Path to Corruption

We’ve commented once already on the implications of the Obama administration’s ‘cramdown’ deal against the secured lenders of Chrysler. (See ”American Revolution 2.0 – The Rule of Law” ). We highlighted Warren Bufftett’s reaction—which was that the ultimate result of the cramdown is that lenders will stop lending. In simple terms, when those in the business of lending observe the government stepping in and setting aside established legal principles of the priorities of lenders in bankruptcy proceedings, they recognize that the rule of law has been replaced by the rule of power.

Buffett is of course nothing if not extremely savvy, but he actually is understating where this Obama-thuggery leads (and yes, thuggery is an apt description of power tactics that deny and destroy laws that stand in the way). Denying and destroying the rule of law puts society on a path to abject corruption.

We can hear the scoffs coming from the so-called ‘moderate’ left—“oh, come on, Chrysler is a one-time deal; and it’s ridiculous to suggest society will become corrupt as a result (plus it’s already corrupt anyway; it’s just that the spoils are now going to the left instead of the right).”

These scoffs are the product of the cultural decay we’ve commented on since the inception of Brushfires. Much of the country’s understanding of the private sector has been dumb-downed by decades of Hollywood portrayals of greedy, unethical, unscrupulous, immoral, amoral executives at the helm of every business, large or small. The Hollywood portrayals are lies, plain and simple.

We’ve lived in the private sector for three decades, and we know what we’re talking about. The American economy is a wonder of innovation and improvement, a marvel of efficiency and productivity. It could not have achieved for Americans the unparalleled standard of living that it has but for the fact that the vast, vast majority of those who make it work are hard-working, play by the rules, honest competitors. That there are bad apples along the way should not surprise anyone; there are bad apples in every avenue of human behavior and there always will be. But the bad apples are the exception, not the rule; they are in a distinct minority, not a majority.

So the ‘moderate’ will react to this paean to apple pie and motherhood with “Okay, you’re just proving our point—most of the economy will just keep chugging along, and the Chrysler episode will just be an incident confined to its facts and limited in its impact.”

No, and this is where many fail to appreciate the significance of the rule of law, even though they hear it invoked and may invoke it themselves in their daily conversation. It is true that much of the economy has a sort of inertia to it—people must be fed and clothed and housed and entertained, and so somehow we expect the suppliers of these things will keep muddling along. But where the big dollars flow—with institutional lenders and large enterprises such as Chrysler—what happens when the lender knows the rule of law can be set aside by the government on a whim?

Well, Warren Buffett is right that some will decide not to lend. But after awhile, if they don’t lend, they have no way to make money to pay their own expenses (interest on deposits, for example) and pretty soon they’re out of business. So what’s their alternative to avoiding government caprice?

The painfully obvious answer is: payola in various forms. Pay off the government official so that he will not take capricious actions; contribute to the election campaign of government officials who could harm you. Do deals that the government wants you to do—whether or not your shareholders will benefit; change your product or service in the way the government tells you to—whether or not your customer wants you to.

What does this breed among your shareholders and customers? Massive cynicism and distrust; and an unwillingness of shareholders to invest again, or customers to buy again. (This is what Chrysler and GM are going to find out, as their businesses are headed for complete collapse unless and until the government and the unions get out of ownership and control).

And what does your competitor do in response to your payola practices? He can’t turn you in to the government, because the government is already on the take from you. He can’t sue you in court, because the government appoints the judge who will protect his employer: the government. So his only recourse is to outbid you in payola. “Protection money” is another term for it—which is why you hear the term “Mafia” included in many descriptions of the Obama administration’s tactics.

That’s why the destruction of the rule of law puts society on a path to abject corruption. A society characterized by massive cynicism and distrust, and an economy running on payola—this will lead to, and has always lead to, and can only lead to disaster—to a sapping of the human spirit, and a complete loss of confidence and hope in the future.

You may read hundreds of books on economic theory, and thousands upon thousands of explanations of the intricacies of what makes an economy grow or decline, but you will never have an answer more simple and more true than this: the human spirit of freedom must be alive and animating activity based on a genuine sense of hope and confidence in the future, or society (and the economy) is going nowhere but down. The wizards of smart on Wall Street or in the Beltway can push every button and pull every lever the economics textbooks say they have, but nothing is going to happen unless and until the human spirit is set right. Freedom and the rule of law are the critical ingredients to setting things right; government control and the rule of power are toxic.

Americans are receiving wakeup calls every day regarding the actions and implications of the ongoing, all-out leftwing assault on our country. A very large number of Americans are awake; many more are in the process of waking up but are still in that state of semi-stupor that follows a deep sleep and can’t quite make sense out of what is happening; and a few wish they weren’t awake, and keep hoping we’re in some kind of national nightmare that we will surely awaken from soon. We’ve catalogued a few reasons for these various states of alertness in ”Not the Obama We Knew; Not the Government We Chose”, and we’ll keep doing everything we can think of to help complete the wake up that is so needed if we want a bright future for America and the world.

Radical leftism disguised itself in the mantle of ‘hope and change’, and is attempting to impose changes to freedom and the rule of law that will put society on a path of abject corruption, and absolutely extinguish genuine hope and confidence in the future. This Soros/Obama leftist agenda must be stopped and reversed, NOW.

(By the way, Mr. Buffett, we're still waiting for an answer to our open letter, "Dear Warren...")

Paul Gable

Posted May 10, 2009