Thursday, February 28, 2008

When You're Good to Mama

Earlier today I wrote about how stupid ideas, which make no economic sense, can make political sense due to the warped incentives of bureaucratic or political management. One example which I mentioned was the disastrous use of ethanol as a means of combating global warming. Ethanol is one of those solutions that is wrong at so many levels one doesn’t know where to begin. In a nutshell it is a lousy alternative to petrol. It is worse for the environment, requires subsidies to be produced, is driving up the price of food and is increasing world hunger because of its impact on food prices.

But it makes political sense. The New York Times has just written a piece on ethanol and the Hillary connection. They told of a “Global Initiative” run by her husband, the ex-president and how the stage was filled with three of the richest men in the world and the audience packed with “businessmen hoping for a profit.”

How do you make a profit producing ethanol? You don’t. But you make a profit when you get political hacks to push through legislation to pay you to produce ethanol. Make no mistake about it, ethanol is not a phenomenon of the free market. It is the Frankenstein monster of politicians like Hillary. Anyone who thinks Big Business tends to favor free markets knows nothing about history. Big Business has repeatedly been behind political campaigns to use the State to limit competition and to reward corporations with profits that they couldn’t earn honestly in a free, competitive market.

In reality it is easier to make money through political favors than through the market. By “make money” I don’t mean these people create wealth. They do not! They destroy wealth through a process of political redistribution. But since the wealth tends to get redistributed into their pockets, and the wealth that is destroyed belongs to others, they don’t mind.

The Times told of how Hillary, as the Senator from New York, “had sponsored legislation to provide billions in new federal incentives for ethanol, and, especially in her home state of New York, she had worked to foster a business climate that favors the sort of ethanol investments pursued by her husband’s friends and her political supporters.”

The paper notes the shady connections between the Clintons and this wealth elite of business parasites. Bill Clinton is a paid “adviser” to Yucaipa Companies. The owner of the company, Ronald Burkle, has raised hundreds of thousands of dollars for Hillary’s political career. Yucaipa has invested millions in Cilion, Inc., a company created to reap profits by being paid to produce ethanol. They are building seven ethanol plants, two of them in New York so Hillary can show how she brought home the bacon. The New York Times writes:
Certainly Mrs. Clinton is doing what would be expected of a senator trying to stimulate a sagging rural economy in her home state, not to mention a presidential candidate mindful of the importance of ethanol in corn-producing places like Iowa. But her actions take on an added dimension when they intersect with Mr. Clinton’s philanthropic and profit-making endeavors, which have periodically raised questions as Mrs. Clinton seeks the Democratic nomination for president.
In fact this is not true at all. They seem to think government can “stimulate a sagging rural economy”. This is the old “broken window fallacy” all over again. What is seen here is the money that Hillary throws into rural New York and no doubt jobs are created. What is ignored by the Times is that the money was taken from the productive sector of the economy and poured into loss-making ventures. Hillary’s intervention created two net losses. It destroyed part of the productive sector while wasting money to produce something that isn’t worth producing -- something which actually has a negative value because it is harming the economy.

Profits can be secured in the political sector through the use of State power to redistribute wealth. The Left seems oblivious to the reality of wealth redistribution in practice. They talk about helping the poor and ignore the fact that political power almost always favors the rich. To redistribute wealth through political power only creates a situation where the poor are fleeced to benefit wealthy elites who have access to cheap politicians like Hillary and her husband.

These corporations scratch Hillary’s back with donations to her campaign and paid positions for her husband. She in turns promotes legislation that robs the taxpayers of America to fund projects which directly benefit the corporate leeches who are in bed with her and Bill. The Times writes:
Under an agreement with Mr. Burkle in 2002, Mr. Clinton was to provide advice and find investment opportunities for several domestic and foreign funds in Yucaipa’s portfolio, and would receive a share of the profits from those funds.
Ask yourself how it is that Bill Clinton has become a financial adviser? Is Mr. Clinton now some sort of investment guru hitherto undiscovered by most people? I sincerely doubt he has sufficient knowledge to direct the investments of billionaires. But he has political connections. Pay off Bill for his “expertise” and Hillary directly benefits -- she had to get the millions she loaned her campaign from somewhere. What Bill Clinton offers these “businessmen” (and I use the term lightly) was access to political power so that they could redistribute money to themselves through the raw use of political power.

The Right seems to think of Big Business as giants of industry. And certainly some corporate leaders have been such, but far fewer than the Right thinks. Far too often they are political parasites who use the State to enrich themselves. This is not the free market but the political process at work.

The Left still entertains the notion that statism, as a process, works. It doesn’t. This naive view regarding political power turns the Left into pawns in the game of corporate leaders who use them to push for legislation that reduces competition and entrenches Big Business into position.

I can’t help but remember how antitrust legislation was pushed through by Big Business who feared upcoming competitors. The Left played along thinking they were reigning in the “excess of greedy capitalism”. In reality the Left were toadies to the very forces they opposed.

When the telephone industry was deregulated a campaign against deregulation was led by two groups: the political Left and the telephone companies. The Left seemed to never pick up on this. The same thing happened with deregulation of trucking and air travel. In both cases the Left and the major corporations in those respective fields opposed deregulation. You’d think that when the Left kept waking up in bed with Big Business they’d eventually cotton on to how politics works. Apparently they haven’t. Of course the Right is equally stupid since many of them haven’t yet seen that their much praised corporate leaders are in bed with the political Left as well.

Classical liberalism promoted free markets. That was truly revolutionary and it had a major impact freeing up those oppressed by the organized forces of conservatism: the state, the feudal lords, and the church. Socialists embraced liberal goals of equality of rights, economic prosperity for all, and individual emancipation. But they found freedom too unsettling. So they concluded that the way to achieve these liberal ends was through conservative means -- the use of state power.

Thus the socialists and progressive broke away from the foundational values of liberalism -- though they continued to call themselves liberals based on their desire for liberal results. But the means and the ends must be consistent with one another. When they are not the result is contrary to the goals being sought.

By embracing statism the socialists have basically betrayed the goals of liberalism. By using state power these socialists have propped up the power elite that liberalism has historically opposed. The feudal lords have been merely replaced by corporate leaders. Liberal ends can not be achieved through the use of conservative means. If socialists and progressives wish to establish a just world they have to reject the use of state power. Until they do they will repeatedly see their icons, like Hillary Clinton, jumping into bed with corporate giants in order to plunder the hard-earned savings of working people. By the way -- if you think Obama would be better think again. He’s even more in favor of this sort of corporatism. I should also note that historically this sort of alliance of Big Business with the State was called fascism. It’s major proponent was a former editor of a Socialist newspaper named Benito Mussolini.

Note: the video above is Queen Latifah's wonderful rendition of When You're Good to Mama from the musical Chicago. I post it in honor of Hillary Clinton.

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