When Balancing Became Swapping

When the federal treasury is large the founding premise of our system of government is gone.    The incentives reverse, like a turning tide,  and it cannot last.

The original congress had limited powers and minimal money.  So they came together to vote the interests of their states, all of whom wanted the central government to stay small.   Any flicker of of an impulse to use the central government would be negated by competing votes.   The center holds.   Politicians get re-elected by protecting their state from the power of the central government, and from other states.     But…

… when the central government gets big — read big treasury — there is a tipping point.  They stop balancing each other and start swapping with each other, and what they swap is their states’ substances.   But, in these swaps, you need to disguise what you are giving and taking — you cannot take a piece of  Virginia back to Maryland.   You both need a larger and larger central store full of fungible treasure.   The center does not hold; the central government literally takes off on a life of its own because 535 points of power need the store to be bigger, and they are all complicit is a sleight of hand:  what goes into the store is not as visible to the contributors as what they see coming out of it.   The tipping point — politicians get re-elected by bringing money from that store back from Washington.   The original incentive is not just eroded, but REVERSED.

You see, they were never supposed to have big buckets of gold to swap with each other.   Add to this swap- meet the feature that they can swap on credit, and the perversity is complete.   When I say “swap on credit”,  stop and reflect; unlike you and I, who could commit certain sums of money to each other in a horse trade but would then have to produce that money,  Congresspersons can negotiate a swap, then simply agree to –together — extract enough money from the populace to cover both of their notes.    It is explicitly corrupt.

We say “get the money out of politics” — and then reform campaign finance.    How ridiculous.    We’re fine with the bank robber as long he rides a cheap ride to the bank and back.   That money wins elections should not surprise or concern anyone.    The corruption is not in the voluntary contributions to get someone elected;  it is in the incentive to stay elected by transferring wealth from taxpayers to tax consumers.

It’s also silly to sound the cry of demanding that the politicians act differently.   Any single politician who refuses to play the game will soon be replaced by his own constituents, because they have all bought into the sleight of hand.   Like children at a magic show, they must see money coming back to them, and they enjoy not seeing it taken from them.

No reform can possibly work that expects the reformed to act against his nature, or against the incentives built into the system he inhabits.    The elected officials are acting in the perceived interests of their constituents (and their own).  It is the very existence of the large treasury that creates the perversity; once it exists, the rest is inexorable and cannot be reformed.

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