Richard Nixon won a landslide victory in the 1972 presidential election by offering fat Social Security benefits to retired- and soon-to-be-retired voters. George W. Bush won re-election in 2004 by delivering $50 billion per year of prescription drugs to voters (Medicare Part D).
Last week, President Obama groused that the “private sector is doing fine”, but state and local governments couldn’t hire workers. What he was really concerned about is that there are no government jobs to pass out in exchange for votes in this election. All that he has are some lousy food stamps to sprinkle around.
So what happens in this dawning “Age of Sovereign Insolvency” when politicians can no longer afford to purchase votes by expanding the welfare state?
Maybe we can get a hint from this week’s elections in Greece. Joe Weisenthal has reported the existence of numerous, cookie-cutter “Communist” parties. Not even the party members could explain the differences between these parties.
A clue to solving this mystery is that politicians in bankrupt European nations are surprisingly promising to hire even more government workers. For example, France’s new president, Francois Hollande promised to hire 60,000. Greece is much smaller than France, and in worse shape, so maybe it is only realistic for its candidates to promise hiring a much smaller number. Let’s say, 1,000.
And lets assume that these are really payoff promises to party members and supporters.
So, if you are out of work, and go to a political meeting in Greece, and there are already 1,000 party members, you might think: “Hmmm, I’m way down on the totem pole here. Maybe this guy won’t be able to give me a job if he gets elected. Maybe I should go down the street and see what the situation is with the next party.”
So, you go to the next party. And maybe the next. And the next, until you find one where your prospects for getting some spoils look realistic.
And if you can’t find such a party, maybe you start one of your own. Before you know it, there dozens of identical “parties” all of the same size.
Of course, the USA has a different political system than Greece does, so things will certainly play out differently here. But make no mistake, it is the same dynamic.
But is this really politics? Or is it, in fact, just corruption?
Instead of the “End of Politics” maybe this will be the beginning of politics. After all, if votes can no longer be purchased, office-seekers will have to step up their game, no? They will have to actually propose programs to help the entire nation rather than just distribute spoils to their constituents.
Ha, ha! Just kidding! The politicians are far more likely to just default on the debt, and go right back to borrowing & purchasing votes again. But maybe you are wondering why anybody would buy the newly-issued bonds of a deadbeat government? And the answer is that such a government would have no debt! They won’t have to default again for a long, long time.
Maybe they couldn’t pull that off, but it wouldn’t be for a lack of trying. We already saw trial balloons floated for a default back during the debt-ceiling crisis in 2011.