Political 'Fare Dodgers'
Vote No on Fiscal Cliff Deal, But Benefit from it Anyway (Handelsblatt,
Germany)
"Only the
dissenters have 'broken no promises.' And that could a very much to their advantage
in the next election. They can present themselves to voters - and to the
various hawks in their own party - as people of 'integrity.' But in reality,
they have only maximized their own benefit while relying on the majority to pay
the price for a result that will benefit them as well. In other words, they are
fare dodgers."
People often like to refer to "free riders." But today,
there are just as few running boards to hitch a free ride as there are ticket collectors on local public transportation. We should, therefore, refer to such
people by the proper term: fare dodgers. They represent an economic problem,
because they maximize their own benefit at the expense of others, similar to
tax or insurance fraud. And they exist in politics - in Washington, for
example. But perhaps in Berlin and Frankfurt as well. We need, therefore, a
little lesson on the political economics of fare dodging.
In the U.S. Senate and House, an overwhelming majority of lawmakers
have agreed to a half-baked notion of financial policy. No shining achievement,
but at least there was something after a period in which lawmakers were primarily
mutually obstructionist and passed fewer laws than during almost any prior
period (a work slowdown considered good news by cynics). But they all knew: The
American people wanted to see consensus. It was this pressure from the public
that brought about an agreement.
But in both chambers and both parties, there were people who
voted against it. We could call these people of conviction. We could
acknowledge that they had the courage to stand up to the pressure of the
majority. But they could also be called fare dodgers.
For it was absolutely clear: Failure to reach a consensus
would have been a disaster, not just for the United States but particularly for
the American political class which would have permanently discredited itself. Even
dissenters benefited from the fact that there was an agreement. They need not
explain to their constituents why they will suddenly have to pay higher taxes -
because this won't occur after the agreement.
At the same time, however, the dissenters have maximized
their own benefit. Because unlike the majority of lawmakers, they don't have to
explain to their constituents why they "broke" their campaign
promise. Of course, that's a nonsensical phrase: campaign promises are always
limited to what one would like to do - never what can actually be achieved in
everyday politics. But that is the way it is often communicated: When someone enters
into a compromise, he is said to have broken his promise. And that is exactly
the position that many Republicans who broke the taboo of raising taxes find
themselves in, as are a majority of Democrats who had to make substantial cuts
to their original tax plans.
Posted by Worldmeets.US
Only the dissenters have "broken no promises." And
that could a very much to their advantage in the next election. They can
present themselves to voters - and to the various hawks in their own party - as
people of "integrity." But in reality, they have only maximized their
own benefit while relying on the majority to pay the price for a result that
will benefit them as well. In other words, they are fare dodgers.
Does this exist anywhere else? Of course - this is probably
part of everyday political life. This makes me think of cntral bank policy in
Europe - and the politics surrounding central bank policy. Bundesbank
President Jens Weidmann - someone I hold in high regard and consider
to be a person of integrity - has time and again opposed his colleagues in the
European Central Bank. In this fashion, he is able to present himself as having
"integrity" in line with the Bundesbank
tradition that is so highly prized by Germans.
At the same time, he can be sure that other colleagues will
implement less-than-appealing financial policies that will prevent the euro
zone from imploding. This also benefits Weidman. If the eurozone
were to implode, he would have to explain to Germans why he allowed it to
happen and why it was a good idea - despite the chaos in the capital markets
and higher unemployment in Germany. The others get their hands dirty, so he
doesn't have to. Again: others pay the political price for saving the euro, but
he also benefits.
The same goes for all the politicians in Berlin who have
periodically criticized the European Central Bank. After all, they would have a
lot of explaining to do if the euro weren't bailed out. In this way, they can
leave this task largely to the ECB, which assumes the
political cost - and also benefits from the fact that things don't explode
after all.
If we were all fare dodgers, then the trains would not be
able to keep running. Luckily, there are many honest people: Not everyone
is intent on maximizing their own benefit, a point on which conventional
economic theory is mistaken. That also applies to politics: If this weren't the
case, difficult decisions could never be taken.
*Frank Wiebe is an all-around financial talent. He knows banks and
insurance companies from the inside and has been following the markets for
years. In his commentaries, he puts short-term developments into perspective
and analyzes long-term trends and the Zeitgeist in the markets.
