Is America Ungovernable?

Otto von Bismark, the 19^th century Iron Chancellor and architect of modern Germany, once remarked that “If you like law and sausages, you shouldn't watch either being made.” One could observe that this is not quite correct; the process of stuffing offal into sausage skins is far less disgusting than that of stuffing bribes into legislators. Still, statute law will always be a matter of negotiations between those who have an interest in the bill at issue. Thus it has always been, and thus it will always be. In itself, this is not too bad; everybody should have a voice in drafting legislation, and compromise, while cumbersome, is likely to be better on the whole.

Democracy is supposed to solve the problem by giving everyone a voice in the process. And this would certainly be true, if we were speaking of a local assembly. But in a nation of 300 million plus, it can't be true; the very size limits the number of voices that can be heard. Hence, a “place at the table” becomes a scarce commodity, and like all scarce commodities it has a market price, a price that prices the public out of the process; as the nation grows, the size of the legislative “table” shrinks; there aren't enough places to go around, and the form of democracy is easily converted into the substance of oligarchy. But even at the local level, government must be guided by some notion of the common good, even when the parties are seeking their own interests. But as the cost of participation rises, this becomes less possible.

Think on this: A congressional race can easily cost $1,000,000 but the congressman is in office for only 730 days. That means he must raise $1,370 for each and every day he is in office, weekends, Christmas, Easter, and Flag Day included. And now consider that this office represents but 1/435^th of ½ of 1/3^rd of the Federal power. When you do math, enormous sums of money are involved, and there are limited sources for that kind of money. The money appears as a “donation,” but it is in fact a purchase, an investment, and the investors expect a decent return on their money. Or rather, an indecent return.

What kind of returns? Well, when the prize is the public purse, the rewards are unlimited, far higher than one could possibly achieve from making things or providing a service. Thus we read with no surprise Gretchen Morgenson's column in the New York Times that the bill to extend unemployment benefits for another 20 weeks also includes a $33 billion dollar gift to businesses, especially the home builders, whose overbuilding is part and parcel of the current crises. These businesses will be allowed to offset their 2008/9 losses against profits going back to 2004, and hence receive huge refund checks from the Treasury. According to Ms. Morgenson, Pulte homes will reap $450 million, Hovanian $250 million, Standard Pacific $80 million, while a Beazar Homes will get a measly $50 million.

How much did it cost them to get these rewards? Gretchen counts their costs:

Securing this tax break was a top priority for home builders, lobbying records show. The Center for Responsive Politics reports that through Oct. 26 of this year, home builders paid $6 million to their lobbyists. Last year, the industry spent $8.2 million lobbying. Much of this year’s lobbying expenditures were focused on arguing for the tax loss carry-forward, documents show. Among individual companies, Lennar spent $240,000 lobbying while companies affiliated with Hovnanian Enterprises spent $222,000. Pulte Homes spent $210,000 this year. That’s some return on investment. After spending its $210,000, Pulte will receive $450 million in refunds. And Hovnanian, after spending its $222,000, will get as much as $275 million.

Again, none of this surprises us, no matter how much it may sicken us. But the raid on the public purse is not half as problematic as the disappearance of the common good in government. The whole purpose of government is to look towards the common good, however imperfectly; when governments lose this function, they gradually cease to function.

I had some hopes for Obama. Not so much for his politics—certainly not that—but for his fund-raising. He was able to raise enough on-line to make a credible candidacy. He was thus in a position to establish an independent force in American politics. But in the end, he accepted more corporate money than any of his rivals. In that success was his failure.

Obama will fail. Indeed, he has already failed. I believe he failed before he started, as soon as he became dependent on big money. The biggest sign of that failure was his appointment of Timothy Geithner to the Treasury. Geithner was President of the New York Federal Reserve Bank, and the person more than any other responsible for the AIG bailout, which was shameful. His is Big Money's man in Washington, one of many such men.

The Health Care Bill is a perfect example of the process. Starting with decent motives, whether one agrees with them or not, it becomes merely a series of subsidies to established monopolies. Big Pharma is on board, of course. In exchange for removing any threat of public control of prices, they voluntarily agreed to lower their prices by $80 billion over ten years. But first they raised the prices by 9%. Obama was totally out-maneuvered by them. They will end up with a huge public subsidy. The AMA, the AARP, and most other big players are on board, all for the same reasons. The only holdout is the insurance industry. They will get on board once the public option disappears; they like the prospect of 30 million new customers supported by the government.

But the bill will not fix any of the problems because it does not address them. It is the current system, only more so, and with more public money going to an elite group. It will hasten the collapse of the health system. The same failures are evident in the bailouts and in the stimulus package. Even the administration's best impulses make them look ridiculous, as with the effort to make the spending transparent by posting it on a website, along with bogus estimates of the number of jobs created.

There is no chance, I suspect, that things will get better in time for the 2010 elections, and by 2012 the Republican Party will give us another Bush, or Palin, or Cheney to rule. But none of them will rule anymore than Obama does. They will campaign to run the country, only to find upon victory that the country runs them, or rather that small slice of the country that controls the political funding. While this is profitable in the short run, it is disaster in the long, and the long is about to overtake the short; without some notion of the common good, the government collapses.

Von Bismark understood how laws were made, but being a good aristocrat, he retained some notions of the common good. After the revolutions of 1848, he understood that new terms would have to be negotiated between the classes, if Germany were to survive. Even though he was a monarchist and no supporter of democracy, nevertheless he accomplished great social reforms in the 1880's, reforms that included health insurance, Accident insurance, and old-age pensions. In doing so, he laid the foundations of the modern European states. He gave the powers their due, simply because they were powerful. But for all his “blood and iron” talk, he did have a notion of the common good. He could actually govern.

We cannot. We have no real place at the table, a table that is itself shrinking, even as our debts grow. If you want to see the future of America, look at Europe of the 1920's and 30's.