How American Democracy Was Bought… and Sold

Eric Cantor, in the news last week, was the best sort of politician. When he was bought, he stayed bought.

When campaign season came around, the oligarchs wouldn’t forget him. The trouble was, he forgot the poor little ‘garchs’. He was so sure he had the election in the bag, he forgot to lie to the voters.

Some say Goldman Sachs owned him. That is an overstatement; Wall Street only had a leasehold, which expired when his grip on House Republicans gave out.

Besides, most leading industries had a piece of him, too; the defense industry, for example, rented major parts of his heart and brain.

The Death of American Conservatism

Many are the explanations for Cantor’s surprise defeat. We put it down to a failure to run a balanced campaign.

He forgot that political commerce in a modern democracy is a two-way street. You have to buy as well as sell. All very well to offer your services to the 1%. But don’t forget the 99% who will decide an election.

Conservatism in the US took a nasty turn in the 1980s. A generation had grown up since Ike Eisenhower was president. This new generation, much of it slipping into Washington along with Ronald Reagan, had come to see Washington as a force for good in the world — especially outside the fifty states. And even if Washington didn’t always do good, a sharp politician could always do well.

The trick was to talk the old conservative talk for the rubes back home, but to vote for every money-guzzling boondoggle that came along.

Cantor talked the talk too. But it was a mushy talk — full of mindless platitudes and empty phrases.

That would have worked fine had his district been a little farther north. Squeeze up nearer to DC and blah blah is all the voters want to hear. They know how it works.

The nation is tilted towards the Potomac. The money rolls towards its denizens like loose change down a storm drain. The last thing they want is a candidate who speaks clearly about the need to change things.

The greatest fix of all time

But poor Mr. Cantor’s district is on the James River, not the Potomac. Around Richmond, voters are less sympathetic to crony democracy.

This is not because they are more high-minded; far from it. It is simply because they get less from it. They don’t necessarily want more of other people’s money; but they definitely want to keep more of their own.

And they knew that their man in Washington wasn’t helping. Congress reacted to the crisis of 2008-09 with the TARP. It transferred $700 billion to the banks…and gave them $23 trillion worth of credit guarantees to boot.

The first time it was proposed in the House, Republicans voted no. But Cantor — leader of the pack — turned them around. The second vote put the TARP in business and began the greasiest fix the world has ever seen.

Five years later, the voters of central Virginia are still puzzled by it.

How come, after five years of ‘recovery’, are there so few good jobs?

Why is the US Federal Reserve still handing out free money to Wall Street?

Does it have something to do with Goldman Sachs’ generous contributions to Mr. Cantor’s political campaigns?

And might it help him secure a nice position — maybe like former secretary of the Treasury Timothy Geithner at a private equity firm — after his political career is over?

Cantor raised $5.4 million from his cronies for this year’s campaign. At the time, it seemed like overkill. He was the leader of his party in the House…and a household name in Republican circles. He was on the escalator — set to become speaker when John Boehner left.

His opponent, on the other hand, was unknown…and had only $200,000 to work with. The oligarchs had nothing for him, because he had nothing to offer them.

Now his stock is rising fast. Goldman should have made a bid sooner.

Bill Bonner
for The Markets and Money

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Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

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