More Picking Winners and Losers

If there was any doubt as to why corporations and unions contribute large sums to political campaigns, today's news should dispel any doubt.

1. Ben Nelson (D-NEfarious) quietly introduced a change to the current financial reform legislation that would hugely benefit Berkshsire Hathaway, Warren Buffet's conglomerate investment vehicle, headquartered in Omaha. Berkshire Hathaway has large exposure to derivative contracts that the bill, as previously written, would have required reserves against potential losses against to be set aside. Now the bill will only apply to new derivatives. This probably makes sense, but why does it take lobbying by a firm led by one of the nation's wealthiest to make a change. Because it's about who wins and loses. No amount of campaign finance reform could stop Buffet from influencing this legislation. All he would have to do was to drop a few lines in his newsletter about what an idiot Ben Nelson was, and Nelson's opponent would be showered with cash. Unless were going to totally end free speech in America,.... (never mind, I don't want to give the left any ideas.)


2. Meanwhile the WSJ editorial pages discuss UPS latest attempt to compete with FedEx, by saddling FedEx with the same Teamster problems that plague UPS. What does Congress have to do with this? The rules for organizing unions at airlines and railroads are different for trucking companies. Under the Railway Labor Act, unions must organize nationally, which has been an impediment to unionization of FedEx. Meanwhile the teamsters strikes have often caused havoc at UPS including the infamous 1997 strike. The Chair of the House Transportation Committee, James Oberstar (D-mORalizing) has tried to change these rules to favor the Teamsters and UPS. So why wouldn't FedEx, UPS and the Teamsters all be pouring cash into key elections? For FedEx, their very survival as a company might be threatened.

3. As previously discussed on these pages, the current financial reform bill makes permanent the idea that the federal government will become the permanent Bailout King. Obama says otherwise, but why would his bill include a $50 billion dollar "resolution" fund, if it wasn't intended to be used to bail out companies that are in trouble. Obama says this won't cost tax payers a dime, because it will be paid for by taxes on financial firms. But how are those firms and their shareholders not taxpayers? And how is it that those expenses won't be passed along to consumers, since they will be a cost of doing business for every financial firm?

Obama wants to make this guy look small time.

4. Closer to my home of San Diego, a $228 million dollar redevelopment project downtown has been stalled, again, by the Coastal Commission. If you were a developer, spending money putting plans together, and having bid a project, wouldn't you be tempted to spend a little coin to influence the membership of the commission? I would think so.

None of this is to say that regulation is always bad, or government has no role. But we can see that the side effects of regulation and picking winners is to cause financial capital to be converted into political capital in our economy. That should cause us to regulate cautiously and minimally. It should mean that we try to limit the size and scope of government. It means, we should adopt the Tea Party agenda.