Are the Republicans as crooked as we think they are? Part IV - Motivations

Let’s look at the proposed Social Security reform of GWB. It was an outgrowth of efforts by the Cato Institute which were largely bankrolled by brokerage houses. Brokerage houses are likely to make money on any privatization, even the most progressive kind where workers are allowed to designate their union to manage their account. This is because unions, like any investor, need professional assistance. In the proposed scenario, where monies are invested in index funds at first, the likely share for the brokerage houses of any investment scheme is relatively modest. Most of the money will be made by the volume of transactions, although if these are pooled the likely effect is that the biggest task is the recordkeeping involved, which will likely be automated. The partners may make a nice dividend from the detail, but it will hardly be extreme and may involve more headaches from jumping through contracting hoops than the proponents expect. The usual reporting and ethics requirements may just sour the milk a bit for our hungry fat cats.

Lets go back to our first three examples, Iraq, Wal-Mart and NAFTA. Do the Republicans and “New Democrats” support these in order to get personally wealthy, or possibly wealthier? If they were, it could be traced. While some might argue that employment after leaving office representing an industry once regulated might be such a payoff, it is hardly confined to retired Republicans, or even New Democrats. While the practice smells of corruption, it is more an outgrowth of floor rules that allow former members privileges, even during voting and debate. This phenomenon also does not explain the gutting of the American workplace. If it could then the unions and losing corporations (such as domestic oil producers, American textile manufacturers and the AFL-CIO) would have simply tendered a better offer. Clearly something else is going on in the recesses of the Republican mind.

What’s going on is bad economic theory. Under the theory of comparative advantage, trade is mutually beneficial if one party produces a good more efficiently and then trades it for a good made better in the trading partner. In this occasion, both sides win and jobs are available for the displaced workers in the industry that now exports more. This is all well and good in theory, but when you have the world’s largest per capita consumption economy attempting to import all it can as cheaply as possible while exporting debt, health care, graduate education, high fructose corn syrup, culture and weapons then all you are building is a house of cards. The theory is that the way to satisfy the voters is to give them cheap products, particularly gasoline, building the highest average standard of living on the planet. The Republican economic machine seeks to allow the American consumer to buy more per dollar than any other consumer on the planet. This means cheap food, cheap consumer goods, cheap appliances and above all cheap gasoline. There are problems with how this shakes out, however.

Cheap food has made us the fattest nation in history, since the cheap stuff is also the stuff that makes you fat. Cheap gas has made the air unbreathable and has led to a backlash in the Arab world as American military might has been used to assure the supply of oil and the survival of the House of Saud. Finally, cheap manufactured goods have resulted in American job losses as manufacturing workers are displaced. They are displaced by immigrants who are often here illegally and must work under slave like conditions due to our immigration laws, which stop complaints. They are displaced by Mexican workers under NAFTA and finally by Chinese workers who are making pennies per hour (displacing even the Mexicans). You can’t shop, even at Wal-Mart, if you don’t have a job. Not everyone wants to or can build weapons, teach college or clean bed pans. The number of decent, middle class jobs is going down. This is one reason Bush is trying to build an “ownership society.” The theory is that if we all own stock than in our retirement we will be supported by foreign workers employed by multinational companies, not through taxation but through profits. This only works if Marx was wrong about the eventual proletariat revolt or if the workers overseas don’t organize and demand a middle class wage in their own economies.
The other problem is that eventually, the world will tire of American debt (the Chinese can’t devalue their currency forever), American culture (which the right wing doesn’t like for domestic consumption), American tobacco (people tend to die) and American weapons (since George is alienating our allies who are the biggest consumers). When this happens, the bottom may well fall out of American civilization and the Republican Party will get most of the blame.

So are the Republicans corrupt? No, just incredibility short sighted to the point of being stupid. If they do not rethink their industrial policy we don't need to worry about how to beat them. What the Democrats need to do, however, is distance themselves from the Democratic Leadership Council and its attempt to mimic the Republicans on trade. If they do not, they will also take the blame.