Having watched the alacrity with which our public servants (legislators and chief executive), recently handed away resources ascribed to the commonwealth of the citizenry at large and the difficulty those same servants had with reigning in health care costs in 2009, I’ve further refined my ideas about how our democracy works in 2011, and who the constituents of those public servants truly are.  It should not surprise most of my readers that their constituency excludes 99% of Americans.

I recently read this excellent article from Steve Randy Waldman which has sparked some thoughts of my own.  In it, Waldman quotes John Kenneth Galbraith:

“To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in — or more precisely not in — the country’s businesses and banks. This inventory — it should perhaps be called the bezzle — amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times, people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always people who need more. Under the circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression, all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. The bezzle shrinks.”

To be generous to those who are actively engaged in raiding the public coffers of America and the rest of the world, I suppose if we have made their actions legal, or turn a blind eye to them through our regulatory and legislative agencies, it can’t really be called embezzlement.  It strikes me that in the aftermath of the financial crisis, and subsequent debt reduction charade in DC, that we as Americans have come to accept and legitimize embezzlement of public funds as the new norm. 

Think about how the legislators and chief executive “hammered out a compromise” to shrink the public deficit by almost 4% of GDP  at great cost to the public safety net put in place in this country during the tumult of the Great Depression, and furthered during the 1960s.  Yet when our legislators were faced with the prospect of healthcare reform in 2009, in which if we could have brought our health care costs in line with the rest of the developed world, and in the process saving as much as 7% of GDP, they balked at the prospect, and passed a “reform” bill which only reinforced the status quo and forced even more Americans into funding the existing mis-allocation of funds in the health care sector.

Think about that.  Our legislators couldn’t conceivably change an existing paradigm in health care that could have saved us 7% of GDP, yet were all to willing to offer up 4% of GDP from the commonweal to cover the gaps in our finances incurred by the financial industry’s gaming of our “system”.

Economists call this “rent seeking”.  Wikipedia explains:

"In economics, rent-seeking is an attempt to derive economic rent by manipulating the social or political environment in which economic activities occur, rather than by adding value . An example of rent-seeking is the limitation of access to skilled occupations imposed by medieval guilds.

Many current studies of rent-seeking focus on efforts to capture various monopoly privileges stemming from government regulation of free enterprise competition.  The term itself derives, however, from the far older practice of appropriating a portion of production by gaining ownership or control of land."

Like the health care and insurance industry, we’ve allowed the financial sector to operate to their advantage at public cost.  Having crashed the world’s economy, we allow them to continue the financialization of public assets and wealth unimpeded. Now we have a campaign financing paradigm that only reinforces the economic paradigm of rent seeking by allowing corporate funding of election campaigns without limitation.  The process will continue so long as the structures of incentives and government backstops that currently exist are allowed to remain in place. 

Yet somewhere along the way we’ve collectively accepted that Socialism is the great bogeyman of humanity. Somehow, our funding of capitalists is acceptable, while providing benefits for the general populace is inherently bad for our economy.  We’ve come to believe that letting our pockets be picked by those with the financial wherewithal to manipulate the existing revenue streams, bolsters our country, and our belief in the free enterprise system remains the greatest asset the human race that has ever achieved continues unabated.  We chant the words to Woody Guthrie’s “This Land is Your Land” like some talisman of American values, while conveniently forgetting the two verses that made the song poignant.

As I was walkin'  -  I saw a sign there And that sign said - no tress passin'

But on the other side  .... it didn't say nothin!

Now that side was made for you and me!  

In the squares of the city - In the shadow of the steeple

Near the relief office - I see my people

And some are grumblin' and some are wonderin'

If this land's still made for you and me.

Woody’s song is a song for our times now more than ever.  I’ll leave you with this song from my friend Greg Engle, which won first prize in the 2011 Woody Guthrie Folk Festival Songwriting Competition.  His composition includes those missing verses, but he didn’t perform them during this recording as he’s still trying to obtain the rights to use them.

It’s time for America and Americans to wake up and take control of our destiny by implementing laws that serve the commonwealth and not the existing revenue streams before “American” becomes a synonym of “sucker”.

Cross-posted at http://miguelitoh2o.posterous.com/