12/17/2010 PERMALINK
After so much previous success, why is the western political model now failing? SOURCE : I've read many blog posts lately attempting to comprehend why developed, democratic countries have mired themselves in so much debt, while producing such poor results for citizens in recent years. Across the board from economic to health to foreign policy, all we seem to see is failures.

I think these failures all stem from a single bad meme developed over the years by politicos for dealing with the growing complexity of the problems they face today.

This failed meme that is the root cause of our civilization's recent plague of problems is the perverse and destructive economics created by the structure of a standing political committee.

If you are one of the few that makes the weapons for the Pentagon or builds the massive 'projects' around cities for housing the disadvantaged. It doesn't matter if those weapons are no longer needed for the national security or if those 'projects' have been shown to create a culture of dependency that destroys most of the young people that grow up within them. You still want to keep your gravy train flowing.

Your industry is only a few compared to the many, but you have an enormous economic incentive to bribe or otherwise subvert the committee into continuing the support for your particular gravy train. So you pull out all the stops to make this happen.

Contrast this with the average citizen's economic incentive to stop the waste that your program represents. The taxes on a billion dollars in excess revenues paid to your particular boondoggle, costs me, the typical taxpayer, only a vanishingly small fraction of my income, less than 1/10th of 1 percent.

So much is at stake for you that you will offer cushy jobs to committee staffers, wives and kids of politicos, or even to politicos themselves when they retire from office. You will hand out cup cakes to a committee's staff just before consideration begins of something that might help the public by addressing your near-monopoly power in a particular business, as AT&T did just this week.

For me though, the average citizen, the economic loss from each individual boondoggle, just isn't worth my getting politically involved to overcome. Each individual loss never rises to the level where it is in my economic interest to fight it.

This is why sub-committees and regulator committees inevitably morph into industry, and existing project protection clubs.

The economic incentives created by the flawed political standing committee meme insurers that it can be no other way.

Even a scrupulously honest politico or committee staff member often finds him/herself subverted into leaving public service for a wonderful job in the private sector. Because an industry wanting them gone from government service, makes them an offer too good to refuse.

Failure on an unbelievably massive scale can be sustained by this system.

After creating the mother of all real estate bubble by printing too much money (M3 just before the bust was rising 17% annually) and keeping interest rates artificially low and making terrible loans. The Fed, Treasury Dept. bureaucrats and banking industry were given trillions in additional resources to deal with the problem they had created.