Dear Friends,
It seems to me that our economy is far too important to play games with. Economics is a powerful tool for the politician, to store up power and then to hold that power, making it a bauble too enchanting not to sport with. Not only our wealth is put at risk, when politicians toy with our economy, the future prosperity of our children is also threatened.
Most of the countries in the World today, who call themselves democracies, are actually representative republics. Those who are elected are put in place to represent the interests of the electorate. Unfortunately the politician who gains office, represents his or her own narrow interests, instead of the interests of the people who elected them. In economics this is called the “Principal Agent Dilemma.” The Principal Agent Dilemma is the result of human nature. Politicians, who are human beings and are subject to all the greed, hubris and fear, that all people are subject to, seek first of all, to amass power and then to hold onto that power.
When a politician sees an opportunity to gain power he or she takes it. That is why almost all politicians believe in gun control. It lowers the level of sovereignty of the individual and puts him or her more under the power of the State. No one believes gun control will solve the problems of violence in our society, because criminals will not give up their guns… only lawful citizens will. Lowering the power of the individual doesn’t solve what incentives cause. Politicians love distributive justice by political favor. Especially since it is the politicians who have the most political favor. Although they know that this form of distributive justice is the lease effective at growing an economy, it is their favorite form, because it amasses power for the politicians and lowers the power of the individual.
Amassing power is only one aspect of where the congenital nature of Man factors into politics. Power accumulated is useless if someone else wields it. The astute politician, not only seeks to raise all decision making to the government where they are the arbiters of who gets what, they must then hold power to have that say. Brinksmanship is the currency of perpetual power in the hands of the Elite. That this brinksmanship risks the people’s prosperity does not even enter the thought process of the politician… unless it threatens his or her power.
Distributive justice by political favor is a tool the Elite can use to close off those people who threaten the politician’s power. The example of Chick Fill a is instructive. The founder and owner made a statement of his deep and profound faith in Jesus Christ and his happiness in his marriage to only one woman… is obnoxious to certain politicians. As a result they are using the power of the State to keep Chick Fill a from opening new stores in Chicago… and I suspect, the friction to the expansion of Chick Fill a will be nation wide. There will be none opened in Vermont for example without millions of dollars spent on lawyers and a Supreme Court decision.
The so called fiscal cliff is another example of politicians playing games with our livelihood. They are not effected because they will continue getting rich, without having to meet anyone’s needs… but their own. The people who must meet the needs of their customers to make a living, Ala, “Adam Smith’s invisible hand,” will have their outlooks diminished profoundly. The democrats want to extend the “Bush tax cuts” only for people making less than an arbitrary number the politicians have conjured up to generate class warfare… and only be extended for one year for the rest of us. This is brinksmanship of the highest order. The extension will do nothing to address the uncertainty, it will punish small business by raising their taxes, and it is only a means to change appearances, not rectify problems.
The other aspect of the Fiscal cliff are the across the board government spending cuts that are included in the debt compromise. Lowering government spending, no matter the form, is terrifying to the Keynesian. Keynesian economics being a self serving theory for those that seek distributive justice by political favor. The demand side politician selfishly claims government is the engine of the economy, and it follows that, they will sound alarms at any and all cuts in government spending… (their power). Supply siders, or followers of the Austrian school started by Ludwig Von Mises, have a different view of the economy. We believe that private citizens are the source of economic growth, and government is, more often than not, in the way.
We are poorly served when our elected officials act in this way. As they continue in their quest to be the gate keepers… points of GDP growth are shaved off forever. The outlook for us and our children is lowered to pay for the politicians power. Even one point of growth carved from GDP every year, multiplies into a huge diminishment of our standard of living, getting redoubled over and over every year. Is this what we want from our leaders or should we demand something better? Maybe we are too asleep to even notice…
Sincerely,
John Pepin
