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All politics is agency theory
Digital Journal ^ | Oct. 6, 2013 | John David Powell

Posted on 10/07/2013 5:40:04 AM PDT by John David Powell

The posturing politicians, pundits, and poobahs in Washington who participated in this latest partial government shutdown once more prove the wisdom of a couple of political tenets: All politics is local, and agents will act in their own best interests.

Journalists credit the origin of the first principle to Associated Press reporter Byron Price, who headed the Office of Censorship during the Second World War. Politicians and the general public attribute it to former Speaker of the House Thomas “Tip” O’Neill. The second comes from economists Michael Jensen and William Meckling whose "Theory of the Firm" explains why managers do what they do.

Any politician, elected or otherwise, knows the meaning of “all politics is local.” Local voters elect local representatives who must understand and influence what local voters believe is important. To stay in office, a politician quickly figures out what constituents want and how to give it to them. It’s a simple quid pro quo based on personal needs and local issues, not grand ideas or affairs affecting voters a thousand miles away.

On a matter of national importance, a clever politician will figure out a way to localize the issue. If we go on the premise that everyone wants affordable health care, then a key to achieving this goal is a plan that works on the local level, even for those who already have affordable health care. One size does not fit all, whether in underwear or a federal program.

Partisan bickering and the government shutdown have hit Republicans in the pocketbook. The National Republican Senatorial Committee is running about $5 million behind in fundraising this year, compared to four years ago at this time. One reason is the effectiveness of Democrats and the liberal media to tie all Republicans to the antics of our own Texas senator Ted Cruz and other members of the House and Senate beholding to their tea party constituents. Another is because big donors, like those on Wall Street, don’t understand the influence of “local” on national politics.

Here’s an example. In August, 80 GOP members of Congress sent what is now called a “suicide pact” to House Speaker John Boehner urging the de-funding of Obamacare, even if that meant tying it to the continuing appropriations bill and forcing a partial shutdown of the government.

Rep. Blake Farenthold from Corpus Christi was one of them. “Listen, we’ve got to use what few leverage points we have in a divided government, and the continuing resolution is one of them,” he said.

Most of those 80 Republicans out polled President Obama in their districts last year, and they probably plan to run again next year. Their constituents are telling them to keep on keepin’ on. So if they want to be re-elected, guess what they are going to do.

Speaker Boehner doesn’t need a whip to count noses on this. If those 80 members decide not to vote on a bill, the GOP will lose on a party-line vote. So, if he wants to be speaker in the next Congress, guess what he is going to do.

My mother-in-law is another example of “all politics is local” at work. She was complaining several years ago about Congress, declaring “we should throw them all out.” When asked if that included her congressman, she replied, “No, because he’s doing what we want him to do.” Indeed.

And that brings us to the second of our two tenets of politics. One of the many levels of the Jensen/Meckling theory of the firm explains why managers or agents act in their own best interests rather than doing what’s best for their bosses. This is why a CEO insists on a golden parachute that pays out even if the CEO harms the company.

Agency theory also explains why elected officials and voters do what they do. Some will argue re-election is the primary goal of an elected official. Others will argue the main goal of the office holder is to serve the needs of constituents. Elected officials will say they cannot serve the needs of constituents unless the voters put them back in office, but voters won’t re-elect someone who ignores their wishes.

This goes a long way to understanding why President Obama continues to say he will not negotiate on the Affordable Care Act. Mr. Obama will never again face voters, so finding a solution that is in their best interests is no longer in his. Add to that the fact that everyone now calls the act Obamacare.

Nothing is more local than personal.

What may have seemed like a good idea to Republicans and tea partiers at the time has become personal for the president. It combines both tenets, and it goes a long way in understanding why he believes preserving Obamacare is in his long-term best interest, regardless of what it does to the nation as a whole or on the local level.

Hard-core politicians will not break the current political impasse for the reasons just laid out. Only someone willing to put aside personal ambition or legacy will come up with a workable solution. One of the regulars at Sparky’s Diner figures we need Mr. Spock, someone who appreciates that the needs of the many outweigh the needs of the few, or the one.


TOPICS: Miscellaneous; News/Current Events; Politics/Elections
KEYWORDS: congress; democrats; obama; republicans

1 posted on 10/07/2013 5:40:05 AM PDT by John David Powell
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To: John David Powell
All politics is local, and agents will act in their own best interests.

Alinsky understood agency theory. The people of Massachusetts and Boston in the 1760s and 1770s also understood it. That is why they took their arguments directly and personally to the Crown agents and Loyalists in their midst. They made sure that these agents understood where their "best interests" lay. Cf. Thomas Hutchinson, John Malcolm, etc.

2 posted on 10/07/2013 6:03:23 AM PDT by Paine in the Neck (Is John's moustache long enough YET?)
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To: John David Powell
liberal media to tie all Republicans to the antics of our own Texas senator Ted Cruz and other members of the House and Senate beholding to their tea party constituents


3 posted on 10/07/2013 6:17:39 AM PDT by C210N (When people fear government there is tyranny; when government fears people there is liberty)
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To: John David Powell

Good find. Thanks.

I am among those who now donate to conservative candidates rather than the Republican party. Throwing the last election was the final straw.

we have to start winning primaries and supporting conservative candidates. When we are faced with the too common dilemma of a RINO as the only viable alternative to the socialist, I have voted for the RINO. (which is usually my only option here in a very blue state)

is there a PAC that supports Reagan-Republicans in primaries?


4 posted on 10/07/2013 6:20:39 AM PDT by John Galt's cousin (WTF? We couldn't rescue four men in Benghazi? Is our military IMPOTENT? ( /s ))
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To: John Galt's cousin

Excellent article.
Thanks


5 posted on 10/07/2013 6:32:58 AM PDT by John Galt's cousin (WTF? We couldn't rescue four men in Benghazi? Is our military IMPOTENT? ( /s ))
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To: John David Powell
Any politician, elected or otherwise, knows the meaning of “all politics is local.” Local voters elect local representatives who must understand and influence what local voters believe is important. To stay in office, a politician quickly figures out what constituents want and how to give it to them. It’s a simple quid pro quo based on personal needs and local issues, not grand ideas or affairs affecting voters a thousand miles away.

All politics may be local, but "local" to politicians elected to the House of Representatives or the Senate is Washington, DC. So they vote according to the will of the special interests and the senior politicians in DC--for whom the purpose of politics is to amass power--and forget that they are supposed to represent people who may be living hundreds or thousands of miles away. When they visit their districts, they mouth nice sounding things that their constituents want to hear; however, the bottom line is that they still vote according to the interests of DC.

Partisan bickering and the government shutdown have hit Republicans in the pocketbook. The National Republican Senatorial Committee is running about $5 million behind in fundraising this year, compared to four years ago at this time. One reason is the effectiveness of Democrats and the liberal media to tie all Republicans to the antics of our own Texas senator Ted Cruz and other members of the House and Senate beholding to their tea party constituents. Another is because big donors, like those on Wall Street, don’t understand the influence of “local” on national politics.

Here, your interpretation is totally off. We have seen those who are supposed to represent us buckle under to the will of Democrats over and over, and have stopped donating for that reason. The government shut down has not been in effect long enough to see an effect on fundraising; there is no way that a decrease in funds raised over a period of years can be attributed to something so short-term. I would predict that this will have a positive effect on fund-raising, since the people who would donate are seeing that their representatives are finally standing up for principle.

Here’s an example. In August, 80 GOP members of Congress sent what is now called a “suicide pact” to House Speaker John Boehner urging the de-funding of Obamacare, even if that meant tying it to the continuing appropriations bill and forcing a partial shutdown of the government.

Let's examine what is really going on here. The Republican-led House has sent up a full budget, sans Obamacare, which is significant because the House has not written a full budget for several years despite their Constitutional mandate to do so. The Democrats have refused to go along with the full budget, and are throwing a temper tantrum to try to force the House to put Obamacare into the budget--despite overwhelming opposition to Obamacare among the people. The people also see government bloating to dangerously unsupportable levels--they're hardly upset to see the government bloat slowed down for a while. The Republican tactic of now sending up one-item budget bills ensuring that the needed functions of government continue is, to my mind, brilliant (in the American sense of the word, not the British).

As a citizen--despite my personal stake as a federal employee during a government shutdown--I am feeling more positive about the Republicans than I have in a long while. Plus, Ted Cruz for President looks awfully good right now.

6 posted on 10/07/2013 6:41:11 AM PDT by exDemMom (Now that I've finally accepted that I'm living a bad hair life, I'm more at peace with the world.)
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