Politics In One Lesson

[This article originally appeared in The Daily Reckoning on September 27, 2013]

“For greed all nature is too little.”
— Seneca

Philosopher kings are as rare as unicorns. If they do exist… you certainly won’t find one in the 113th U.S. Congress.

Back in his time, Plato thought that philosopher kings would make ideal rulers. Someone who strove for knowledge and justice for justice’s sake. The philosopher king would despise worldly things, as he would seek only justice. It would be a reign free of whim, greed or bias.

The big surprise isn’t that the majority of politicians do the wrong thing. The shocker is… we’re surprised each time they do!

Boom, thought Plato. Problem solved.

But besides maybe the biblical superstar Solomon, can you name a philosopher king in history?

Compared to philosopher kings, real people are scalawags. We all are motivated toward our own ends and goals. Sometimes they’re good… sometimes they ain’t. Most people seem to understand that when talking economics. Buyers act in their own interests. It’s painfully obvious. So is the idea that buyers want more stuff… at a lower cost.

But when you start talking politics, that basic idea gets tossed out the window. Why?

Politicians are held to different standards. We’re outraged when there’s a scandal or when political corruption is exposed. We scratch our heads and wonder why our representatives won’t stand up for the right things.

Why don’t they listen to the “American people”? Why don’t they follow the Constitution? Why do they roll over on important issues without a fight?

“Throw them all out!” some shout.

Yeah… and then what?

The big surprise isn’t that the majority of politicians do the wrong thing. The shocker is… we’re surprised each time they do!

Do you think Goldman Sachs is in the derivatives business for the common good? Why does anyone think members of Congress are motivated by some higher cause? The vampire squid and the debt leviathan are both staffed by men and women, no?

Once you look at politics like you do economics, something becomes painfully clear:

Your problems can’t and won’t be solved by imbeciles and hoodlums in Congress or the White House.

Call us defeatist, an anarchist… a fool. We’re not just shrugging our shoulders for lack of constructive solutions. The political process is bunk by nature. It will continually leaving you wanting better men to run for office.

Washington collects smaller amounts of money from 300 million people across the country. Then it redistributes larger amounts of money to special interests. To the ordinary person, it doesn’t pay to be educated on the issues or spend time lobbying Congress. But to the special interests, it pays to spend millions on smooth-talking lobbyists who will go and convince politicians to spend money on them.

In 2012, Congress granted the National Science Foundation $325,000 to create a robotic squirrel. The goal was to see how a rattlesnake reacted to it. If you take that $325,000 and spread the cost across all 313 million Americans, do you know how much you paid for the robo squirrel? One-tenth of one cent.

Do you know the hoops you’d have to jump through to find out this program was being funded, let alone the time and effort it would take to go and lobby your representative effectively? I don’t have hard numbers, but I’m taking a wild guess you’d rather part with your one-tenth of a cent and spend your time doing something else.

But you can bet your bottom dollar that the robo squirrel makers took the time to write Congress and make sure they got that money. Heck, why not? It was good for $325 large!

As it turns out… that’s the easy way to get votes too. Think of voters as buyers… and politicians as businessmen. Voters act no differently than investors do. Instead of stocks, they use the ballot box to optimize their own “situation.”

Politics is a super magnet for the self righteous, the blow hards… graft seekers and incompetents.

The market has one set of constraints, and the political arena has another. So we see different results. In the market, we can change our mind constantly and vote with our dollars. You can buy one good one day and sell it the next if you’d like. You can be fickle with your choices too. And your neighbor can do what he wants no matter what you do. I can buy chocolate ice cream, and you can buy vanilla.

But in the political arena, it’s different. You’re stuck with Obama for another four years, like it or not. If all your neighbors like Obama and you don’t, you’re screwed. Likewise, you can’t shop around and mix and match laws or policies. You can’t say that you like Obama’s policies A, C and E and Ron Paul’s policies B, D and F.

Nope, it’s a package deal. All or nothing. Imagine if you were forced to buy a grill every time you wanted to just buy a steak. All of this is why the cycle is nearly impossible to break. The natural response is, “If we had the right people, then they would be able to stand up and break this cycle.”

Ha!

Politics is a supermagnet for the self-righteous, the blowhards… graft seekers and incompetents. Our mind immediately races to Rep. Hank Johnson (D-Ga.) who honest to god thought Guam would capsize as soon as a few thousand Marines and their families were stationed there. Is anyone honestly holding out for an elected official to fix the world’s problems? No. But you might get a fat check if you play your cards right.

If you ask us, too many “voters” are looking for heroes in the wrong place. With the constitutionally granted power to tax, spend, regulate and send people off to war, all congressmen and women should be held suspect. Not just the guys from the other side.

The Daily Reckoning is an equal-opportunity offender. We take pride in roasting parties, politicians and policies of all stripes. Fortunately for us, there are no shortages of new policies, new ways to tinker, improve lives, or “right men” for the job.

Here’s a suggestion. The next time you feel so passionately about a politician who you think will make things right, conduct this experiment on your own:

Divide a page down the center and think back to the very first politician. On the left side, total the cost of money spent and frittered away by politicians. Think of the money debauched and of all the lives lost in war and genocide.

Then, on the right side, total all of the wealth created, promises that were kept, the lives that have been saved and the justice that has been served and tell us how it netted out. If you get the same answers we do, you realize what a colossal losing proposition the political process is.

It’s true, politicians don’t always power grab, nor do they always destroy wealth or always go along to get along… but that’s the way to bet they’ll act. In our opinion, that means you have a responsibility to protect you and your wealth. You can do that through electioneering or making smart decisions with your investments.

We advise the latter. And we will say one more thing about the government. For every distortion it causes in the market… for every tax dollar it takes from you and gives to another, it creates an investment opportunity. We call it “making the empire pay.”

Thanks for reading The Daily Reckoning.

Regards,

Peter Coyne
for

P.S. The government has practically announced where investors can earn gains as high as 12,000% on their money… you just have to know what to listen for. If you read today’s Daily Reckoning email you were given a chance to hear the message loud and clear. If you didn’t… Well, you missed out. But the opportunity is still available, and will undoubtedly appear in our next issue. Sign up for FREE, right here, and start getting the full story.

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