Sam Vaknin, Ph.D.
Sam Vaknin is the author of “Malignant Self Love – Narcissism Revisited“

The agent-principal problem is rife in politics. In the narrative that is the modern state, politicians are supposed to generate higher returns to citizens by increasing the value of the state’s assets and, therefore, of the state. In the context of politics, assets are both of the economic and of the geopolitical varieties. Politicians who fail to do so, goes the morality play, are booted out mercilessly.

The misconduct of politicians is one manifestation of the “Principal-Agent Problem“. It is defined thus by the Oxford Dictionary of Economics:

“The problem of how a person A can motivate person B to act for A’s benefit rather than following (his) self-interest.”

The obvious answer is that A can never motivate B not to follow B’s self-interest – never mind what the incentives are. That economists pretend otherwise – in “optimal contracting theory” – just serves to demonstrate how divorced economics is from human psychology and, thus, from reality.

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The same goes for politics and political science, respectively.

Politicians will always rob blind the state. They will always manipulate electorates, political parties, legislatures, and the judiciary to induce them to collude in their shenanigans. They will always bribe constituents and legislators to bend the rules. In other words, they will always act in their self-interest. In their defense they can say that the damage from such actions to each citizen is minuscule while the benefits to the politician are enormous. In other words: such misbehaviour is the rational, self-interested, thing to do.

But why do citizens cooperate with such political brigandage? In an important Chicago Law Review article titled “Managerial Power and Rent Extraction in the Design of Executive Compensation” the authors demonstrate how the typical stock option granted to managers as part of their remuneration rewards mediocrity rather than encourages excellence.

But everything falls into place if we realize that citizens and politicians are allied against the state – not pitted against each other. The paramount interest of both citizens and politicians is to increase the value of their benefits (stake) regardless of the true value of the state. Both are concerned with the performance of their individual assets rather than with the performance of the state. Both are preoccupied with boosting the “share’s price” rather than the “company’s business”.

Hence the inflationary perks and pay packages enjoyed by politicians, directly (via campaign contributions, personal favours, an enhanced quality of lifestyle) and indirectly (via the revolving door between politics and business). Citizens hire “stock manipulators” – euphemistically known as “politicians” – to generate expectations regarding the future prices of their stakes in the state.

These snake oil salesmen and snake charmers – politicians – are allowed by the citizenry to loot the state providing they generate consistent “capital gains” to their masters. This they do by provoking persistent interest and excitement around the country and the nation and their prospects, both economic and geopolitical. Citizens, in other words, do not behave as owners of a firm – they behave as free-riders.

The Principal-Agent Problem arises in other social interactions and is equally misunderstood there. Consider taxpayers and their government. Contrary to conservative lore, the former want the government to tax them on condition that they share in the spoils. They tolerate corruption in high places, cronyism, nepotism, inaptitude and worse providing that the government and the legislature redistribute the wealth they confiscate. Such redistribution often comes in the form of pork barrel projects and benefits to the middle-class and the affluent.

This is why the tax burden and the government’s share of GDP have been soaring inexorably with the consent of the citizenry. People adore government spending precisely because it is inefficient and distorts the proper allocation of economic resources. The vast majority of people are rent-seekers. Witness the mass demonstrations that erupt whenever governments try to slash expenditures, privatize, and eliminate their gaping deficits. This is one reason the IMF with its austerity measures is universally unpopular.

Employers and employees, producers and consumers, voters and elected officials all reify the Principal-Agent Problem. Economists would do well to discard their models and go back to basics. They could start by asking:

•   Why do shareholders acquiesce with executive malfeasance as long as share prices are rising?

•   Why do citizens protest against a smaller government even though it means lower taxes?

Could it mean that the interests of shareholders and managers are identical? Does it imply that people prefer tax-and-spend governments and pork barrel politics to the Thatcherite alternative?

Nothing happens by accident or by coercion. Electorates the world over aided and abetted the current crop of venal politicians enthusiastically. They knew well what was happening. They may not have been aware of the exact nature and extent of the rot, but they witnessed approvingly the public relations antics, unnecessary wars, rampant malfeasance, media manipulation, opaque transactions, and outlandish pay packets. People remained mum as they witnessed the mounting corruption of the political-corporate nexus.

Still, there is an even narrower and more worrisome interpretation of the politician’s comportment, in which he is answerable not to his constituents, but to party hacks.

It is a common error to assume that the politician’s role is to create jobs, encourage economic activity, enhance the welfare and well-being of his subjects, preserve the territorial integrity of his country, and fulfil a host of other functions.

In truth, the politician has a single and exclusive role: to get re-elected. His primary responsibility is to his party and its members. He owes them patronage: jobs, sinecures, guaranteed income or cash flow, access to the public purse, and the intoxicating wielding of power. His relationship is with his real constituency – the party’s rank and file – and he is accountable to them the same way a CEO (Chief Executive Officer) answers to the corporation’s major shareholders.

To make sure that they get re-elected, politicians are sometimes required to implement reforms and policy measures that contribute to the general welfare of the populace and promote it. At other times, they have to refrain from action to preserve their electoral assets and extend their political life expectancy.

Snake-Oil salesmen John McCain and Sarah Palin are in “Hyena Mode” — desperate and discombobulated, the McCain-Palin team are chewing at anything in their path, including each other.

The empty headed DIVA — Sarah Palin, is squabbling with her handlers, and every “Cockroach” in the McCain camp is scampering to save “dear hide,” in the face of imminent defeat, as THE ONE — Barack Obama takes the fight to them in Republican red-state turf.

The Huffington Post reports: Even two Republicans once on McCain’s short list for vice president sound skeptical. In a fundraising e-mail on behalf of Senate Minority Leader Mitch McConnell of Kentucky, Mitt Romney referred to “the very real possibility of an Obama presidency.” In the Midwest, Gov. Tim Pawlenty gave a dour assessment of McCain’s chances in his state, saying Barack Obama “has a pretty good advantage in Minnesota right now.”

Even tax cheat “Joe The Plumber” a.k.a “Joe Wurzelbacher The IDIOT,” now a McCain surrogate, has inserted himself into the pathetic scare mongering mix — boldly insinuating that an Obama presidency would mean the “death of Israel” and the “end of democracy in America. ”

Joe oozes GODLY stupidity like the Republican he is, alright.

Meanwhile a Republican attempt at electronic vote theft was caught on tape in Virginia:

…and some of McCain’s robo-calls have degenerated into “Phone-Sex.”

The negative and racist McCain campaign has driven almost ALL African American voters to Obama. In most polls, McCain is losing these black voters by margins like 97% to 1%.

You can bet the Latino vote is not far behind. John McCain the former champion of Comprehensive Immigration Reform recently did a one hundred and eighty degree turn, and is now in bed with the extremist “Tom Tancredo-Lou Dobbs Wing” of the Republican Party — Vicious xenophobic Mongrels, who I am sure, with sufficient provocation would KILL EVERY IMMIGRANT ON SIGHT.

Bob Herbert sums it up eloquently: “The heyday of Lee Atwater and Karl Rove is over. Yet Senator John McCain handed the reins of his campaign to Mr. Rove’s worshipful acolytes.” “The classic fear card that the Republicans have played to such brilliant effect for years — will not work anymore!” — [MORE]

Olbermann on Palin: Socialist, fraud

In a Special Campaign Comment last night, Keith Olbermann cited yet another example of the McCain campaign accusing Barack Obama of something of which they themselves are guilty. In this case, Sarah Palin is accusing Barack Obama of advocating socialism when she literally used that word to describe the collective wealth sharing in her home state of Alaska.

Guilt By Association?

The McCain campaign has devoted considerable attention and resources to making the point that Barack Obama’s associations are a reflection on his judgment and character. With that in mind, Keith Olbermann takes a look at the staggering volume of questionable associations by the McCain/Palin ticket from disgraced lobbyists to Alaskan secessionists.

Voter Suppression Tactics

Major Confusion in McCain Team

Gook – John McCain’s Racism and Why It Matters

Editorial Book Reviews of: Gook: John McCain’s Racism and Why It Matters

Read More Reviews

Editorial Reviews

“A no-holds-barred exegesis on the naked cynicism of conservatism in America.” –Kirkus Reviews, starred review

“Written with barbed wit and finely controlled anger, he skewers such juicy targets as libertarian strategist Grover Norquist and Michelle Malkin.” –Publishers Weekly, starred review

“Glorious… Often brilliant… Frank’s gloom is leavened by an eye for the unexpected and the absurd.” –Los Angeles Times

“Well-researched and witty… Provides a powerful liberal antidote to the high-volume rantings of Bill O’Reilly, Ann Coulter and Fox News.” –Seattle Post-Intelligencer

“Frank’s gifts as a social observer are on display… His analysis of why there are so many libertarian think tanks in a country with so few libertarians is dead on. In Thomas Frank, the American left has found its own Juvenal.” –The New York Times Book Review

“Frank offers one damning anecdote after another. The Wrecking Crew explains how cynical conservatives have wrested control of the government by railing against its very existence, all while using federal perches to funnel billions into the pockets of lobbyists and the corporations they represent.” –Time

“Thomas Frank is back with another hunk of dynamite. The Wrecking Crew should monopolize political conversation this year. It’s the first book to effectively tie the ruin and corruption of conservative governance to the conservative “movement building” of the 1970s, and, before that, the business crusade against good government going back at least to the 1890s.” –Salon.com

“Tom Frank has hold of something real. The Wrecking Crew can be good, spirited fun. Frank captures a quality of exuberant bullying in those of his conservative subjects he knows well enough to identify individually, rather than categorically.”–The New Yorker

“Frank’s sentences inhale and unfurl with a wit and verve…” –The New York Observer

“Conservatives in office have made their share of blunders and mistakes, and Frank is at his finest in depicting some of the stunning instances of hypocrisy and idiocy in the period of Republican rule.” –The New York Post

“Smart, thoroughly researched, and written with wit and panache.” –The Wichita Eagle

“A welcome read. There is no doubt that Frank is helping to restore the journalistic and literary standards to political books. Elegant… The Wrecking Crew has the rhetorical power to illustrate the dire consequences of a government sold off piece by piece to the highest bidder. One finishes the book feeling as if one’s political vision has been brought into focus.” –The Courier-Journal

“A superb follow-up to What’s The Matter with Kansas?… Thorough reporting and incisive historical analysis. With genuine outrange and blasts of polemic, but Frank never allows The Wrecking Crew to become just another seething right- or left-wing political tract preaching to the choir.” –The Oregonian

“Frank brings invaluable insider perceptions, ardor, and precision to his lancing inquiry into the erosion of democracy and the enshrinement of the mighty dollar… An electrifying, well-researched analysis of ‘conservatism-as-profiteering.’ This staggering history of systematic greed with inject new energy into public discourse as a historical election looms.” –Booklist (starred review)

Product Description:

From the author of the landmark bestseller What’s the Matter with Kansas?, a jaw-dropping investigation of the decades of deliberate–and lucrative–conservative misrule

In his previous book, Thomas Frank explained why working America votes for politicians who reserve their favors for the rich. Now, in The Wrecking Crew, Frank examines the blundering and corrupt Washington those politicians have given us.

Casting back to the early days of the conservative revolution, Frank describes the rise of a ruling coalition dedicated to dismantling government. But rather than cutting down the big government they claim to hate, conservatives have simply sold it off, deregulating some industries, defunding others, but always turning public policy into a private-sector bidding war. Washington itself has been remade into a golden landscape of super-wealthy suburbs and gleaming lobbyist headquarters–the wages of government-by-entrepreneurship practiced so outrageously by figures such as Jack Abramoff.

It is no coincidence, Frank argues, that the same politicians who guffaw at the idea of effective government have installed a regime in which incompetence is the rule. Nor will the country easily shake off the consequences of deliberate misgovernment through the usual election remedies. Obsessed with achieving a lasting victory, conservatives have taken pains to enshrine the free market as the permanent creed of state.

Stamped with Thomas Frank’s audacity, analytic brilliance, and wit, The Wrecking Crew is his most revelatory work yet–and his most important.

See all Editorial Reviews

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