the UAW, which represents a tiny wealthy sliver of the US’s workforce. The greater cost for Obama’s theft is hidden in the revelation that politics trumps property rights. The Chrysler bondholders were prepared to sue the Government, but they were convinced by Obama’s operatives that they would be beaten down long before prevailing in court. Until this moment, an investor felt he knew his rights, but now any investment can be taken without cause or compensation if the President so wishes. In order to transfer a few million dollars to his cronies, Obama permanently damaged an $8 trillion engine for capital formation and economic growth.

If only Washington acted as the gentlemanly jewel thief, simply giving its stolen cash to its friends. Instead, Washington is like the copper thief, callous to the incidental damage its thievery causes. The next time someone exposes the latest episode of Washington corruption, remember to scale-up the reported graft to include the collateral damage.

Obama’s Commerce Combine

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Last week Pres. Obama asked Congress to combine six federal agencies into a single cabinet level agency to oversee Commerce. His nominal reason is to bolster the economy by making it easier to do business in the US and making the Federal Government better able to promote business. Given Obama’s outright hate for business and free markets, a skeptic might wonder why. The answer is that Obama is using the time honored playbook of defending bureaucratic failure – when government fails, put a new coat of paint on the old jalopy.

Pres. Carter inherited and oversaw an energy policy failure in the 1970′s. The US’s gasoline supply was disrupted by OPEC and also government mandates as to the delivery of product across state lines. Some states had plenty of gas, while others rationed it. Carter demanded that people ‘drive 55′ to save fuel and wear sweaters inside. It was a colossal failure, largely at the hands of bureaucrats who thought regulation was the answer. Carter’s response in 1977 was to create the Department of Energy, an umbrella of existing agencies. By lumping the failed Federal Energy Administration with the more successful Atomic Energy Commission, Carter saved his bureaucrats from embarrassment. Fast forward to 2009, and the DOE remained alive and well, doling out billions in grants and loan guarantees to Obama supporters.

In the early months of Pres. Bush’s presidency, Saudi terrorists attacked the Pentagon and the World Trade Center, killing 2,977 innocents. Despite pouring nearly $30 bln each year into the NSA, the intelligence community failed to notice 20 young Arabs who had radical ties, some of whom had trained to fly but not land a plane, and all of whom had bought plane tickets for the same day. 9/11 was a colossal failure of the Federal Government’s obligation to keep citizens safe from foreign attack. Bush’s response was to create the Department of Homeland Security by combining such notable failures as the INS, the ATF, and of course the airport security that allowed 19 young foreign Arab men armed with box cutters onto the airplanes. Fast forward ten years, and TSA employees are being tested for radiation exposure from the same machines they force children to walk through.

Recessions come and go, but 2008 was particularly bad. Government policy had inflated the access to cheap capital for a decade, and the housing bubble burst, bringing down every industry dependent on debt. While it was always ridiculous to presume that the DOC and FTC could somehow guide the US economy toward making the right decisions, the ‘great recession’ proved that these agencies were at best worthless. As with his big government predecessors, Obama is seeking damage control by combining several worthless agencies into one agency too big to eliminate.

Neither Carter nor Bush’s uber-agency strategy saved money, cut government payrolls, or made government more effective. Why would Obama assume otherwise for his adventure? Perhaps he doesn’t care about performance so much as the appearance of action. Agencies like the DOC and the SBA do more harm than good to the US, so the right move would be to eliminate them, but Obama is on the side of government, not commerce. He just wants to rearrange the deck chairs, add a layer of management, and credulously claim that bigger is better when it comes to government bureaucracies.

Hard Line Obama

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The Obama of 2008 is long gone. Pres. Obama is taking a page from FDR’s 1936 business bashing, class warfare reelection campaign, and getting rough. Obama has abandoned every appeal to independents and moderates in favor of shoring up his left-wing base. Clearly Obama is a professional politician, but the numbers just don’t seem to add up to a 2012 victory.

Obama has provided worthwhile paybacks to his base. The environmental left can look to his shutting down older coal mines along with EPA plans to effectively outlaw all new coal plants. The Keystone XL pipeline will not break ground this year, regardless of Congress’s recent efforts to break the Obama logjam. The DOE has wasted billions of dollars in loan guarantees and grants on ‘green’ energy projects, most of which happened to go to Obama donors.

Big labor may not approve of the environmental left’s opposition to Keystone, but Obama has delivered to this base too. The NLRB has accomplished much of Card Check’s objectives by arbitrarily changing unionizing rules to favor big labor. His recent, perhaps illegal, appointment of three labor lawyers to the NLRB cements the board’s power to force unionization. The NLRB v. Boeing SC factory lawsuit turned out to be nothing more than a strong-arm tactic to force Boeing into a favorable union contract unrelated to the 787.

The trial lawyers can also thank Obama. The Dodd-Frank law is fertile ground for suing when anybody is either denied a credit card or is granted one and then cannot pay. Obamacare does absolutely nothing to stop the gravy train of suing whenever a doctor delivers less than a miracle. The trial lawyers would be fools not to support Obama.

African Americans can look to AG Holder’s hyper-divisive racial rhetoric. Blacks are the Dems’ most reliable base, yet Obama is placating them with words and gestures. Calling the GOP racist over voter ID laws costs nothing, and benefits nobody, yet it is red meat to the base. In exchange for over 95% voter compliance blacks should ask for something more concrete, but Obama knows their vote is secure anyway.

Of course Obama’s class warfare is on display to rally the social justice crowd. These unconscious Marxists love it when Obama pretends that taxing ‘the rich’ is the solution to $1.5 trillion deficits. Hollywood and media types are the Dem PR base, and Obama’s demagoguery is sweet nectar for the jealous / guilt ridden crowd.

The one group Obama no longer speaks to is independents. Most independents want economic opportunity and an answer to how the US government will pay its bills. Moderate voters want small steps, not radicalism. As Reason’s Nick Gillespie and Matt Welch argue, voters have distanced themselves from party affiliation. GOP registration has always lagged the Dems, but the gap has narrowed due to more independents dumping the Dem label than the GOP. In 2008, Obama won the independent vote by 8 points, but that margin may reverse in 2012.

Obama has all but abandoned the independent vote. His anti-business, anti-rich rhetoric may be shoring up his base, but at the expense of alienating independents. A Presidential candidate cannot win solely with his base; independents are too many to ignore. Perhaps Obama will eventually tack center, but most likely Obama is a hardened ideologue who will pursue European socialism because he truly believes it is what Americans want. Unless Obama softens, the key to his reelection is best gauged not by overall approval, but by where he stands with independents, and that is looking doubtful.