Economics & Finance

DOGE is an Oxymoron: Unchecked “Democracy” is the Problem

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Unlike the private sector, where operational efficiency is necessary to survive, the public sector is and always has been inherently inefficient. But that’s not the main problem. Think of federal public polices justified as being in the “public interest” as a building. On the upper floors are the best of them, the merely inefficient. At the mezzanine level are those suffering from extensive waste, fraud and abuse. On the ground floor are policies and programs rife with self-dealing and crony capitalism. Down in the basement is the “temple of virtue” where taxpayers are sacrificed to multiple ideological isms.

DOGE is peeking inside the locked doors on all four levels. As DOGE exposes “Dirty Deeds, Done Dirt Cheap,” politicians cry foul, as “they were implemented (by us) democratically. To paraphrase Churchill, “democracy is less bad than totalitarianism,” but, he might have added “generally worse than competitive private markets.” At this stage in US democracy, DOGE revelations have lost some of their shock value as commonplace, and politicians emphasize their good intent. DOGE needs to demonstrate that “good intentions” often lead to bad outcomes, and do not justify corruption in any case.

DOGE alone can only win a few skirmishes against Congress and its massive army of rent-seekers feeding off their largess. With public understanding and support, the Trump Administration could bring about more permanent structural changes that provide greater voter control.

Life is a Competition

Americans love sports, from 5 & 6-year-old soccer leagues through high school, college and pro teams, where the competition to succeed is intense. Pro sports is a business, as the recent Luka Donic trade to the Lakers reminds us, with winners and losers. It is incredibly “democratic” as millions of fans choose what players to follow, games to attend or stream at the posted price, and owners respond continuously to fan expectations. The competition is subject to a massive set of complicated rules and limitations enforced by referees and judges whose integrity is subjected to coaches’ challenge, instant replay and fan fury. That reflects the system of checks and balances that a competitive private market incorporates.

Now imagine a pro sports league designed and governed by the most honest and altruistic national politicians. They would deem it unfair to pay some athletes more than others, or to exclude the weak or physically impaired from the competition. Winners would be determined by political deal making in smoke-filled back rooms. Prices would be determined according to “ability to pay” and ticket purchases would be mandatory whether or not attending the games, with revenues first flowing through party coffers. Fans would be told who to root for and losing teams and cities would be declared winners so as not to result in hurt feelings. Voting against this system would result in your team being designated the loser but you would still be required to buy the tickets. That’s a metaphor for our current “altruistic” federal democracy.

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“Evil Amazon”

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Josh Treviño regarding the Mexican cartels:

“It is evil Amazon, really. They’re logistic firms with small armies attached that will profit from whatever they can and increasingly take on the characteristics of insurgency.”

I think the Amazon comparison is apt, but Treviño pulls up a bit short because it’s more than just logistics. Amazon has proven to be a master of leveraging existing capabilities in order to exploit new markets. There is of course its e-commerce transformation from an online bookstore to selling just about everything under the sun. Then there was its leveraging the last-mile delivery and now using its expertise in data centers to develop AWS and enter the AI market.

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2024 Election Plus/Delta

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Pluses: admittedly much the shorter list, but we did resolve a few things.

  1. Thanks mainly to vote shifts in California and New York, the popular vote outcome was not at variance with the Electoral College vote, and it wasn’t particularly close (over 4-1/2 million votes).
  2. Largely as a result, the losing side, and VP Harris herself, have indicated cooperation with formal certification and transition processes.
  3. Harris is gone. She’ll get a chunk of money for a book and retire to the lecture circuit.
  4. Walz, same, and given the likelihood that he would have been a 21st-century version of Henry Wallace, with Chinese instead of Soviet agents in his inner circle, that might be more important than getting rid of Harris.
  5. Taking a somewhat longer view, Trump is gone too (perhaps not a much longer view; see the final Delta item below).
  6. By extension, there is some chance that ’28 will not have the electorate choosing between a crook and an idiot for President.
  7. Whatever one may think of prediction markets, and there are arguments on both sides regarding their functionality, the biggest prediction market of all, the US stock market, was forecasting a Trump victory all year (not coincidentally, the same thing happened in 2016).
  8. By the way, the media will actually report negative economic news now.
  9. I could have put this in either category, but I’ll leave it here: your Cluebat of the Day is a reminder that Trump is as old as Biden was in ’20, and notwithstanding some of my more apprehensive items below, to expect anything much of him is a waste of time.
  10. Likely continuation of relatively good space-industry policy across Administrations, which should be the only thing that matters several decades from now.

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On the Waterfront

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The longshoreman strike is a great example of why you need a functioning president at the top of the executive branch.

There has been a lot of gobbledygook from leftist circles over the past several months that Biden’s inability to carry out the functions of the presidency is not a crisis because for the most part government runs on its own. They say, sure he’s not up to another four years but let’s not go crazy and start thinking about invoking the 25th Amendment forcing him to resign; we’ve got smart people in government and can get by.

Well the two arguments against that are the natural entropy of government and the ability to deal with crises. In both cases, someone needs to have both the legitimacy and incentive to knock heads and take the risks needed in a leader; as the sign on Truman’s desk said, “The Buck Stops Here.”

We’ve been skating on thin ice for a while regarding possible labor unrest across various critical parts of our transportation network and the longshoreman strike couldn’t have come at a worse time for the Biden Administration. The International Longshoremen’s Association (ILA) has maximum leverage given its ability to shut down the ports in the eastern half of the country, at a time when the economy is especially vulnerable and during the final month of an election when the Democrats need union support in a tight election.

The last thing the Democrats need is the economy to go into a tailspin. The second-to-last thing they need is the labor unrest that would stem from invoking Taft-Hartley and breaking the strike.

Outside of the danger to the economy and people’s livelihoods, there is something almost entrancing about the cartoon villainy of ILA President Harold Daggett, who has threatened to cripple the economy if his demands aren’t met regarding pay and automation. You can argue that long-term he is being foolish because he’s converted a viable threat in-being into a dangerous threat in fact — the best threats you can have are the ones you never have to state let alone use.

It also doesn’t help that the productivity of US ports is among the lowest in the world. In the world of tight supply chains and container shipping, inefficiency in port operations has the same effect as a tariff on the cost of goods. To paraphrase William J. LePetomane, Daggett and the ILA need to protect their phony baloney jobs. I’m as nostalgic as the next guy, but not for that ’70s vibe of unions using extortion to protect their cushy way of life.

So basically our cartoon villain Daggett has thrown down the gauntlet and challenged the feds to come get him. The problem in the executive branch is that anyone can make a decision and get it implemented under Biden’s signature, but there has to be somebody willing to take the risks and the heat to see that decision through and that’s where the buck stops. Somebody needs to not just broker across the various interests in any administration but to make the decision stick. There’s only so much our 21st Century version of Edith Wilson, Jill Biden, can do.

Like Zelensky and the mullahs, Daggett knows that a Republican victory will undercut his leverage so he’s in a use-it-or-lose it situation. If Biden does nothing, the economy tanks. If Biden breaks the strike, he weakens a valuable base of support for the Democrats right before the election.

From the Middle East to the Atlantic-Gulf Coast ports, the consequences of the Biden puppetry are coming home to roost.

Side note. It’s a shame Jen Psaki is no longer in government so that when the inevitable shortages from the ILA strike occur she can poo-poo us about “the tragedy of the treadmill that’s delayed.”

Today’s Labor Day Viewing

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