It's A Kleptocracy

The midterm elections are a scant 3 months away. Already we see various media and interested parties pumping up the political rhetoric. It's very hard to filter out the noise, but I'm going to give it a try.

Let's use a recent example from the New York Times. Ronald Reagan's budget director David Stockman savaged the Republican party in Four Deformations of the Apocalypse—

IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase...

It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market's fault. It's the decaying fruit of bad economic policy.

Under these circumstances, it’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.

For the last 10 years, and before that in the 1990s while Bill Clinton was receiving blow jobs in the Oval Office, the Republicans, with the acquiescence of Democrats, oversaw the largest transfer of wealth in American history. Money flowed from the government & everybody else to the wealthy. That transfer, particularly on Wall Street, continues today.

Was this "bad economic policy?" Or something else? More to the point, do we live in a Democracy or not? If we live in a Democracy, Stockman's thesis, which is that the GOP ran America into the ground, must rest upon the deeper fact that the American voters ran themselves into the ground by electing these clowns over & over again. If we don't live in a Democracy, as I'm sure Stockman would argue against, everything begins to make sense. Why would ordinary Americans endorse this blatant transfer of wealth to the richest 1% among us?

The dictionary tells us what a kleptocracy is—

government by those who seek chiefly status and personal gain at the expense of the governed; also : a particular government of this kind

Allow me to explain how it works. The benefits & prestige of being a member of Congress are substantial. But these come with a high price tag. It takes hundreds of thousands or even a millon dollars to run a campaign for a seat in the House of Representatives, and much more to campaign for the Senate. The uninformed voters are easily duped, but only at the considerable cost of hiring advertising people to "craft" a message—often a negative attack on the opponent based on half-truths or outright lies—and buy the spots on TV where the voters can receive it. Therefore, considerable money must be raised. Every politician in Congress is completely consumed with the need to raise money, not just in the months leading up to the election, but from the very moment they take office. 

Raising money is often a euphemism for taking bribes. The most important event for the politician is the fundraiser in which he (or she) meets with special interests who are keen on the candidate voting one way or another on key legislation that may come up, or inserting special provisions into unrelated bills. For the special interest, donating to a campaign is often a euphemism for gaining influence.

With a nod & a wink, or even an overt promise behind closed doors, the candidate accepts the cash and fills up his campaign coffers. Bribes are rarely direct transfers of money between special interests and the candidates. In another variation, there is the "revolving door" bribe in which cash is accepted in exchange for a promise of a position with the special interest after the politician has retired from political life.

And it is more complicated yet. Much of the "fund raising" takes place at the party level, not the candidate level. Messages for voters are often "crafted" at the national (party) level for use in individual campaigns. Or candidates are treated to special investigative "field trips" (i.e. taken to lavish parties on private planes). Etc. There is no end to deviousness in human American politics.

There's nothing the least bit controversial about how the process I've sketched out here works. Everybody knows this is how it works. The only caveat is that not every Congressman or Senator is corrupt. However, it is not required that every person elected to public office be corrupt for special interests to get things done, so to speak. (And the size of the bribes required are often pathetically small compared to the financial advantages of the services rendered.) If you want to know who is bribing who, go over to OpenSecrets.org and start browsing the various Congressman and Senators. Most everything you might want to know is listed there.

Various observers of the status quo, recognizing the utter corruption of this system, have proposed term limits or campaign finance reform. However, our elected representatives, including the corrupt among them, must pass the laws to restrict their own ability to collect bribes to run political campaigns. There is no chance whatsoever that such reforms will be passed.

I would be remiss if I did not also point out that to run a Kleptocracy in a putative Democracy, there must be an apathetic, uninformed, malleable electorate. That this is indeed the case can be easily demonstrated in the United States.

Winning is everything in America's decadent two-party system. Wise governance is always a secondary concern, if this concern exists at all. The media know this, and thus report ad nauseam on the "horse races" in the various States and districts. This noise will get louder as November approaches.

Let's get back to the original questions raised by Stockman's article. Was the GOP selling us down the river "bad economic policy?" Or something else? Given our straightforward description of how politics works in the Declining Empire, the answer should be obvious. Commenting on Stockman's article, Barry Ritholtz said—

I can sum it up thusly: Whereas the Democrats have no economic policy, the Republicans have a very bad one.

No, Barry. The Republicans also have no economic policy. Neither political party has an economic policy in a Kleptocracy. Opportunism, not policy, dictates what gets done. The sooner everyone acknowledges the way it works, the better off we'll all be. As always, I assume that dealing with Reality is better than not.

Comments

[Jb]

Wow, I'm not sure if I should feel stupid for believing the "yes we can" message or glad that I finally 'get it.' Whomever crafted Obama's campaign was worth every penny. Pray tell, what's the point in voting in November? Great post; thanks.