Economics for Politicians Chapter Six: – You are Greedy – This is a Bad Thing [Reader Post]

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In Chapter Five we discussed how, because of its direct and indirect benefits to society corporate greed is not necessarily a bad thing. Now we’re going to look at a form of greed that is always bad, namely yours.

This lesson will actually be the lightest in terms of economic theory, but will probably be the most difficult for you to accept. Unfortunately for you, this lesson will show that many of your actions end up doing more harm than good.

It was either after the 2006 or 2008 elections (I can’t recall which) that House Majority Speaker Nancy Pelosi addressed her incoming Freshman class and advised them something to the effect of, “You’re number one priority is to get re-elected.” Her reason for this makes sense from a beltway perspective – in order to push grand changes your party needs to gain and hold power. Obamacare and how it was passed is a perfect example of this. Government takeover of the health care industry has been a holy grail for leftists for some time (Apparently the rest of us are too unenlightened to want to emulate systems that will bring 18 month standard waiting periods for surgery or turning family doctors into an endangered species ), and the majorities that the 2008 election provided were the perfect opportunity. After it was over leftists were angry (when are they not angry, anyway?) that it did not include the single payer option that they so dearly coveted. The Democratic leadership realized that they would face a slaughter in the midterm 2010 elections (for this among many other reasons), but recognized that if they pushed too hard too quickly there was a possibility of a veto-proof Republican majority being elected that would overturn the bill. So instead of including single payer immediately the bill was instead crafted to eventually strangle any private insurers under insane amounts of regulation to drive them out of business, leaving one insurer standing. That would be the government, and the house always wins.

That may have seemed like a lengthy tangent to an Economics lesson, but the entire picture was necessary to illustrate fundamental differences between business and government. Look at the timeline for where businesses have to think. Some take a short run view of cash flow an ensuring enough profitability to survive the next shareholder meeting, but any business leader who wants to keep his job or gain a promotion needs to be thinking farther down the road – years and possibly decades if the company is to grow and gain market share.

Your motivation is unfortunately far shorter term. While I understand Nancy Pelosi’s statement on priorities from a political perspective, as a taxpayer I find her remarks to be one of the most disgusting things to hear coming from the mouth of someone who works on a job that calls itself “public service”. This is why you put the good of your party over the good of your country and over the best interests of the local constituents that you represent.

Sadly, this is a social contract that we as voters have come to expect. So how does this affect us economically? Look at the impact of your greed versus that of a business. A business’ greed leads it to produce more of a product that is so vastly superior to all of the other choices on the market that people willingly choose to give up some of their hard earned income to buy it. You can read about the rest of the positive impacts of a business’ greed in Lesson Five.

Contrast this with the products of your greed. Donations from powerful teachers’ unions force you to trap inner-city minority children in failing schools. Money from defense contractors compels you to fund projects for military equipment that our forces may not want or need only because the contractor has operations in your district. I’m using two quick examples from both sides of the aisle to highlight the fundamental differences between you and business. The business’ money gets invested where it will be rewarded by producing the most of a good or service that society wants. You choose to allocate money based not on its economic benefit or societal good but rather on how effectively it can be used to get you re-elected.

I know that you’re going thinking that you do not think strictly short term. Development of military vehicles, building bridges, or destroying a health care system all take time to plan and execute. But ultimately the decisions for all of these go back to what will serve best to get you re-elected. This is also why you are so ready to not speak honestly to voters about issues and prefer to give them the pandering that will excite them into voting for you. If you are truly motivated by long term then why haven’t you done the following:

  • Show real numbers about what happens when a government is planned to grow faster than the sector of the economy that funds it?
  • Talk honestly to inner city families about how part of the reason their schools are failing is because of the students and the family structure (or lack thereof) that is too common in inner cities?
  • Give the American people an honest assessment of what it is costing the United States to be the global police officer? *
  • Instead of “Push Granny off of the Cliff” demagoguery why aren’t you showing real numbers as to how we are going to sustain our entitlement programs?/li>

For that matter, if your thinking were truly long term, how did those permanent majorities that the Republicans achieved in 2004 and the Democrats’ in 2008 work out? This can not be an easy lesson for you to hear, so we’ll stop here as you (hopefully) follow the sage like advice of Obi-Wan Kenobi and go home and rethink your life. The next chapter will only be slightly less painful as I elaborate on how…

Lesson Seven: You Don’t “Invest”, You Spend

Previous Lessons:

Lesson One: It’s Not Your Money

Lesson Two: Intro to Microeconomics, or Why Prices Matter

Lesson Three: Intro to Macroeconomics. or So that’s Where Government Fits In!

Lesson Four: You Don’t Create Jobs – It’s Time to Get Over FDR!

Lesson Five: Businesses are Greedy – That’s Not Necessarily a Bad Thing!

* The role of the US in global security is probably the the most complicated out of these topics. I wrote about it a little bit here, and this subject will warrant its own post outside of this series

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A business’ greed leads it to produce more of a product that is so vastly superior to all of the other choices on the market that people willingly choose to give up some of their hard earned income to buy it.

How about this…”A business’ greed leads it to ship American jobs to Asia faster than you can say “Smoot Hawley?”

Let’s let x go to infinity, shall we? Let’s make every possible thing that could be made in China/India/Country X instead of here.

No one will have a decent job. Nothing of real value/wealth will be created.

I understand that this article was in response to that idiot Pelosi, but let’s get real here.

Speaking of pelosi…
$737 million in green-tech loan to company connected to Pelosi family?

http://hotair.com/archives/2011/09/29/737-million-in-green-tech-loan-to-company-connected-to-pelosi-family/

Politicians are looking for (and finding) odd and anti-intuitive ways to try to get more money into their tax coffers…..

BofA has just instituted a $5 monthly fee for anyone who uses a debit card to buy stuff with their own money.

I’ve never had a debit card, but that seems excessive since BofA is not fronting anyone a dime.

All they are doing is holding your money for you until you spend it.
Heck, they can even pull an overnight loan based on your money being in their system!
So, they make money on debit card accounts anyway!
Someone on the radio just said she was quitting her debit card because she only bought about $70 a month on it.
Why make that $75?
It made everything more expensive.
So, how do banks benefit from all their new federal regulations that are forcing them to charge their ”customers” more?
Seems to me they are losing customers.

Has the top of the Laffer Curve been reached?

@Ivan, We enjoyed some of our great trade balances during the 1930’s. And trade is not a zero sum game. Go to lesson 3 and click on the link regarding comparative advantage for a good explanation on how trade benefits both countries.

And maybe one of the reasons businesses are going overseas is dealing with Obamacare, Dodd-Frank, the NLRB, the EPA and all of the other means that our government has been punishing employers?

@Nan G: It drives me crazy when banks keep tagging us with new fees, and that’s another case of unintended consequences of government regulation. Banks are in business to make money, and when caps get placed on fees that they can charge for some items (like late fees or bounced checks) or make it easier for people to walk away from loans. As distasteful as I find what B of A is doing I’m more in the camp of “Hate the game, not the playa”