December 22, 2008
Blago's AuctionBy C. Edmund Wright
There isn't too much money in politics after all. The problem is too damned much politics in money. Gaining political power with money is perhaps tawdry. But commonplace. Gaining money with power is, well, corruption. And it has devastating consequences.
There is much to learn from the Governor Blago Senate seat sale case. While the focus for many is on the Governor's ties to Rham Emanuel and by extension Barack Obama, one of the more critical lessons is how fundamentally flawed John McCain's pet project of Campaign Finance Reform really is and how that whole discussion diverted attention from much bigger problems.
Recently, as we know, one politician from the Chicago machine has shattered every fund raising record known to man while getting elected President and a second Chi-town machine politician has been hauled away in handcuffs for attempting to auction off machine politician number one's senate seat. Now wait, wasn't McCain's CFR was going to handle the problem of money and politics?
Of course not. From the start, CFR was bad medicine created to treat a flawed diagnosis. Power and money have never been separated in world history and never will be. McCain was arrogant to think he could change that.
Coming at the wrong problem from the wrong angle, CFR did nothing to stem the tide of government power -- read politics -- of controlling every facet of our money and our lives. This control is how a lot of anti-wealth liberals get rich, including politicians winning elections championing causes of the poor. More to the point, intrusive government makes a lot of very devastating policies beneficial to a small group of elitists.
You might say never have so few gotten so rich while being so incompetent and helping so many stay so poor and so ignorant and screwing up so much for so many for so long.
Intrusive governments' fruits are the reason that the power to appoint Barack Obama's successor is something along the lines of "a bleeping goldmine." To the liberal, this is business. The way to make money is to flex political muscle for all it's worth. Who cares (or even knows) where the money comes from. It only matters that the money is there to be taxed, kicked back, socially engineered, regulated and redistributed.
Take Michelle Obama's 300 thousand dollar PR (community organizing) job at a hospital that had received a ton of government hand outs due in part to efforts by Barack and his connections. Classic "pay to play" crony capitalism. While she was in that job, she managed to "create" 21 new organizing jobs at that same hospital. (and we thought health care money was supposed to be used to treat sick people - what dupes we are). That's 22 crony health care jobs and not one person was healthier as a result and not one job created by the market forces of supply and demand. The Obamas, however, were both richer and more powerful as were a handful of their friends. Not exacly how the Huxtables practiced medicine.
Governor Blago surely was aware of this arrangement and he obviously expected the power to appoint Barack's replacement to pay off big. While he was simply practicing pay for play, he was simply not as elegant in his plan as say, Chris Dodd. Dodd's pay for play example does show, however, how a senate seat can be a gold mine, not to mention how devastating the resulting policy tentacles can be.
Dodd is living in a house made possible because he qualified for the "VIP Loan Program" at Countrywide Mortgage. In their non-VIP program, Countrywide (whose CEO is Anthony Mozilo) was lending hundreds of thousands to anyone who had two cans to rub together and had resided under the same bridge for more than a week. They could justify this because government was putting pressure on lenders to lend to "the underserved communities." You and I would call these deadbeats, but government capitalists often have their own vocabulary.
For this, Countrywide pocketed the billions in origination fees and Mozilo got very rich. Naturally, Countrywide sold many shaky mortgages to Fannie Mae or Freddie Mac. Countrywide had their cash and Fannie and Freddie had the budding problems on their books.
Often these loans were bundled into securitized debt instruments and packaged into investments called derivatives that were bought and sold on Wall Street by big government liberals like John Edwards and Jon Corzine and their hedge funds. (This was when Edwards wasn't practicing good liberal capitalism by suing doctors or swimming pool companies).
Now this not-so-free enterprise was all fine and dandy, until those real capitalist laws of supply and demand and unintended consequences kicked in and burst the housing bubble. Suddenly, houses were worth much less. So were the attached mortgages. So were the derivative investments tied to mortgages. So was your 401K. So was the entire economy. Oops.
But the dominos continued to fall even further. These bundled securities were now very insecure and called "toxic assets." Enter another phony capitalist, Hank Paulson. He was going to handle these toxic assets with his 700 billion dollar Treasury scheme. (You see how these things are all connected?)
But back to Dodd. He was a Mozilo VIP because he was part of the legislative firewall (along with Barney Frank and others) who kept Fannie and Freddie operating unchecked. Now with Fannie and Freddie still rocking along on inflated housing prices, other players like Franklin Raines and Jamie Gorelick also got wealthy. They were executives paying themselves multiple millions of dollars while running these two semi-public corporations into the ground. Like a lot of government capitalists, Gorelick and Raines went to Harvard.
There are other pertinent dots that are part of the connection above, but the cause and effect analysis is essentially correct. And all of this economic disaster clearly tells us a few things. First, it shows exactly why the Senate seat from Illinois is a bleeping goldmine. As Senator, Dodd was in the middle of a tangled web where an awful lot of incompetent people got very wealthy as he promoted bad policy to a stunning quid pro quo existence. These policies, by the way, merely redefined the housing market, the mortgage market, Wall Street, and with it, the retirement plans of milions of Americans. In the meantime, Dodd still enjoys his sweetheart mortgage.
It also shows us that the problem of money in politics is dwarfed by the much bigger problem of politics in money. Let's face it, money and power will always be together. Every minute of world history has demonstrated this.
The only way to prevent an unhealthy concentration of money and politics is to make sure that government never has that much power to begin with. You cannot have an intrusive government and ever separate it from money. The bigger government is, the more money it will attract. Like gravity, this is a law that cannot be broken.
Which begs a couple of questions. First, why was Blago considering a measly million for the Illinois senate seat? And Senator McCain, how is that separation of money and politics going?