Congress has inflicted frightful punishments on its members--now you know that. When they tried Mr. Fairoaks, and a cloud of witnesses proved him to be--well, you know what they proved him to be--and his own testimony and his own confessions gave him the same character, what did Congress do then?....Congress intimated plainly enough, that they considered him almost a stain upon their body; and without waiting ten days, hardly, to think the thing over, they rose up and hurled at him a resolution declaring that they disapproved of his conduct! Now you know that. –Colonel Beriah Sellers, The Gilded Age, Mark Twain, 1873
No single area of public life threatens what previously was known as the American Dream more than the apathy of our public officials regarding their fiduciary responsibilities towards their citizens.
They are mismanaging our money and, worse yet, letting others mismanage it, with a wink and a nod that is, for all practical purposes, destroying the concept of personal property.
Recent scandals involving Congressional inside trading, federal investments in bankrupt green companies, inside banking deals that benefited millionaires and billionaires, along with the collapse of investment manager MF Global have contributed to public skepticism, amounting to cynicism, that those we have entrusted to leadership positions have done what British kings, Nazis and Communists have failed to do: namely, kill free and open markets in the US.
Free markets and free governments require public confidence in order to operate successfully. Confidence comes from the public’s perception that the markets and governments are fair- or at least neutral- arbiters for investment and public policy.
Over the last several years, however, there has been mounting evidence that the game of life has been rigged against the general public, not just a little bit, but a lot.
With that realization, our confidence, thus our freedom, has been eroded.
And if either political party is serious about gaining the trust of the electorate again, they had better address some of these scandals before the torches and pitchforks end up on their steps.
Gone are the days when a change of party in Congress or the White House was enough to placate an electorate spoon feed morsels from a media elite of a few dozen national editors.
Free and open markets in news and media have replaced a half century old oligarchy.
The result has been the slow realization that we have tolerated being wedded to the political equivalent of a bunch of spousal abusers.
For example, the Department of Energy has spent $36 billion on clean energy technology in the form of loan guarantees. And all you need to know about those guarantees which were originally intended to create jobs, is that the Obama administration has stopped talking about how many jobs they have created, but instead, in a reprise of their bogus stimulus claims, now brag about the jobs they have saved through the program.
Count the Solyndra bankruptcy scandal as a one time charge and be thankful it wasn’t worse. Worse is coming. Instead, look at NRG Energy with a loan guarantee of $1.3 billion creating a whopping 15 permanent jobs. The explanation? According to an analysis of loans made through the D.O.E. program by Peter Schweizer, 80 percent of the loans went to political donors of Obama.
We’ve gotten so used to government graft that plain-old government incompetence would be a welcome relief. But no, we just have to accept the fact that all of our politicians are venial, making legal for themselves what they throw others in jail for.
“Not only can members of Congress legally trade [stocks] on confidential information; they do, despite the potential cost to their reputations,” writes CNN. “The U.S. television program 60 Minutes recently reported that several current members of Congress allegedly used confidential information that they acquired on the job for personal gain.”
At least now they have to report that they are trading strocks, like other insiders.
In fact, Senate Majority Leader Harry Reid dumped his holdings in energy companies in 2008, right before the energy market crashed and bought healthcare stocks with the proceeds. Within 6 months Reid was heavily involved in re-writing healthcare laws.
The corruption goes way beyond Congress too.
Former US Senator, New Jersey Governor and Obama pal, Jon Corzine- according to Veep Joe Biden, Corzine was the first person Obama called for economic advice after the election and a key architect of the stimulus law passed by Obama- ran futures firm MF Global so solidly into the ground in a little over a year after being bounced from office that the firm dipped into customer accounts to pay their bills. Not only is that an ethical problem, it’s also illegal.
No arrests have yet been made, as of December 1st. Charlie Gasparino at Fox News says that as much as $1.2 billion dollars in customer money may be missing.
MF Global is one of the ten largest US bankruptcies of all time, according to the UK’s Independent.
Government insiders have also discovered ways of channeling profits toward their friends when government sponsored enterprises go belly-up for public investors.
In 2008, then-Secretary of the Treasury, Henry Paulson dropped by the offices of Eton Park Capital Management LP in Manhattan. There he shared with a gathering of hedge fund managers how the government would seize Fannie Mae and Freddie Mac, essentially wiping out private shareholders. But publicly, at the same time, he was telling the press that the government intended that Fannie and Freddie remain in the hands of investors.
The discrepancy could have allowed the hedge fund managers present at the meeting to benefit from non-public information. “There's no evidence that they did so after the meeting,” reports BusinessWeek, “[and] tracking firm-specific short stock sales isn't possible using public documents.”
But BusinessWeek says that at least one participant was so shaken by the disclosures that he immediately called his attorney to make sure that he wasn’t breaking any laws. The lawyer’s advice was to immediately stop trading in any securities of Fannie Mae and Freddie Mac because trading those securities while possessing inside information is against the law for mere mortals who don’t work for the federal government.
How did the hedge fund manager know he risked breaking the law, when Secretary Paulson had no clue?
What was legal for Paulson as Secretary of the Treasury is illegal for the rest of us.
Living under different laws than the rest of us is so ingrained in our national leadership, that it seems they hardly give it a second thought.
“The present era of incredible rottenness is not Democratic,” wrote Mark Twain, “it is not Republican, it is national.”
And that’s the paradox that all of us must grapple with seriously if we wish to preserve both our free markets and our free people.