Friday, September 16, 2005

Rent seeking for politicians and Malaiseathons for voters

For the past week I have been in Wyoming fishing (more on that later) with a group of people I serve on a corporate board with. This morning a group of us had a discussion about priorities - in government. We disagree pretty strongly about whether the current effort in Iraq is a good policy or whether we should be spending $200 billion of federal money to rebuild in New Orleans and also about whether the push to keep the death tax from reviving is a good idea. But everyone in the group agreed that the current political environment is not serving us well. We spend a lot of time yakking about silly stuff and not much substantive time in thinking about the key issues where government could actually have a positive effect. But when it comes to spending politicians seem to think our taxes are their private accounts to help them get reelected. On that front there was a general malaise bordering on anger in all three of the early morning discussants.

There are opportunities for the President to change the game here. For example, he could suggest that a good part of the financing for the restoration of New Orleans come from the pork in the energy, highway and agriculture bills. (There might well be close to half the total money there if it were done correctly.) What was intriguiging about the President's speech was his adherence to principles that he has suggested elsewhere - home ownership, enterprise zones and the like. But the real test will be whether he can stick to those principles. If the relief effort becomes a clone of the most recent three bills (add some here and add some there on both sides of the aisle) then we get the worst side of both parties. The sum of rent seeking by politicians and the additional malaise by voters is not a healthy combination. In the Wealth of Nations Adam Smith has an analogy that I have always liked about taxes - "pluck the goose when it has feathers" - at some point if they keep making these self serving decisions the goose may well bite back.

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