DC Beltway insiders, abetted by their friends in academia, are expert at identifying and recommending political curatives for the ills of society. At the most sophisticated and effective level, punditry has a predictable genesis and trajectory. First, from the chaos of all manner of the environment’s input, whether in universities or “think tanks” academics identify a societal problem that needs correction. Many times, what follows is often widespread agreement that a problem exists and needs correction. When that occurs, the process gains momentum, traction, attention and support from different constituencies. Politicians whip up widespread public support. Pundits produce inspirational articles and editorials in support of the corrective action. Myriad examples emerge of the consequences of the unsolved problem. Some examples may emerge of solutions to the problem, albeit solved on a finite, boutique, scale. Soon we have groundswell support to “do something.” We lobby, pass legislation, establish agencies and write regulations. At the beginning all goes well, but soon problems arise. We experience administrative overreach, which is often worse than the original problem. So what has begun as a good idea becomes misshapen beyond recognition and becomes its own societal problem. Some examples:
- The problem: discrimination on the basis of race or sex. The solution: Passage of the Civil Rights Act of 1964. Starting with a simple corrective of ending discrimination we have built an administrative Rube Goldberg empire: the Equal Employment Opportunity Commission, the Office of Federal Contract Compliance, state anti-discrimination agencies. Soon class action and affirmative action programs were introduced as mandates. Further, the Obama Administration now desires to expand the scope of anti-discrimination laws regarding the concept of equal pay for equal work to a new more troubling concept of “comparable worth.” Employers are now beset with charges of discrimination and class actions. See ‘Comparable Worth’ Rears Ugly Head in Age of Obama
- The problem: America lacks universal health care coverage. The solution: The passage of Obamacare. The law is byzantine beyond explication:
…the health system is complex, yes, but also ornate. The new law creates 68 grant programs, 47 bureaucratic entities, 29 demonstration or pilot programs, six regulatory systems, six compliance standards and two entitlements.
Getting that massive enterprise up and running will be next to impossible. So Democrats streamlined the process by granting Health and Human Services Secretary Kathleen Sebelius the authority to make judgments that can’t be challenged either administratively or through the courts. See Obamacare Only Looks Worse on Further Review
The law has other consequences: 117 million current health care plan participants may need to change plans in 2013; 16 million new participants may be forced into Medicaid: Medicare benefits will be reduced to pay for the program; a 3.8% additional tax will be imposed on investment income; a 40% excise tax on “Cadillac” health plans and a $2100 increase for families buying private insurance plans.
- The problem: Public employees need employment workplace protections. The solution: In 1962, President Kennedy extended collective bargaining rights to federal employees. While federal employees could only bargain over working conditions, not salary and benefits, this precedent set the stage for widespread collective bargaining rights for public unions. At the state and local level bargaining occurs over all issues. Politicians have recognized the efficacy of acceding to union demands.
Thus, we have had an explosion in public sector salaries and benefits, especially lucrative pension plans. As states and municipalities face huge budget deficits and massive pension plan underfunding, these entities are considering benefit cutbacks, bankruptcy and large tax increases. The public, facing job insecurity or unemployment are revolting against increased taxes. See Strained States Turning Laws to Curb Unions; Cash-Strapped States Seeks Laws to Curb Labor Union Power
- The problem: The financial crisis threatens the solvency of US banks. The solution: The government ignores its own advice to the troubled Japanese financial system. Instead of forcing the banks to write down bad assets, the government undertakes a costly and legally and economically dubious program of buying trouble assets. It has forced $700b dollars of funds on troubled banks, and continued to guarantee bankrupt Fannie Mae and Freddie Mac, and maintain a zero interest rate policy for over two years. The economic consequences have been enormous: unemployment near 10%; savers and retirees punished; oil and other commodity prices exploded and the dollar substantially lower.
Taking it to the Limit it Too Many Times
We have lost the ability to identify a societal problem and implement a measured and thoughtful solution. We have also lost the ability to forebear, take no action and let the problem work itself out. We move from under-reacting to over-reacting. Over-reacting imposes enormous costs on society. Thus, we have backlashes against affirmative action, a move to repeal Obamacare, tax revolts against the privileged financial protections afforded to public employees, and simmering resentment toward Treasury and Federal Reserve policies which favor Wall Street over Main Street.
Perhaps in matters of important policy, more thoughtfulness, realism and humility, rather than brash hubris and impulsiveness, would restore confidence in both our government and our economy.
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