With
a last-minute debt deal reached, I’m reminded of two holy words in
Washington: “compromise” and “bipartisanship.”
It’s amazing that the political elite have so twisted the English
language as to lend virtue to these terms. In Washington, these words hold
intrinsic value… similar to how “truth” and
“honesty” do outside D.C. Unfortunately for the American public,
Washington compromises have been and will continue to be the death knell of the U.S. economy – and particularly
the free market.
Rarely
does compromise ever benefit the small-government side of the argument.
Instead, compromise increases the size of the state step by step. For
example, suppose the left wants $2 billion for organic school lunches. Of
course, the free-market guys are against this bill; they want $0 dollars in
extra spending. So, what’s the compromise? The two meet at $1 billion.
But
this only makes one side better off. In a true compromise, each side would
get something. In this case, spending grows by $1 billion, and the small-government
side gets nothing from the deal. Future spending was simply reduced from $2
billion to $1 billion. The small-government advocates are further away from
their goal than they were prior to the deal. In a way, this really
isn’t a compromise at all.
One
could think of similar examples to prove the point. Suppose someone wanted to
put ten drops of arsenic in your food. Does negotiating the person down to
five drops improve the situation? No, it doesn’t. That’s exactly
how America has been poisoned over time. Sometimes the dosages are smaller,
but it’s the same lethal stuff for our long-term fiscal situation.
This
happens with regulation as well. Think about the Dodd-Frank Act. The
financial industry has been fighting tooth and nail first with Congressmen and
now with the government bureaucrats implementing the law to reach a
compromise on the particulars of the law. But it’s not a compromise
where the financials win: Rather, it’s a battle to lose less.
“The struggle to lose less” has become the definition of a
Washington compromise.
A
real compromise would involve a tradeoff where both parties gain. For
example, regulations could be increased on derivatives, with deregulation
occurring in other parts of the financial sector. Trust me; there are plenty
of harmful regulations on the books. Each party gains something and trades
something else. That’s how compromise works in the real world.
But
don’t expect to see this happen anytime soon – at least not in
regard to the free market. In reality, these tradeoffs do happen. However, it
works more like this: “I’ll sign your war spending bill if you
sign my local pork stimulus bill.” Sure, that’s a real D.C.
compromise – and a third party is the real loser, i.e., the American
taxpayer.
[These kinds of compromises have also
allowed the political leaches to bleed your bank accounts. Read this free
report to learn all about it and to start profiting from it.]
Vedran Vuk
Casey Research
