Free Markets, Free People

Polling

Libertarians break for Romney

CATO has the news:

The Reason-Rupe September 2012 poll includes our favorite ideological questions to differentiate libertarians from liberals and conservatives. Using three questions, we can define libertarians as respondents who believe “the less government the better,” who prefer the “free market” to handle problems, and who want government to “favor no particular set of values.” These fiscally conservative, socially liberal voters represent 20% of the public in the Reason-Rupe poll, in line with previous estimates.

Among these likely libertarian voters, the presidential horserace currently stands:

Romney 77%
Obama 20%
Other 3%

Romney’s share of the libertarian vote represents a high water mark for Republican presidential candidates in recent elections.

I find it difficult to believe 20% of the “libertarian” vote would go to Obama, but whatever.

Bush pulled 70% of the libertarian vote in 2000. But that percentage dropped to 59 in 2004.

So what if Gary Johnson is included?

Romney 70%
Obama 13%
Johnson 14%
Other 3%

A pretty even split between libertarians voting for Romney and Obama (7% each).

This is all interesting for a number of reasons.  One is that many libertarians like to argue that “true” libertarians would never vote for any Republican or Democrat.  Yet when you look at the numbers, and unless you’re willing to exclude about 97% of self-identified libertarians, that’s just not at all the case.  In fact, in the last two presidential elections (2004 and 2008), third party candidates have pulled a whopping 3% of the libertarian vote.  Yeah big “L” libertarian party types, it’s not selling.    A lot of that has to do with “principles” which simply aren’t realistic (you know, like isolationism and open borders?  Both have been overcome by events in case you haven’t noticed.).  Once the Libertarian party begins dealing with the problems and realities of the here and now, and not how they’d like it to be, you may see those numbers change.

Until then, the lesser of two evils prevails.  The reason for the record break this year?  Probably because most libertarians understand that Obama and the Democrats pose the biggest internal danger to freedom and liberty this country has faced in quite some time.   Is Romney/Ryan the panacea?  Are you kidding?  But first you have to remove the danger.  Then you can work on repairing the damage.

And it won’t be quickly done as all of us know.  I look for many “ones step forward, two steps back” days even after Obama is sent into retirement.

But one thing is for sure – this nation cannot afford another 4 years of Barack Obama.

~McQ

Twitter: McQandO

Facebook: QandO

Media distrust at an all time high

Gee, I wonder if they’ve figured out they’re being a little too obvious about it?

Yeah, probably not. They have “3 layers of editors” after all.

Gallup has the goods:

Now there are those out there that say, much like voter fraud, there’s really no bias in the media, they’re professionals.

Well, we may call them that, but that doesn’t make them professionals.

More importantly, much like voter fraud and a myriad other things, it ignores human nature.

What there’s been in the past, for the most part, is plausible deniability.  It just wasn’t obvious or if it was, it was arguable.  Now?

Well now it is really hardly arguable anymore.  Treatment of recent events brings that into startling focus.  Yesterday on QandO Facebook, we linked to an article that listed 6 plausible headlines if Obama was a Republican president.

And yes, they’re quite plausible.  In fact, I think that it is almost inarguable.

As interesting as the first graph above is, the second it telling in another way:

How is it telling?  Well, who is the most satisfied demographic?  18 points higher than the average in the above of those who are a great deal or fairly satisfied with the media.  And, as expected, at least if you follow the news media at all, the GOP is horribly dissatisfied.  In fact 74% have little or no trust in the media.

But that’s not the important story in that graph.  It’s the slide of the independent voter from a postion of trust to one of distrust.  A 21% drop from 2001 to now.

It is that demographic’s distrust that best tells the story.  They really have no dog in the hunt in terms of strong ideology.  Their claim is they vote the candidate that best represents them at the time.  So if anyone’s view is less tainted by ideology or concern, it would be independents.  And they’ve shown a marked downward trend in trust for the media.

The point?  Well the point may be that the media’s best biased efforts may not pay off quite as well as they hope or they’ve enjoyed in the past.

One of the reasons is there are a multitude of other sources out there that are readily available and help point out the half-truths and spin that is seen quite often in media reports these days.  It also says, at least to me, that such sources are being both sought out and believed (if the independent number has any validity at all).

Gallup concludes:

On a broad level, Americans’ high level of distrust in the media poses a challenge to democracy and to creating a fully engaged citizenry. Media sources must clearly do more to earn the trust of Americans, the majority of whom see the media as biased one way or the other. At the same time, there is an opportunity for others outside the “mass media” to serve as information sources that Americans do trust.

That’s precisely what is happening.  The media monopoly has gone the way of feudalism.  The digital printing press has seen to that.  The problem is, the media, for all their self-lauding and claims of being “professionals” haven’t yet caught on to the fact that they’re fast becoming the equivalent of the buggy whip in an automotive society.

And it’s their fault.

~McQ

Twitter: McQandO

Facebook: QandO

Polling 101

As you weigh the results of various polls in the coming couple of months, this might be a handy tool to use when considering their credibility (via Vox Populi). The following list of polls, from a Fordham University study, is in order based on their accuracy last election (2008). Rasmussen and Pew were the only one’s that were spot on. The rest, to varying degree, missed it, either by an inch or a mile (at least in terms of polling):

1T. Rasmussen (11/1-3)**

1T. Pew (10/29-11/1)**

3. YouGov/Polimetrix (10/18-11/1)

4. Harris Interactive (10/20-27)

5. GWU (Lake/Tarrance) (11/2-3)*

6T. Diageo/Hotline (10/31-11/2)*

6T. ARG (10/25-27)*

8T. CNN (10/30-11/1)

8T. Ipsos/McClatchy (10/30-11/1)

10. DailyKos.com (D)/Research 2000 (11/1-3)

11. AP/Yahoo/KN (10/17-27)

12. Democracy Corps (D) (10/30-11/2)

13. FOX (11/1-2)

14. Economist/YouGov (10/25-27)

15. IBD/TIPP (11/1-3)

16. NBC/WSJ (11/1-2)

17. ABC/Post (10/30-11/2)

18. Marist College (11/3)

19. CBS (10/31-11/2)

20. Gallup (10/31-11/2)

21. Reuters/ C-SPAN/ Zogby (10/31-11/3)

22. CBS/Times (10/25-29)

23. Newsweek (10/22-23)

Frankly, if they’re not in the top 5, I’d take them with a grain of salt. Why? Because of things like this:

The latest CNN/ORC poll released today shows a wider lead for President Obama than the previous CNN/ORC poll but it is doubly skewed. It massively under-samples independents while it also over-samples Democratic voters. The CNN/Opinion Research Corp. poll official reports Obama at 52 to percent and Mitt Romney at 46 percent. Unskewed, the data reveals a 53 percent to 45 percent lead for Romney.

This new CNN/ORC survey, unlike many other analyzed, not only over-samples Democratic voters, but also massively under-samples independent voters, to produce a result more favorable to Barack Obama. This survey’s sample includes 397 registered Republicans and 441 registered Democrats. But the survey included a total of 822 registered voters, leaving only 37 independent voters at most. The survey clearly under-sampled independent and Republican voters.

Note that CNN’s history has it tied for 8th place for accuracy last time around. So, what should those numbers likely be? Well let’s hear from the polling group that came in tied for first (and this is probably the reason why):

Rasmussen Reports recent reporting of partisan trends among voters, based on tens of thousands of voters surveyed, showed the voting electorate made up of 35.4 percent Republicans, 34.0 percent Democrats and 30.5 percent “Unaffiliated” or independent voters. Clearly 6.5 percent of a sample as independents is a large under-sampling of those voters compared to 30.5 percent.

However, what CNN used was this:

The sample for the CNN/ORC poll includes 50.4 percent Democrats and 45.4 percent Republicans and appears to have only 4.2 percent independents. This means independents are under-sampled 25 percent while Democrats are over-sampled 12.1 percent. Both of those are larger variations in sampling than seen in most polls that are likewise skewed by such sampling variations.

And as it stands now, independents lean toward Romney. So unskewed, or perhaps “properly skewed”, the results would be quite different. In fact they would give Romney a 53 to 45 percent lead over Obama.

That sort of sloppiness is an indicator of why CNN was in 8th place before in a race in which there were actually a large population of self-identified Democrat voters, a population that likely doesn’t exist in this election, or at least not to the extent it did in 2008. And if they’re in 8th, you can imagine how sloppy those below them on the list are.

Look at Gallup for heaven sake. 20th? Of course, the right should also note Fox and IBD/TIPP in 13th and 15th positions when they get excited about results there.

This is not just a phenomenon in national polling. It is also happening in swing state polls as well. For example PPP’s recent Ohio poll.

Finally, remember this when considering the RCP poll average. Many of the polls making up the RCP average are found way down on this list.

Just a word to the wise as you watch everything unfold. There are polls and then there are, well, “polls”.

Make sure you know which one’s to watch.

~McQ

Twitter: McQandO

Facebook: QandO

Indicators: And then there’s this poll – Are you better off now than 4 years ago?

The Hill says:

A majority of voters believe the country is worse off today than it was four years ago and that President Obama does not deserve reelection, according to a new poll for The Hill.

Fifty-two percent of likely voters say the nation is in “worse condition” now than in September 2008, while 54 percent say Obama does not deserve reelection based solely on his job performance.

Only 31 percent of voters believe the nation is in “better condition,” while 15 percent say it is “about the same,” the poll found. Just 40 percent of voters said Obama deserves reelection.

Key word above? “Likely” voters.

The poll sort of echoes Eastwood’s words about what you do with someone not performing, doesn’t it? And, finally, the president is faced with actually earning something … or not. Apparently it’s “or not”.

Prepare for spin city this week as Democrats meet to try to salvage this presidency and frame the GOP as the equivalent of Nazi Germany, Stalinist Russia and Pol Pot’s Cambodia all rolled into one. And don’t be surprised if Idi Amin gets a mention as well.

But they’ll be civil about it.

Sure they will.

Oh, and before I forget … one other indicator. Reports have it that the Romney campaign raised $100 million in August. That ought to help set the right tone for the DNC.

~McQ

Twitter: McQandO

Facebook: QandO

Democrats and Republicans: A pox on both their houses

We’ve talked in the past about why these “wave” elections, as they’re called, are happening with increasing frequency.

Well one of the reasons, I would assert, is people are tiring of the same old promises – promises that are rarely if ever kept – with the same old results – business as usual with vituperative partisan sniping and finger pointing, while we spend ourselves into oblivion.

No matter who is put into power, nothing substantive happens.  So voters keep switching the sides in hope that some group they put in there will “get it”.

So along come this poll, which is quite interesting.  No matter how “popular” Obama is alleged to be, it seems the party he is associated with is now at their popularity nadir.

Today’s Gallup Poll, "GOP Favorability Matches 2008 Pre-Convention Level," shows the pre-convention favorability ratings of the two Parties going back as far as 1992. For the very first time, the favorable/unfavorable ratios are now higher for the Republican Party than for the Democratic Party. For the first time ever, the Democratic favorability ratio, which has always been within the range of 1.20 to 1.56, is now below 1. It is a stunningly low .83, which is 31% lower than the prior Democratic Party low of 1.20, which was reached in 2004.

The Democrats find themselves at John Kerry territory in terms of popularity.  Gee I wonder why (*cough* ignore the voters and pass ObamaCare, unemployment at 8.2%, economy in the crapper, etc., *cough*)?

But  before Republicans celebrate because they’re better than Democrats, they should realize they’re only marginally better. 

By contrast, the Republican ratio is now .88, which compares with the 2008 ratio of .80, which was that Party’s lowest-ever ratio, reached at the end of the Bush Presidency. Prior to 2008, the ratio was 1.16 in 2004, 1.41 in 2000, 1.16 in 1996, and 1.36 in 1992.

Those figures compare with the Democratic ratios of 1.38 in 2008 (compared with the Republican .80), 1.20 in 2004 (vs. 1.16), 1.56 in 2000 (vs. 1.41), 1.50 in 1996 (vs. 1.16), and 1.42 in 1992 (vs. 1.36).

So?  So right now,  Republicans seem to be enjoying a slightly better level of “popularity” than are Democrats.  But both should note that their relative popularity is near the bottom of their historic range.

What does that say?

It says to me that voters are truly considering the lesser of two evils.  That their “popularity” is a function of there being no other choice but these two and there being little if any confidence in either doing what is necessary to turn this mess around.  But, at the moment, they are inclined to give the Republicans a shot, simply because the Democrats have been so lousy.

Another “indicator” poll.  Expect the media’s full court negative press to continue unabated.  We now know more about Mitt Romney than we’ve ever known about the President of the United States (of course that’s partly because Romney has actually run things and done things prior to running and has an actual record to examine).

Meanwhile voters seem inclined toward the Republicans, but not such that anyone in the GOP should get arrogant or cocky by any means.  This is all touch and go at the moment.

But here’s a key which is hard to ignore, speaking of Obama’s “popularity”:

The Democratic brand has thus suffered more (down 39%) under Obama than the Republican brand suffered under either of George W. Bush’s two terms (-16%, then -31%).

Democrats have reason to be worried.

~McQ

Twitter: @McQandO

Facebook: QandO

Indicators: Obama wins the non-vote, while enthusiasm for re-election remains down

As Politico says, the poll among non-voters is a good news/bad news poll if you want to look at it that way:

Forty-three percent of nonvoters are Obama supporters, the survey found, while 20 percent of the nonvoters support Romney, 18 percent back a third-party candidate and 15 percent are undecided.

How is this good news? Well here’s the claim.  See if you don’t agree the bad news is likely to be the real news here:

“The good news is that there is a treasure chest of voters he doesn’t even have to persuade — they already like him and dislike Mitt Romney. He just needs to unlock the chest and get them out to vote. The bad news is that these people won’t vote because they feel beaten down by empty promises, a bad economy and the negativity of both parties. Obama has lost time — and the key — to open that treasure chest.”

Actually, his poor performance has put the key out of reach.  But no one wants to say that, I suppose.

What this indicates to me is the masses that were motivated to vote the last time aren’t at all motivated this time to turn out for Mr. Hope and Change. 

His real problem though isn’t with non-voters, it’s with real voters, real voters that have supported him and must turn out in similar numbers as last time for him to win.  It would appear many have returned to the non-voting roles.

Netroots Nation, the activist left convention held every year by the Daily Kos may be a reflection of another problem:

“I want to be happy with him,” said Democrat Kristine Vaughan, a 45-year-old school psychologist from Canton, Ohio. “But I am finding that he has succumbed to the corporate influence as much as everyone else. I think he has so much potential to break out of that, but overall he has been a disappointment.”

The sentiment is not unique among the 2,700 people gathered on the first day of this three-day convention. More than a dozen liberals interviewed here indicated some level of frustration with the president, despite widespread praise for his recent decision to support gay marriage and ongoing push to scale back military action in the Middle East.

Of course, Ms. Vaughan –an activist – will turn out and she will vote, but the question is, will she do it enthusiastically?  The answer is likely “no”.  It’s a duty this time.  So what does that say for the non-activist voter that previously voted for Obama?  See above.

Kate Hicks points out:

Those who do still plan to vote for Obama, however, report that they’re less willing to put in the same sort of get-out-the-vote effort that they displayed last time. Indeed, part of Obama’s victory in 2008 stemmed from increasing voter mobilization, and while the die-hards will trudge to the polls in November, they’re less likely to work quite so hard to encourage others to do so, too.

And we all know that Get Out The Vote (GOTV) efforts are key to winning elections.  Last time Obama had a massive and effective GOTV effort (and the money with which to do it).  This time, not as much money and certainly not as much enthusiasm surrounding the effort.

A final indicator:

A Gallup/USA Today survey released Monday found that 74 percent of Republicans were thinking of the election “quite a lot,” compared with 61 percent of Democrats.

The enthusiasm gap remains and is real.  And it’s not good news for the incumbent President (who yesterday visited Oiho, one of the 57 states).

~McQ

Twitter: @McQandO

Facebook: QandO

Indicators: WaPo poll says majority thinks government too big

As Dale points out in the podcast, while the election polls have yet to reflect it, the atmospherics of this electiongovtintrusion don’t bode well for Obama.  For instance, you have huge crowds turning out for Romney/Ryan events and you have the Obama campaign trying out “we purposely limit crowd size” on the media to excuse the comparatively paltry turnouts they are experiencing.  And then there’s the Newsweek cover story by Niall Ferguson telling Obama it’s time he hit the road.  It is almost like Newsweek is attempting a return to legitimacy by distancing itself from Obama.

Another indicator, much like the Gallup issues poll in which Obama had a 36% approval rating on the economy, is a Washington Post poll concerning the size and intrusiveness of government.

Call it a mood poll if you wish.  But again, taken with all the other polls, it does indeed begin to outline the “atmospherics” surrounding the election.  In this poll, a good majority of those polled said that government was both too big and too intrusive … not to mention way to expensive.  CNS has the story:

The poll asked: "Would you say you favor a smaller federal government with fewer services, or larger federal government with many services?"

Among all those polled, 55 percent said they wanted a smaller federal government and 40 percent said they wanted a larger federal government.

Among just the registered voters in the poll, 58 percent said they wanted a smaller federal government and 37 percent said they wanted a larger federal government.

The poll also asked: "Do you personally agree or disagree with the following statement. Government controls too much of our daily lives."

Among all those polled, 60 percent said they agreed and 39 percent said they disagreed. Among just the registered voters in the survey, the results were almost identical, with 60 percent saying they agreed and 38 percent saying they disagreed.

CNS points out that the Washington Post analysis says:

“… [T]he results show a deep partisan divide in America. "Partisan polarization presents a potentially insurmountable barrier to governing for whomever wins the White House in November."

Funny how the percentage of those who are for a larger and more intrusive government are at about the same percentage as the Democrats in the poll (35%).  So if it is “partisan polarization”, it would seem that the Democrats are losing the battle.  It would seem that the big middle is headed to the right.

Now we all know it’s easy to say you want smaller government with fewer services when it costs you nothing but an answer on a poll.  And we also understand that most people are fine with real cuts, as long as they effect someone else’s benefits and not theirs.  But that doesn’t change the fact that the mood of the country is inclined toward smaller and less intrusive government.

And that doesn’t bode will for big government Democrats – like Obama.

~McQ

Twitter: @McQandO

Facebook: QandO

Obama handling of economy garners 36 percent approval

Another indicator poll.  Again, these polls, at this point, are much more valuable than the horse race polls at this point.

They indicate the mood of the public.  They tell you what is bothering them (or what is pleasing them).  They allow you then to consult electoral history to get an idea of what these sorts of indicators usually mean.

So, to Gallup:

Gallupecon

The one issue that Obama gets a majority approval on is really not even on the radar screen for most Americans.  Terrorism is there but unless there’s a big event involving America, it’s not a major issue for this campaign.

Next comes education.  What Obama gets there is a passing grade – barely.  But again, that’s not a top issue in this campaign.  Nor are foreign affairs.

Immigration is important in certain regions of the country and he’s doing poorly there.

But his worst job approval comes in the three top issues for 2012.  Jobs, the economy and the budget deficit.

In all three categories Obama’s is dismal.  His disapproval rating is very high.

While most of the issues above pertain to the country, the jobs and economy categories are much more personal in nature.  They have a great impact on individuals.  And it is individuals who vote.  Right now, only 37% of voters think he’s doing a good job creating jobs (and 58% think he’s doing a poor job), 36% approve (60% disapprove) of his handling of the economy and only 30% (64% disapprove) of his handling of the budget deficit.

That means he now “owns” the economy.  And note the percentages of approval he gets are just about the same percentage of those who self-identify as Democrats.

So, what must Obama do?  Well here’s Gallup’s advice:

Nearly six in 10 Americans approve of Obama’s handling of terrorism; however, that is where majority approval of the president ends in the current poll. He earns his lowest issue ratings on the economic issue areas tested in the survey, with approval on the federal budget deficit the lowest at 30%, and his approval on the economy not much higher, at 36%.

While Obama’s issue ratings are largely unchanged from where they have been over the past year, that stability may be a problem given his overall job approval rating is 45%. Historically, presidents who won a second term had near-50% job approval ratings or better prior to the election. To move closer to that range, Obama may want to focus singularly on raising his approval rating on the economy, as with previous presidents it seems to have been the issue approval most closely linked to overall job approval.

However, Team Obama wants to do anything but focus on the economy since doing so would also focus on how poorly it has performed and provide an opportunity to the GOP to point out why (policy, etc.).  He wants nothing to do with that sort of focus.  Thus the alternate campaign of distraction characterized by “small ball” where Obama et al try to divert attention from these issues to irrelevant issues that have no real bearing on these issues but capture the media’s attention and are exploitable by the Obama campaign.

Result?  Well, we’ll see.  I don’t believe he can hide from this forever.  And as the election nears, it will become more and more difficult to avoid these issues (and more obvious if he attempts it).  He’s eventually going to have to explain the 8.3% unemployment rate, the failure of the stimulus, the dramatic increase of the deficit (to no avail) and the planned trillion dollar deficits for the future. 

And when that happens, and since its obvious the public now charge him with responsibility for the economy, it’s unlikely his ratings are going to improve.

~McQ

Twitter: @McQandO

Facebook: QandO

Media bias? Majority of likely voters say yes

This can’t help the mainstream media’s already battered reputation or it’s constant claim of objective political reporting:

Likely voters, by a five-to-one margin, believe that America’s media is in President Obama’s pocket and will treat his candidacy better than challenger Mitt Romney’s as the election nears, according to a new Rasmussen Reports poll.

The startling numbers point to an even more disturbing trend for the media: Reporters just aren’t trusted to deliver the news in an unbiased fashion. The proof: Rasmussen found that when it comes to information about the presidential campaign, 48 percent of likely voters trust friends and family while just 26 percent trust reporters.

In fact, it’s even worse than those two lead paragraphs in the story:

The poll found that 59 percent of likely voters believe that the media has given Obama better treatment than Romney, a view Team Obama doesn’t agree with. Just 18 percent believe the media has treated Romney better.

Whether or not “Team Obama” agrees is irrelevant.  In politics, perception is reality.  And the reality is a large majority of likely voters (the key demographic) find the media both bias and wanting in terms of fair, objective and balanced political reporting.

So what is the impact of this?

Well, for one, tuning the media out.  Few people are likely to keep listening to or watching coverage don’t trust.  One of the reasons for the rise of the new media is it provides an important “other side” to the coverage of politics.

Despite their protestations to the contrary, the mainstream media has been unable to convince almost 60% of the likely voters they’re unbiased and trustworthy.  That has to come from somewhere when you talk those numbers.  And it is unlikely it is only a figment of that 60%’s imagination.  They see the bias as real and they don’t like it or trust what they consider the biased outlets.

If you’re wondering why CNN’s numbers are at an all time low or why newspapers are failing this is part of it.  Meanwhile the new media is thriving.  It may not be objective, but readers and viewers know that, because new media outlets make no bones about it.  What these outlets provide is “the rest of the story”.  And when the rest of the story comes out, and all the facts are on the table, not just what the mainstream media chose to use,  it makes the mainstream medias bias apparent.

Another reason the mainstream media is considered to be in Obama’s pocket is that instead of asking hard questions and follow up, and researching a story, they’ve become a transcription service.  Whatever the campaign or White House put out is dutifully published or announced with little or any questioning.  When that is shot full of holes by blogs and on-line news services and pundits, they again look to be biased (when, in many cases, they’re just not doing their job).

The question, of course, is with almost 60% of likely voters believing that the mainstream media is in Obama’s pocket, what effect will that have on the election.

In the past the media has, of course, played a large role in helping determine who the next president would be.  Will the 60% disregard and ignore the media?   Will they treat it as a propaganda arm of the campaign and seek their information elsewhere?  Because of the perception held by a majority of the likely voters, will the media play a diminished role in this election?

All interesting and entertaining questions which we’ll have to monitor during this election cycle. 

I remember years ago, after QandO got started and blogs began having some visibility and impact, media organizations sniffing down their arrogant noses at these upstarts who dared to question their dominance and reminding everyone the difference between some loser in the basement in his pajamas churning out his stuff and a professional organization, with trained journalists and 3 layers of editors.

Well as it turns out, that difference hasn’t mattered.  The pajama clad are still around (and pretty well established now) and the professional organizations with trained journalists and 3 layers of editors have seen their reputations and followings dwindle.

You’d think, by now, they’d be clued into the ‘why’, but apparently its like economics to the left – it just doesn’t compute.

~McQ

Twitter: @McQandO

Facebook: QandO

Capitalism, cronyism and corruption

Gallup has a new indicator poll out that shows the nation’s national priorities according to its citizens.  It’s interesting in many ways, but primarily because one of the highest calls for action is to address “corruption”. 

 

corruption poll

 

(As an aside, notice the bottom two “priorities).

Notice carefully how the corruption question is phrased – “Reducing corruption in the federal government”.  What sort of corruption?  Well, one type, that most fair minded people would identify, is that which we call cronyism.  As we listen to the uniformed continue to say we’ve been ravaged by the “free market” system, one can only shake their head in wonder that anyone would identify what we have as a “free market system”.  Rarely, if ever, are markets allowed to function as they should in this country (or any others for that matter). 

What we have is a system of cronyism (I’m removing “capitalist” from the description since there’s nothing “capitalist” about such a system) that is part of what is killing us economically.  David Henderson gives us a good description of the system under which we must operate.

What is the difference between free markets and cronyism? In free markets, buyers and sellers are free to agree on price; no government agency restricts who can buy or sell, and no one is told how or what to produce.[1] In contrast, under cronyism the government rigs the market for the benefit of government officials’ cronies. This takes various forms. Governments sometimes grant monopolies to one firm or limit the number of firms that can compete. For example, most U.S. municipalities allow only one cable company to operate in their area even though there is no technological reason more could not exist. The same is true for most other utilities.

Governments sometimes use quotas or tariffs to limit imports with the goal of protecting the wealth and jobs of domestic producers who compete with those imports. President George W. Bush did this in 2002, for example, when he imposed tariffs ranging from 8 to 30 percent on some types of imported steel.[2] Governments sometimes subsidize favored producers, as the Obama administration did with the politically connected solar-energy firm Solyndra. Governments may use antitrust laws to prevent companies from cutting prices so that other, less-efficient companies can prosper: For example, beginning in 1958, the U.S. government prevented Safeway from cutting prices for a quarter of a century.[3]

The entities governments help with special regulations or subsidies are not always businesses; sometimes they are unions. The federal government’s National Labor Relations Board’s (NLRB) complained against Boeing in April 2011, for example. In response to a complaint from the International Association of Machinists and Aerospace Workers (IAM), the NLRB sought to require Boeing to produce its 787 Dreamliner in Washington State rather than in Boeing’s chosen location of South Carolina. According to the NLRB, by saying that “it would remove or had removed work from the [Puget Sound and Portland] Unit because employees had struck” and by threatening that “the Unit would lose additional work in the event of future strikes,”[4] Boeing was making “coercive” statements to its employees. As a matter of fact, it was not. Boeing was simply telling the employees some likely consequences of the union’s actions.

The Boeing-IAM case is not as simple as most of the press implied. It turns out there was a prior case of cronyism. The government of South Carolina promised Boeing “$900 million in tax relief and other incentives” in exchange for moving production to South Carolina.[5] Such is the tangled world of cronyism.

As we discussed on the podcast last night, we have given, or at least allowed government to amass, power to do what it is doing.   We have, over the years, allowed them to use tax exemptions and other favors, etc. to lure businesses to our states (and we’re then thankful for the jobs created) not understanding that by doing so, we empower politicians to be the decision makers in areas that should be the function of markets.  And what does that foster?  A culture that is incentivized to seek out politicians to grant such favors.   To ask for, and receive, subsidies.  To allow politicians to leverage that power into favoring businesses that fit their political agendas.   They become the focus because we have given them the power necessary to grant those favors.

We see the same sort of game played at a national level as described by Henderson.  That has nothing to do with capitalism folks.  It has nothing at all to do with “free markets”.  In fact, it is the antithesis of both.

Probably the most blatant and disturbing example of cronyism came in the auto bailout:

Of course, a much larger instance of cronyism under the Obama administration, one that makes the Solyndra case tiny by comparison, is the bailout of General Motors (GM) and Chrysler. Bush and Obama together diverted $77 billion in TARP funds to GM and Chrysler. In organizing their bailouts and bankruptcies, Obama  violated the rights of Chrysler’s creditors and gave a sweetheart deal to the United Auto Workers union.

Law professor Todd Zywicki provides the details:

In the years leading up to the economic crisis, Chrysler had been unable to acquire routine financing and so had been forced to turn to so-called secured debt in order to fund its operations. Secured debt takes first priority in payment; it is also typically preserved during bankruptcy under what is referred to as the “absolute priority” rule— since the lender of secured debt offers a loan to a troubled borrower only because he is guaranteed first repayment when the loan is up. In the Chrysler case, however, creditors who held the company’s secured bonds were steamrolled into accepting 29 cents on the dollar for their loans. Meanwhile, the underfunded pension plans of the United Auto Workers—unsecured creditors, but possessed of better political connections—received more than 40 cents on the dollar.

Pure cronyism.  The bankruptcy rules were thrown out by government in order to pay a favored constituency – labor.  Henderson explains:

Moreover, in a typical bankruptcy case in which a secured creditor is not paid in full, he is entitled to a “deficiency claim”—the terms of which keep the bankrupt company liable for a portion of the unpaid debt. In both the Chrysler and GM bankruptcies, however, no deficiency claims were awarded to the creditors. Were bankruptcy experts to comb  through American history, they would be hard-pressed to identify any bankruptcy case with similar terms.20

Why did the Chrysler bondholders not object? Many did. But, Zywicki notes, the federal government (in this case, the U.S. treasury secretary) had enormous power over financial institutions through TARP, and these institutions owned much of  Chrysler’s secured debt.

While this has been going on for quite some time, never has it been as blatant as with this administration.  And that blatancy is what has pushed the corruption priority up the list to where it stands second to job creation in this horrific economy.

What can be done to remedy this cronyism “corruption”.  Only one thing, and unfortunately, those enjoying the power are where the remedy must come:

There is only one way to end, or at least to reduce, the amount of cronyism, and that is to reduce government power. To reduce cronyism, we must abolish regulations and cut or abolish special government subsidies. That way, there is nothing to fight about. For example, the government should not bail out companies or give special subsidies and low-interest loans to companies like Solyndra that use technologies or produce products that the government favors. It should have unilateral free trade rather than tariffs, import quotas, and other restrictions on imports.

Will it happen?  No.  Those who tout the power of markets and demand they be given priority are now considered “radicals”.  Just listen to President Obama talk about the former administration and try to convince you “we tried their way before and look where it led”.    Spinning a regime prior to his that was as wrapped up in cronyism as is his and claiming it represented free markets is standard, disingenuous, leftist boilerplate with nary a leg to be found standing in reality.  It is pure, fatuous BS.

The “corruption in the federal government” isn’t lobbyists.  They’re a  symptom of that corruption.  The problem resides under the Capital dome and within the offices of the executive branch.  They have the power that is sought by the lobbyists.  No power and there would be no petitioners.   Instead, we see the number of petitioners for favorable treatment by government (usually at the detriment to their competitors) continuing to expand.

So while the public has finally identified a major problem (thanks to the blatancy of this administration) it has a long way to go before it realizes the means by which it must be fixed.  Stripping the federal government of its power to grant favors to its cronies is almost an impossible task, given we have the fox in charge of the hen house.

I see nothing in the future that says those who must fix this are willing to divest themselves of the power to grant favors (see recent farm bill, an orgy of subsidies and pay offs (earmarks), for a perfect example).   Show me when they’ve ever divested themselves of any meaningful power they’ve accrued.

And so cronyism will continue and we will continue to circle the drain of economic collapse.    Meanwhile, Coke and Pepsi will fight about the marginal nonsense that won’t make a significant difference and make all the usual promises about being the panacea for all our ills that voters have been pining for so long.

Or it is “kick the can down the road” politics as usual.

Happy Monday.

~McQ

Twitter: @McQandO