This goes to underscore the endemic nature of political corruption in the US right now.
This underscores how it was not markets that failed, but rather how government-mandated interference in these markets that led to the markets punishing those who have forgotten the Gods of the Copybook Headings.
The last two are really interrelated: this one shows that unions have regained some of their political clout under the Obama Administration, and this shows how modern unions corrupt the democratic process.
All are clear and present dangers to the well-being of the United States.
Let's take a brief look at the first point...
I don't think that too many outside of Johnstown would disagree that the Representative of that city, John Murtha, has turned earmarking into an art form. Why has he done this? Simple: Johnstown lost its last major industry, and only through the earmarks that Murtha has brought in has the city managed to survive. This is understandable: without some sort of perspective for economic growth, cities collaps and decay. But this comes at a major cost, one that the taxpayers in general are paying for the subsidies that keep Johnstown from turning into a ghost town. The difference between Johnstown and, say, Akron in Ohio, is their elected officials: Murtha brings home the pork.
To quote the article linked to:
About all this, John Murtha has said something to ponder: "If I'm corrupt, it's because I take care of my district."
When we speak of public corruption, we normally mean an official has been convicted of breaking a law. The bad pols did it. We are at the point, though, where it is hard to say that the corruptions of government are only about the politicians.
Murtha may be right. We are all earmarkers now.
Here's another way of putting it: The U.S. budget is now history's biggest mountain of swag; it is uncountable goodie bags filled with tax revenue. Mr. Obama's swag mountain, the fiscal year 2010 "budget," is $3.59 trillion high (25% of total GDP of about $14 trillion). His $800 billion stimulus bill was another pile of public cash. We the people have concluded that if we don't use the Honorable John or Nancy or Ted in Congress to get our piece of it, someone else will get it.
For the longest time, we were able to believe that these corruptions were the inevitable but petty price of politics. But I agree with John Murtha. It isn't petty anymore. It isn't just about amusing "pet projects." The whole system has become an earmark. The politicians have been shaping the system so that more and more people have to buy in to the earmark philosophy -- we pay, they decide -- or get left out.
Barack Obama isn't a reformer. He's the president of Earmark Nation. We are about to enact the Obama federal health-insurance entitlement, which on top of all the other entitlements and their limitless liabilities will require pulling trillions of dollars more into the federal budget. Whatever nominal public good this is supposed to achieve, it means that they, these 535 pols, most of them gerrymandered for life, will decide in perpetuity the details of how to dole it out.
When this experiment called the United States began some 200 years ago, neither the "liberals" nor "conservatives" of that time imagined their successors would have such vast sway over the nation's income, or that U.S. politics would be mostly factions begging and fighting to have fragments of it disbursed back to them. The phrase "pay to play" would have disgusted them.This is indeed endemic corruption, and the argument "everyone is doing it" doesn't make it right. As I have said elsewhere: I have seen the future, and it is Chicago.
The second point is how markets were distorted by government regulation in such a way that market-clearing economic activity led to the results that the critics are now calling market failures: the markets didn't fail. They just punished those who followed government-mandated development that no market could sustain.
This is the great tragedy of the recent crisis: that government, which got us into the situation, is actively making things worse. The markets obey the Gods of the Copybook Headings, the unavoidable effects of cause and effect, the inexorable meeting of demand and supply in clearing the market of available goods, what we economists call equiblibrium. Politicians sincerely believe that they can manipulate markets to give them the politically desired effects: that works only for a relatively short period of time, as markets will ruthlessly punish those who mess with them. The invisible hand of Adam Smith doesn't care about political goals and will destroy, in the long run, anyone trying to game the markets for political effects.
This doesn't relieve the banks of responsibility for their errors: they should have protested more and fought the legislation. They knew that these government regulations were going to lead to ruin, but failed to persuade. Of course, it may have been a virtually impossible task to persuade such completely ignorant politicians that dominate the body politic today.
The last point is how unions have perverted their role, how they have become completely corrupt and tools for political purposes that actually serve to punish and impoverish their membership.
More on that later: suffice to say, read the whole thing at both links.