After the nation was warned just a few months ago that a massive $5 billion bailout with taxpayer cash was absolutely necessary to avoid a “disastrous” bankruptcy at Chrysler, the Obama Administration has now orchestrated, well, a bankruptcy.

Chrysler in Intensive Care

At the time of the bailout many observers noted that Chrysler’s problems – cars that too few wanted, made by too many workers in too many factories – had not been fixed.  This was just a temporary band-aid they said.  Management wasn’t retooled.  The United Auto Workers didn’t change their ways.  The products were the same old cars buyers previously shunned.  So just how was this supposed to work??

Well, as we now know the band-aid didn’t work, and the Administration now admits the patient needs major surgery.  At one level this is just a classic example of government kicking a difficult problem down the road using taxpayer money.  But at another level this is a lesson about our brave new Obama world.

Dr. Obama, Dr. Obama   To the Emergency Room Stat!
When I heard about the bankruptcy I thought “sad, but at least the taxpayers will now get to own the New Chrysler – for whatever that’s worth – in return for their $5 billion investment.”  Then I read the details of what the crack team of finance doctors in the Administration had done.  Anyone know a good malpractice attorney?

For those of you not steeped in corporate finance, there is a simple and basic principle concerning how a business raises money to finance its affairs (its “capital structure”):  Risk vs. Reward.  For example, to raise money the business may take out bank loans, issue bond debt and issue stocks.  The banks don’t get paid much for loaning their money to the business, but in the event of bankruptcy their debts are “secured” by the business assets, and they get paid back first.  The Banks’ investment is the safest.

Bondholders, being in the middle, get a bigger return when the business is successful, but in bankruptcy they get paid back only after the banks.  And who knows, there may not be enough money to pay them back.

Finally, there are stocks.  Stock investors get paid out last in bankruptcy so this is the riskiest way to invest money.  If things go badly, and the company goes into bankruptcy, they may not get any money back at all.  But they should get the biggest return if the business performs well.

Q.  So what happened in the Chrysler bailout?

A.  When the taxpayers were forced to put up their $5 billion a few months ago what place did they take in the capital structure?  They were in the middle – after the banks, but ahead of the stockholders.  OK.

Q.  So what is happening in the Chrysler bankruptcy?

A.  Because the bailout band-aid failed to stop the bleeding, it was time for the various capital providers to line up to get back as much value as they could.  We would have expected the banks and the hedge funds (the senior “secured lenders”) to get their money back first.  If there was any money leftover it would go to the taxpayers, being in the middle.  And if any more money was left over it would go to the stockholders.

Further, if there was not enough money to pay off the senior lenders or the taxpayers, they would be given the residual equity of the business.  Alternatively, if some outside entity, like Fiat, came in and contributed fresh money to Chrysler, they could receive some or all of the residual equity for their new investment.  That’s how it works for a bankrupt patient in a real corporate hospital.

But this is now Obama-land.

When They Showed Me the Bill I Almost Fainted
As it turns out, here’s what is actually happening.  It’s not for the squeamish:

The senior lenders will get approximately $2 billion in return for their $7 billion in loans to Chrysler, taking a loss of $5 billion.  And then they walk away; no future equity.  Go home.  Ouch!

The taxpayers get zero – that’s zero as in zilch, zip – for their $5 billion bailout.  And, they and are going to pony up $6 billion more, in return for 10% of the future equity.   Double ouch!!

The old shareholders?  They are wiped out.  Go home.  At least this part is as it should be.

Fiat, the Italian Auto Company, is putting up no money in exchange for 35% of the future equity, presumably for their future management and for funding the start up of the New Chrysler.  I don’t know if 35% is the right number, but at least it passes the snicker test.

So that’s it, right?  $6 billion in new money from the taxpayers, $10 billion in loan losses from the taxpayers and lenders, the old stockholders wiped out and 45% of the future equity handed out.

But wait! Are you doing your math??  Where is the remaining 55% of the ownership??  Oh.  Well you see it was given to the United Auto Workers Union.  The majority of the company was handed on a platter to the UAW; and they had no money in the game, and are putting no new money into the deal.  But they get 55% !!

Now why in the world would the lenders turn and run like yellow dogs with tail between legs and take a $5 billion loss??  They have the senior secured position.  This is very, very strange.  Well, you see, some of the lenders – the banks -  got TARP money.  So they are now simply puppets of the government.  But what about the other lenders, the hedge funds?  Why did they agree?  Well, they didn’t!!  They had no intention of taking 29 cents on the dollar, so they protested.  You see, they had crazy notions that the historical rule of law and how secured lending works would prevail.  But not in Obama-land; he stuffed them.

And just why did the UAW get more than half the company for free?  Because, they are loyal Democrat Party supporters, of course.  They will claim they “gave up” their VEBA claims (employee retirement).  However, this is simply factually incorrect.  Under law they have no claim on the assets of Chrysler superior to the lenders.  None.  That’s why Obama had to strong-arm the TARP’d lenders into agreeing, overruling the hedge funds.  Second, that VEBA claim was $4 billion.  Get your calculators out.  Anyone want to tell us why the UAW gets 55% of Chrysler for a $4 billion claim, that was actually worthless, and the taxpayers get just 10% for losing their $5 billion plus a fresh $6 billion!!??!!  Answer:  Because they have no choice in Obama land, that’s why!!

In Obama-land:  UAW 1, taxpayers 0.

When government steps in like this and dictates economic winners and losers it has a very chilling effect on bankers’ and investors’ future decisions to lend and invest money, crushing economic growth and prosperity.  This is why socialist economies grow slowly, or not at all.

Just today, Warren Buffet, a part-time Obama adviser,  came out and said exactly this.  Sadly, in Obama-land you taxpayers and the private sector have no choice right now…unless you are getting a Chicago style political payoff like the UAW.

Well, at least Chrysler finally got the surgery it needed; the doctors cut the taxpayers heart out.

aaa.again is the nom de plume of a frequent commenter who has agreed to be a contributing writer.  He writes from the perspective of decades of success in business, finance and entrepreneurial enterprise.   Learn more about him on the About Us page.

Valentine’s Day is fast approaching, and we all are all thinking about stimulus, right?  However, on this blog we talk about all things economic and political, including the government stimulus package.  For Valentines Day you are on your own.  Good luck.

In recent weeks this blog has more than adequately exposed and enumerated portions of the waste, fraud and hypocrisy that characterize the “stimulus” package, haphazardly crafted by a Congress drunk with its newfound power.  So I thought I would attempt to weigh in with some thoughts that are not so much an amplification of the problems with specific spending proposals, but rather some hopefully thought provoking queries highlighting the responsibilities of leadership, and some basic economic considerations.

Welcome to the Office, President Doom

During difficult economic times in the past, our national leaders have offered messages of various tones, such as President Roosevelt’s “the only thing we have to fear, is fear itself.”  Or how about President Reagan’s classic message of trust and hope:  “stay the course,” which led to “Its morning in America.”

On the other hand, President Carter, a less optimistic “leader,” gave us the infamous “malaise,” speech and admonished us to don our cardigans and turn the thermostat down.  Pretty inspiring, eh?     And now we have President Doom, who intones “pass my bill, or else disaster will follow, you will all be unemployed, to be followed by a slow and agonizing death.”  OK, I took literary license.  But you get my point.  This is not leadership.  This is fear mongering.

Ask yourself, with such supposed high stakes, why do we have the pure politics and blatant pork spending in both the House and Senate bills?  If things are so dire, isn’t there a responsibility to make every last dollar work to get a reasonable economic result?  As recent essays on this blog have pointed out, that is far from the case.  I remember when we suffered the 9/11 attacks.  The parties came together because there was real concern and fear in the country.  I don’t see fear in Washington today.  I see opportunistic, garden variety pork politics designed to expand government.

Give It to Me Straight, Doc!

How bad is it??  For those who are not students of economics, there actually has been wide spread agreement among economists for some time that government fiscal stimulus (spending) is not a particularly effective counter to recessions.  (Paul “I Never Saw a Government Expenditure I Didn’t Like” Krugman aside).

Somehow the notion has lost its way in the current environment.  Why?  Perhaps because monetary policy – the Federal Reserve induced reduction in interest rates – is viewed as tapped out.  The rates can’t go any lower.  Or perhaps because of the canard that “these are extraordinary times,” so we can throw the rules out.  Politicians making justifications like that should make you suspicious.

Extraordinary times?  Let’s talk about that.  The primary statistic we get in media reports and political speeches is “job losses greater than any time since the Great Depression.”  Have you noticed that only raw numbers are cited?  What these people fail to tell you is that if properly characterized, job losses as a percent of the size of the population aren’t even close to the worst.

The “workforce,” defined as everyone with a job, plus everyone who is unemployed but wants a job, is 47% larger today, than it was at the beginning of the 1981-82 recession. You would expect the raw job loss numbers to be bigger today.

The unemployment rate during the 1981-82 recession reached 10.8%.  It is now 7.6%.  President Obama says we’ve lost 3.6 million jobs since the current recession began.  In fact, if that number doubled the unemployment rate would reach 9.8%, still not equal to the 1982 rate.

Give It to Me Straight, Doc! II

So will the stimulus cure it??  I won’t get into boring academic jargon or mathematical models.  Let’s just say, it will work, but just a little, and not nearly as much as advertised.  But more importantly, one has to ask, as any economist would, not just what the potential benefit of an economic policy is, but also what are the costs?  So what are the potential costs of the stimulus?  They are threefold:

• A short term stimulus may have a benefit in, well, the short term.  But when the stimulus is withdrawn, the effect is reversed.  Said another way, unless you believe in a strategy where we are to have serial stimulus packages every two to three years, (which is silly, not to mention unaffordable) we are just moving recessionary contraction from today until a couple years from now.  Kicking the can down the road, if you will.

• Classic government fiscal stimulus largely takes the form of construction projects.  It sounds so seductive and easy.  “Hey!! Here’s some money.  Go build some stuff, and employ some people.”  (It gets labeled ‘infrastructure,’ today.)  Well, yes, we do need some infrastructure rebuilding.  But how much?  More importantly, has anyone noticed that we just came off an easy credit and government policy induced building binge, ending in a classic bubble bursting?  That bubble means we simply have too many structures, residential and commercial, and more construction workers than the long term needs of the economy suggests we should have.  The country needs to make adjustments; those workers need to get at the task of moving into other lines of work.  But what does the stimulus package do?  It has us, and those workers, diving right back into that construction mess.  This only means that when the stimulus money runs out, those workers are two years older, and still facing the same problem.  Delaying the inevitable is not good policy, it’s a cruel joke.  But it is classic government, and it carries a cost.

• Again, without getting into economic jargon, there is a textbook economic identity that no economist, left or right disagrees with:  savings = investment plus the current account.  (The current account is the deficit, however financed.) So if the government stimulates spending then in the short run savings must go down (your only choices are to spend, or to save), which means investment goes down or the current account goes down.  Said another way, we reduce growth inducing investment, or we finance the deficit with more debt, or selling off assets.  Those are real costs.

If your eyes have glazed over, let me put this all into summary perspective.  All this means is that working our way out of the current economic issues will take time, perhaps two to three years.  This is the way a large and complex economy works: slowly.

Remember the 1999 dot.com bust??  Then 9/11.  It took time to recover.  Bust in ’99, sliding into recession in 2000; recovery not until 2003.  Recoveries require population growth, older goods wearing out, productivity growth, investment and innovation.  Perhaps, dare I say it, even a tax cut?!  In other words, recovery the old fashioned way.  Slow, steady, hard work.  Beware the man peddling a magical quick fix.  It’s not what it seems.

President Doom is clearly playing politics, telling us of his concerns about the unending depths of the recession, but in my opinion really using this fear mongering as a prod to implement a leftist agenda.  Further, all the costs I cited about the stimulus have a common theme: they don’t solve the problem, they just kick the problem down the road a few years.  In my opinion, President Doom is hoping for a quick fix, hoping that the 2010 congressional elections will be conducted in an environment of recovery.  However, chickens eventually will come home to roost, as his pastor has informed us.  I don’t like politicians who play politics with people’s economic wellbeing.

We once had a great President, Ronald Wilson Reagan, who entered office facing runaway inflation, stagnant productivity and high unemployment, and a dispirited public.  He told the nation that if they stayed the course with his policies, and put their belief in themselves, the country would recover and achieve new heights.  It was tough, but two years later he was right.  And twenty-five years of growth and prosperity were unleashed.  He didn’t go for the expedient quick fix.  That’s called leadership.

Unfortunately, in this Presidential election cycle we got President Doom, who trades quick fix gimmickry for political gain.  As all the country has just witnessed, it’s the Chicago/Illinois machine way.

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We Voters Tell Pollsters We Want Change.

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Do We Really?

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It’s a nice thing to say, “change.” But voters continue to pull the lever election after election for politicians who claim they will solve the very same problems that have vexed us for years.  But the fact is that those problems just never get resolved.  Pull out a speech by a politician from 15, 25, 45 years ago and you will see them promising to solve almost the same list 2008 crop promises!  How do we explain this behavior?

The failure of government to “solve” problems is not due to any shortage of government spending. The chart below shows the growth in population and federal spending, adjusted for inflation since 1965, when “The Great Society” package of shiny new government programs was created to “win the war on poverty.”

We hear from the left that the military soaks up most of the government’s resources leaving crumbs for social problems.  Yet, as the chart shows, the growth in military spending is dwarfed by the growth in other programs.  And, the additional military spending bought tangible benefits: an end to the draft, a better trained, all-volunteer force, and astonishing new technologies that didn’t exist in the sixties, and have dramatically reduce casualties.

This 500% increase in non-defense spending is only for the Federal government!!  I doubt anyone’s state, local and property taxes are going down.  By any reasonable measure government has plenty of resources.

What do we have to show for this spending binge?  Has government put “an end to poverty?”  Not yet, even after billions and billions in expenditures.  Has it “fixed health care?”  No.  Sixty year old government programs like Medicare are going broke, and in the current campaign candidates are promising yet again to fix the problem.

How about pensions?  Social security is in constant need of triage, which really means another round of tax increases.  “Energy independence?”  Obviously not.   “Better education?”   The government already largely controls our failing school system, but the high school drop out rate in cities is 50%, and here in Chicago public school kids routinely have to duck from bullets.  Not a good report card if you ask me.

How about “protecting jobs and creating competitiveness?”  I don’t think so.  For decades we’ve heard politicians routinely berating corporations for their greed in making profits, and promising to raise their tax rates and regulatory burden, while telling workers this will lead to more jobs.  How’s that been working out?

And our infrastructure?  Well, only after we finish with the pet pork projects.  And so it goes.

Government has not worked and is not working.  It is larger than ever, soaking up more taxes than ever, and is more intrusive in our lives than ever.  But it is not solving problems.  The fact that politicians are running on the same old platform to solve the same old problems tells you this.

Government is simply ineffective at all but a few select tasks, and that’s a pattern that has persisted for at least the 50+ years since the first round of The Great Society.  And yet amazingly we have one candidate, Barack Obama, who is essentially running on the same, Great Society platform this year.  “This time it will be different,” you see.  That’s his “change,” I guess.

I am not a zero government, zero tax anarchist.  There is a place for government.  But all our experience suggests that it should be limited, and a last resort.  And we should demand results, or refuse to let government posture as the solution.  I ask any reader of this essay: is there any credible evidence that government can more effectively spend the national income – your income – by taxing it away from you to be spent by Washingtonians??  This is not intended to be a cute question.  It’s a simple, straightforward and honest question.  What do you say?

So how do we explain the voter’s attitude toward government?  As I have noted, they keep pulling the lever for every new politician who comes along promising to be the one to finally solve all their problems.  We’re told that one definition of intelligence is to not make the same mistake over and over.  Is the American Voter stupid?  I don’t think so.  Actually, I believe quite the opposite.  So again, how do we explain this?

I end with an unfortunate conclusion, and a recommendation.  First, as best I can decipher, a large number of Americans have developed an incredible sense of entitlement, and in fact are perfectly willing to use the taxing mechanism of the State to enrich themselves at the expense of their neighbor.  We have a euphemism for this:  “voting your interest.”  That sounds nice.  But it is just old style “beggar thy neighbor” politics.  “You’ve got money, I want your money (or I want to spend your money on my pet issues) and my vote can make that happen.”  Politicians nurture, encourage and count on this sense of entitlement

In addition, I have concluded that a large number of average American Voters – Republican or Democrat – are really just plain old partisans, masquerading as independent thinkers.  It’s unfortunate, but despite how ineffectual or destructive government programs are, if they happen to be enacted or proposed by a particular voter’s party, they are viewed as “good.”  It’s the “hooray for our side” effect.

Here is some unsolicited advice.  I have no idea if John McCain and Sarah Palin can actually bring reform to Washington.  It’s a tough town with entrenched interests.  But the simple fact is that they are the only ones with a record and reputation as reformers; they are the only ones talking reform.  Any voter really fed up with Washington and who wants a shot at “change” needs to consider that very carefully when they go into the voting booth.

Otherwise, I can absolutely guarantee you this:  a vote for the seductive taxing and spending protocol that Barack Obama offers means that 15 years from now another fresh candidate will come on the scene.  Government will be bigger, taxes will be higher, and this candidate will promise “change” and a host of new government solutions to problems.  The same old problems that former President Obama didn’t get fixed.  History demonstrates this.

I guess this series of essays has looked like somewhat of a scolding of the American voter, and a defense of the natural behavior of politicians.  It is not intended to be either.  Rather, it is just a query about the observed odd behavior of voters, repeatedly beating their heads against the wall in search of “good government,” a utopia we never seem to achieve.

What’s the problem?  I understand that the phrase was used many years ago, and in a different context, but I am afraid that the title of this series is the real answer to my question:  “we have met the enemy, and he is us.”

Voters: Short Memories, a Selective View of the Facts

and a Strange Fascination

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In any number of newspapers you might pick up today, letters to the editor decry the current “economic mess.”  The mass media similarly have proclaimed imminent recession and economic disaster for over a year now.  For over a year!!  The fact is that a crucial measure of economic well being, the unemployment rate, during the full tenure of President Bush’s term is essentially indistinguishable from the unemployment rate cited as evidence of the Clinton “economic miracle” in the 90’s.

What about the current housing and financial market “crisis” you ask?  Yes, there is a very real and considerable issue in the financial sector.  But have we forgotten that as Bill Clinton exited the stage in 2001, to a crescendo of media adulation, he left a crashing stock market, the tech sector dot.com bubble, and a looming recession?

Asset bubbles happen; slow economic growth follows.  It’s an empirical fact.  But we recover.  Anyone who bought a house for the long haul will do just fine.  The median home price is still 50% higher than five years ago.  Think about that for a moment.  Investors, and those who just want to own their own home, will do just fine.

Voices of doom also tell us that despite GDP figures or unemployment rates we have a loss of manufacturing jobs, shrinking wages and the loss of the American dream.  Serious issues, indeed.  But do those apologists, and do voters, realize that these are very long term (think multiple decades long) issues that transcend the term of a particular President or Congress?  Apparently not.

This crisis-mongering is simply not justified, nor should it be stoked by a sensationalist, agenda driven media and opportunistic politicians.  Objectively, are we soon to actually enter recession?  Will roiling credit markets, issues in the financial sector, the correction in housing, and energy costs finally convey that fate upon the next President?  Perhaps.  The last time I looked the business cycle and episodic economic upheaval had not been repealed, and such a recession would indeed be unfortunate.  But can we have some perspective?

Some would accuse me of being “out of touch.”  But America, an “economic disaster?”  Are you hunkering down in your cellar this weekend, storing water and foodstuffs?  Or are you planning a normal weekend?  C’mon, get real.

Switching emphasis, the voter’s fascination with the government based solutions promised by politicians is quite odd.  The record of government quite simply is just not good.  However, the alternative, private enterprise, although not even close to perfect, is quite satisfactory.

If we review just a few of the changes private enterprise has brought to our standards of living in the last 50 years, and those standards do improve inexorably and measurably decade by decade, we can in no time assemble quite a list.  Let’s start with a few basic items like food, clothing and shelter.  Travel to any city and drive through what was the “middle class” housing area in the 50’s, 60’s or 70’s.  If the proverbial middle class “Average Joe” owned a home at all, it was most likely one of these small, modest little boxes. Today, more of the middle class own homes, and they are bigger and better homes, with air conditioning and full of furniture.

And clothing?  Does anyone really want to compare the price and quality compared to 10, 20 or 30 years ago??  Care to know how many people wash those clothes in their own washer and dryer, and not at the Laundromat like years ago??  How about the quality and choice of foods in the stores?  Fresher produce, higher quality meats and a fabulous selection unimaginable years ago.  We are nation of plenty.  Hunger is not a central focus today, obesity is.

How about health care, a favorite whipping boy of politicians, compared to 40, 30 or 20 years ago? We now effectively treat our high blood pressure and cholesterol.  It used to be the case that if a man had a heart attack at fifty the reaction was, “well, he was fifty.”  Now, it’s “what happened?”  Survival rates for cancer are increasing.  We control our diabetes, our arthritis and even our day-to-day anxiety with effective, and cost effective medications brought to us by the drug companies.  While politicians rail against the drug companies, the reality is that morbidity and mortality have been greatly reduced.  Need a fancy image study to diagnose a problem?  CAT scans and MRI’s now do what used to require exploratory surgery.  And the available surgical procedures of today stretch the imagination.

Turning to everyday creature comforts, the list is almost endless.  We love our rooms full of flat screen TV’s, our cell phones and other consumer electronics.  We used to have only our radios, and maybe a color TV.

How about transportation?  More people today own cars.  Perhaps two or even three.  And they are nicer, safer and more reliable.  Speaking of transportation, how many of those middle class Average Joe’s who used to drive or take the bus or train on a trip now fly?  Off to college?  Spring vacation?  Visit grandma? Christmas?  The big Bowl game?  Off to the airport we go!

I haven’t even mentioned perhaps the biggest change of all: personal computers and the associated information revolution.  Politicians keep telling us we need government.  The private economy doesn’t work, the middle class is hurting and has to choose between putting food on the table and health care, gas or some other vital need.  I don’t know about you, but I’ve actually been outside my house in the real world recently.  From what I see the real choice seems to be between cell phones, or ipods, or a nice dinner in the city, or the tickets to this weekend’s baseball game – and health care.

How about government?  Politicians have promised a lot from government.  How has government performed?  Politicians declared a “War on Poverty” 45 years ago, and yet are still able to run today on anti-poverty platforms, despite billions and billions of expenditures.  I guess government didn’t win.  Further, government seems to have created a permanent and dependent underclass in the process.  Interestingly, no politician in this election cycle has talked about “ending this costly and un-winnable war.”

How about infrastructure, a function most would agree is a legitimate government function?  It’s an overcrowded, crumbling and neglected mess.

Health care?  That’s a big issue this year.  All the candidates profess they will fix it.  But how have government’s initial entries into the health care field, Medicare and Medicaid, performed?  Answer: miserably, and getting worse to the point of driving the nation towards insolvency.  Look at the numbers.

Politicians have promised industrial competitiveness for years.  Did they prevent the steel mill jobs from leaving?  No. Did government create the wealth and prosperity associated with Microsoft, or Google?  No.  Today we routinely hear politicians wringing their hands over “energy independence” and the “trade deficit.”  But the truth is that politicians stand in the way of solutions like nuclear energy and domestic oil exploration.  The result?  American consumers pay $4 bucks/gallon for gas and must keep sending their dollars overseas to hostile governments.

And lastly, lest one ask about government’s role in regulation and the current turmoil in the financial markets, I simply note that these markets are among the most highly regulated in our economy.  Further, if regulation is your proposed solution, please go look at two key pieces of legislation and regulation that started this whole mess: The Community Reinvestment Act, and the post Enron “mark to market accounting rules.  No, politicians and government won’t come out smelling very good here either.

Politicians Behaving Badly and Voters Who Love Them

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Perhaps it’s just an increasingly jaded view that accompanies advancing age.  Maybe it’s wisdom and maturity.

In either event, with the conventions over, and a long campaign season to reflect upon, I find myself annoyed and intellectually offended by the torrent of fabulist promises from the Presidential candidates.“Change,” they promise.  Ah, yes, glorious change.

But have you heard any candidate offer something that sounds like real change, something really different, especially when it comes to the “big issue,” the economy?  I haven’t.  Back during the primaries I watched with amusement a debate between Senators Clinton and Obama as each shamelessly attempted to trump the other with increasingly implausible promises of government largesse:  “Oh, yeah!?  I’ll see your promise of a giant chocolate bar, and raise you two toffee bars and a cup of tapioca pudding.  Take that!!”

It made you want to avert your eyes.  Campaigning in Pennsylvania, Senator Clinton promised to “get America back to work.”  Not to be outdone, Barack Obama routinely denounced the “middle class squeeze” and promised “change” from the “failed Bush policies.”

Today?  They will all “fix” Wall Street.  If only you will vote for me, they say, a shining and wonderful future will surely follow.  Sigh.

If distilled to its essence, the central message of almost all the candidates in debates, speeches and campaign website policy manifestos comes down to: “you poor, grievously wronged little dears, times are tough, and if only you will vote for me I will create a government program or payout scheme to fix each and every one of your ills and concerns.  And be assured, if I have to, I’ll fleece that no good rich neighbor of yours to do it.”

This is tired, old standard issue populism.  We’ve heard it all before, yet actually fulfilling those promises seems to have eluded all the politicians who made them in the past.  Sen. Obama has at times attempted to finesse this crass “vote your own interest” appeal by wrapping his message in the positive veneer of “hope.”  But I see no reason or evidence that standard issue Robin Hood politics cloaked as “hope” have any better prospect of working now than they ever have.

It occurs to me, however, that the focus of my annoyance is misplaced.  After all, a politician’s endless promises to hand out goodies in exchange for votes is nothing more than the employment of proven and focus group tested campaigning techniques for the purpose of achieving the politician’s explicitly stated goal – winning an election.  The politicians haven’t really done anything wrong.  Mind you, they have shown no propensity to lead rather than simply pander.  But they have done nothing wrong.  Let’s be honest.  Politicians don’t control the voters’ minds or pull the voting lever.  Voters do.  And wouldn’t political science professionals tell us that this class warfare, populist approach has a rich heritage that dates back to at least Williams Jennings Brian?

So the real question is to understand what voters are thinking, and why a significant, and perhaps increasing, portion of the electorate is susceptible to this populist message election after election?  Are a large number of American voters in an almost perpetual state of anxiety, anger, self pity or simple sense of entitlement, and in search of a politician to be the “savior” to deliver them the goodies they believe they deserve?  As you might surmise, implicit in this question is the observation that the track record on politician’s promises of government based solutions is (shall we be charitable) at best “mixed.”  In the next installment we will take a brief look at the results of government’s handiwork, and compare it to private enterprise.