Free Markets, Free People

Gallup


Manufacturing a problem for government to solve

It is something government is quite good at doing, even though the solution usually ends up being worse than the problem.

And then there are “problems” that aren’t really problems, but government sees an opportunity to step in and “solve” it via, well, more government and less freedom, of course.

For instance:

Two out of three Americans are dissatisfied with the way income and wealth are currently distributed in the U.S. This includes three-fourths of Democrats and 54% of Republicans.

On it’s face, you might not think much about this, since very few people are satisfied with their condition, regardless of how good it really is.  Everyone thinks they should be doing better.  And, for the most part, many like to blame others for their inability to realize whatever goals and dreams they’ve set out for themselves.  It’s certainly not their fault they aren’t the CEO of a Fortune 100 company … it has to be the “elite” or the “rich” or the “old boy network” that’s kept them from their dream.  And they certainly think they should be making more than they do.  They’re worth it, just ask them.

They’re also fertile ground for the biggest con artist in the world to use their dissatisfaction to promise them their dream at the expense of others.  Instead of saying, “Don’t like your situation?  Work harder and smarter then”, this bunch of grifters promise to use their power to help the dissatisfied get “their due”.  And so:

President Barack Obama spoke about income disparities in a Dec. 4, 2013, speech, saying he wanted to prioritize lowering income disparity and increasing opportunities, particularly for the poor, during the rest of his second term. He most likely will return to that topic in his State of the Union speech at the end of the month. Gallup’s Jan. 5-8 Mood of the Nation survey included a question asking Americans how satisfied they are with income and wealth distribution in the U.S. Few, 7%, report that they are “very satisfied” with the distribution, while 39% of Americans say they are “very dissatisfied.”

Who says a failing economy can’t be used to increase political and governmental power?  Just hide and watch.  Of course, it is no coincidence that the “dissatisfaction” with the “distribution” of “income and wealth” took a nose dive with the economy, is it?

But you know the old Rahm Emanuel saying – “never let a crisis go to waste”, even if it is a manufactured crisis.  If it is an opportunity to expand government (especially if that expansion accrues more power to government and less to the people) then it’s all good.

They’ll have to move fast though:

Obama will almost certainly touch on inequality in his State of the Union address on Jan. 28. This will certainly resonate in a general sense with the majority of Americans who are dissatisfied with income and wealth distribution in the U.S. today. Members of the president’s party agree most strongly with the president that this is an issue, but majorities of Republicans and independents are at least somewhat dissatisfied as well.

Although Americans are more likely to be satisfied with the opportunity for people to get ahead through hard work, their satisfaction is well below where it was before the economic downturn. Accordingly, improvement in the U.S. economy could bring Americans’ views back to pre-recession levels.

Heaven forbid the economy get better before more useless programs can be “funded” and more plans executed to relieve the “rich” and “wealthy” of their money for the usual vote buying schemes.

But with this crew in charge, an economic turnaround isn’t very likely anytime soon … so I’m sure they feel pretty darn safe at the moment and believe that they have plenty of time.

~McQ


Obama myth of a strong and decisive leader finally meets reality

I’m not sure why a majority of America once did consider Obama a strong and decisive leader, but then there are a lot of things I can’t explain.  But Gallup’s latest poll makes it clear than President Obama is no long considered a strong and decisive leader, at least for the moment:

After six messy weeks — defined chiefly by the partial government shutdown and troubled rollout of the federal government’s healthcare exchange website — President Barack Obama’s reputation with the American public has faltered in some ways, but not in others. Most notably, for the first time in his presidency, fewer than half of Americans, 47%, say Obama is a “strong and decisive leader,” down six percentage points since September.

The current spin coming from the White House and Democrats says this is all a cumulative bump in the road that had to be suffered.  The disastrous ObamaCare rollout, the government shutdown, the perceived lie about keeping one’s healthcare insurance if they wanted it have all, as Obama’s favorite preacher would say  have “come home to roost”.

The question, however, isn’t when will this pass, but whether it will pass at all?  Is this just a bump in the road for the Obama team or is it the “new normal” for him?

There’s no question the trend in his approval ratings the past few months have been anything but encouraging.  One thing politicians have learned throughout the ages that they’re unlikely to keep their job if they lose the trust of their constituency.  There’s obviously very little reason for Obama to be concerned about losing his job, however, loss of trust now, barely into his second term, could mean his second term agenda is all but dead on arrival.  His desire to push immigration reform and climate change legislation wouldn’t even get our of the starting gate.  That’s because other politicians, the ones he needs to get the job done for him, will have no fear of defying his wishes and facing the wrath of the people.

So how has Mr. Obama’s trustworthiness done?  Not well:

Similarly, the share of Americans who view Obama as “honest and trustworthy” has dipped five points. Exactly half of Americans still consider Obama honest and trustworthy, but this is down from 55% in September and 60% in mid-2012 as Obama was heading toward re-election.

He’s at 50% and sinking.  And you’ve got other Democrats taking the lead in trying to fix the ObamaCare debacle while he seems to be doing what he usually does – dither.

The hit, then, to both his trustworthiness and decisiveness are a bit of a double whammy to his ambitious agenda.  And it may not be recoverable as Gallup points out:

Of more concern for the White House, Obama’s once-positive image as a strong and decisive leader has suffered, in addition to his longtime reputation for being honest and trustworthy. Of these, the decline in Obama’s honesty rating may be the most noteworthy because Gallup has previously found that this dimension is one of the most important drivers of his overall job approval. Thus, the recent controversy over whether the president honestly described Americans’ ability to retain their own healthcare plans under the Affordable Care Act could have the most significant implications for his presidency.

As Insty would say, indeed.  Taking hits in decisiveness and trustworthiness are not hits you shrug off.  They represent core qualities or a lack thereof and once lost, they’re very hard to regain. Mr. Obama is seen more and more to be  lacking those qualities.  That doesn’t bode will for him in the next 3 years.

~McQ


When and how will America change this back to the way it is supposed to be?

A glimmer of realization?

Six in 10 Americans (60%) believe the federal government has too much power, one percentage point above the previous high recorded in September 2010. At least half of Americans since 2005 have said the government has too much power. Thirty-two percent now say the government has the right amount of power. Few say it has too little power.

Is this a partisan view?  Yes and no.

As you’d expect, Republicans and Democrats pretty much switch positions depending on who is in the White House.  But the telling line is the Independent line.  It is higher now than it was in the Bush years.

Of course, the pregnant question is, “so what are you going to do about it?”

The answer, if the recent past is any indication, is “not much”.  Probably change the Senate over to the GOP, and possibly, in the next presidential election, change parties again.

And then what?  Again, look at the trend on the graph above.  We’ve changed parties before and yet we still see the power of government continuing to grow.  Will another party change really make any difference?

One other thing to note in passing, take a look at the Democrat line in the last year.   Democrats who think government has too much power are up 13 points.  If I had to guess that is a direct result of the IRS and NSA scandals, ObamaCare and the EPA and other regulatory agencies over-reach.  Anyone who thinks those scandals, new regulations and abuse of power haven’t been significant is living in a dream world or, alternately Maine, which is about the same thing.

~McQ


Americans downbeat about America’s future

Ok, they’re downbeat according to Gallup:

So what?  I mean, this is what I don’t get.  The American public just re-elected possibly the worst and most incompetent president in my lifetime (what the hell do you have to do to get fired?), they refuse to make their leaders face up to the realities of the fiscal situation, they give away freedoms like some universities give away condoms and suddenly they’re “downbeat” about America’s future?

WTH?

They should be downbeat – they as much as anyone have generated the culture that has produced these politicians that they continue to reward with reelection term after term.  If you don’t make those who represent you do what they should be doing, if you continue to reward their kicking the can down the road with re-election, why in the hell should they do anything?  Especially when those who try “die”, politically speaking.

And, of course, you have the compliant press who has no compunction anymore about pursuing an agenda that supports the premise that there is a free lunch and the rich should pay for it.

I’m fed up.

Can you tell?

~McQ


Gallup does some myth busting

What is spin and what is fact out there right now? Well, if I had to guess, we’re in the 80 to 90% factor when talking about spin. Both campaigns are heavily engaged in trying to convince the public that the election is as they say it is.

One of the more persistent bits of spin has been “early voting has heavily favored Obama”.

I’m not sure how those who were tossing that little nugget out there were so sure, but that’s been the story. And obviously, it’s intent was to calm the waters, make it appear that Obama was in control and that his base was enthusiastic and out supporting him at the voting booth.

Except it seems it may have been just that – spin.

Gallup weighs in today with this:

Hmmm.  That doesn’t at all track with the Obama spin does it?  In fact, it’s not even close.   The report says 15% of registered voters have voted.  And at this point, at least according to Gallup, Romney leads 52 to 46.  If true, that points to two problems for the Obama campaign (beside the fact that their claim seems to be hogwash) – 1) enthusiasm and 2) GOTV effort.  Not so hot in either category, huh?

Yes, I know, there are all kinds of things that can be said about this, with “whys” and “wherefores”, caveats and whatever.

However, given this, one thing should be clear – when the Obama campaign again claims they’re leading in early voting, they’ll have to come up with something to counter this, won’t they?

And, speaking of spin, one could argue that perhaps … perhaps … the early voting indicates the possible outcome and it’s percentage.

Heh …

~McQ


Americans down on more regulation of US businesses

Gallup has a poll out saying fewer and fewer Americans want more regulation of US businesses.  That shouldn’t come as a surprise, really, given the current economic situation (I say that because it’s anyone’s guess how the population would feel if we were going great guns economically):

Americans say there is too much (47%) rather than too little (26%) government regulation of business and industry, with 24% saying the amount of regulation is about right. Americans have been most likely to say there is too much regulation of business over the last several years, but prior to 2006, Americans’ views on the issue of government regulation of business were more mixed.

Here’s what I found fascinating about this particular poll:

The collapse of Lehman Bros., the failure of the secondary mortgage market, and other business problems in 2008 and 2009 might have been expected to increase Americans’ desire for more government control of business and industry. But that was not the case. Americans’ views that there is too much government regulation in fact began to rise in 2009, perhaps in response to the new Obama administration and new business regulation policies such as Dodd-Frank, reaching an all-time high of 50% in 2011 before settling down slightly this year to 47%.

Now it is well disguised in there, but the bottom line is that Gallup is saying that the American public didn’t buy into the notion that the financial collapse was all the fault of “Big Money” or “Big Business”, despite the administration and politician’s best efforts to spin it that way.  There’s obviously some fault to be found on the private side, but it appears the public also puts a lot of it on government and government policy.  That’s encouraging.

Of course the unsurprising aspect of this poll was the breakdown of who didn’t think there was too much regulation of US businesses and, in fact, thought there ought to be more:

Another, in a long line of reasons I find the Democrats to be much more dangerous to our future freedom (at least at the moment) than the GOP.

~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


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


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