Obama Was Warned

A month ago, an AP story appeared about how Bush was warned of the impending mortgage crisis, by some obscure lender named Paris Welch in a letter to regulators. At the time I thought, "Are you kidding me, that constitutes a warning?" So in response, I telepathically warned Barack Obama that appointing so many ex-Clintonites with all that swag Washington was throwing at businesses, even one's that don't seem to want it, would inevitably result in a scandal during his Presidency. But I was wrong, scandal seems to be arriving early, as Bill Richardson withdrew his name for Commerce secretary as a federal grand jury probes "goings on" in New Mexico, dating back to 2004. Amazingly, Obama is sticking with his "No Clintonite Left Behind" strategy and is reportedly going to appoint Leon Panetta as DCI, (that's Director of Central Intelligence for those who haven't read some of the great novels of the twentieth century.) Anyway, Obama was warned.

But the sarcasm belies a deeper point; what the heck is wrong with our political class? Why does the world's second oldest profession have lower moral standing than the first? The scandals of the last few years are mind boggling. Blago is not so amazing as he is prototypical.

As one with a little training in economics, I believe incentives matter. There is just so much money in play, and it is often spent at the whim of the powerful, that bad actors are constantly tempting politicians with goodies. For example, years ago, domestic sugar producers spent $4 million lobbying to protect their "industry" from cheap Caribbean imports of sugar cane. Congress, realizing the national security implications, rallied to their defense and preserved tariffs on sugar cane imports that were worth about $4 billion a year at the time. Their wasn't even a bribe, or at least no indictments. So who wouldn't spend that kind of cash for 1000 to 1 return on investment, in the first year alone. (Although this doesn't explain the Larry Craig's of the world, I'll admit.)

The solution is for we the people to demand limits on government and how much discretion it has to spend our money. We need to realize, to get really educated, on the harm done to our economy and and to our freedom when government becomes Big Brother to business. And that's the real danger of this bail out. Not that it will fail and we all go broke, but that it will appear to succeed and set a dangerous precedent, much as the New Deal did.