With the level of dissatisfaction voiced by so many, a third party frequently becomes an attractive political fantasy. For a decade I had supported Libertarian candidates and after thirty years they gained minimal traction. (My commitment quickly waned when Libertarian Harry Brown blamed U.S aid to Israel for the violence in the Middle East.  Apparently the Russian aide to Egypt, Syria and Jordan seemed unworthy of consideration.) The same has held true for other third party candidates in spite of celebrity endorsements and brief flashes of news coverage.

These attempts to unseat the two party system fail for several reasons:

1. They lack a clarity of purpose. Being non partisan is not a purpose. In fact it is the avoidance of purpose.  It is easy to be frustrated and opposed to what seems so obviously not working. It is quite another to clearly state a governing philosophy with real world applications.
2. Too often a lame attempt such as the “no name party” is simply a cowardly ruse to avoid admitting that the policies of the party you supported have failed.  Rather than admit failure, some will just seek to repackage the same failed ideas with a new label.
3. A wonderful sounding idea is worthless without the organizational skills to back it up. Without the control of sound and visionary leadership these movements become like flypaper attracting extremist elements. Witness OWS.
4. If a movement attracts a real following it will likely be largely adapted by one of the major parties.  The Socialist party of the 1930’s disappeared when the Democrats adopted many of their positions.  Libertarians may have started as a group who felt betrayed by Republican leaders, but even Ron Paul realized that he could attain a much wider audience in a party that is somewhat aligned with a free market, even if not perfectly so.  The perfect can be the enemy of the good.  The Tea Party significantly influenced interim Republican elections, but chose not to seek an independent path.
5. Third parties may actually aid the larger two parties by creating a lightening rod that keeps extremist elements away from the larger party platforms.  It is better for the Democrats to have Ralph Nader screeching offstage than to become associated with the Democrats and alienating the central core necessary to actually winning an election.
6. Third parties and some elements of the main parties ignore the reality that there is opposition that must be considered when putting laws into effect.  Otherwise it is the same as giving business advice that ignores the reality of competition.
7. The core problem is not partisanship. The core problem is a fundamental difference in governing philosophies.

Jeff Jacoby noted this in Two is Enough in the May 20^th Boston Globe.

Yet the two-party system remains deeply rooted in our political life, and for good reason. The broad struggle between Republicans and Democrats reflects, however messily, the ancient tension between America’s two profoundest political goals — liberty and equality.

It is much more palatable to hide behind vague notions of bipartisanship and complaints of gridlock than to face the harsh reality that we cannot afford the government programs we have. Benefits will have to be cut drastically.  Government tends to promise benefits without paying for them.  If they do not have the balls to raise taxes they will borrow or inflate, but the results are ultimately the same.

We are a social democracy within a republican framework and will likely remain one. The pertinent question is at what point is our redistribution turning the unable into the unwilling, killing the soul of those who could be contributing to a growing economy.  At what point do we wound the golden goose that creates wealth and suffer a loss that makes everybody poorer?

The reason third parties often fail is that they do not answer this question any better or any clearer than the entrenched political parties they seek to replace.

John Taylor

John Taylor writes Economics for the Long Run -Individuals should be free to decide what to produce and consume, and their decisions should be made within a predictable policy framework based on the rule of law in The Wall Street Journal,  1/25/12.

Excerpt:

A big move toward more interventionist policies started in the mid-1960s, after more activist Keynesian economists came to town in the Kennedy and Johnson administrations, and it lasted through the 1970s in the Nixon, Ford and Carter administrations. We saw short-term stimulus packages, temporary tax rebates or surcharges, go-stop monetary policy with inflationary overexpansion followed by severe contraction, wage-and-price guidelines and controls. The eventual result was high unemployment, high inflation and slow economic growth.

This was followed by a shift toward more predictable policies and a more limited role for government starting in the Reagan administration and largely continuing into the George H.W. Bush and Clinton administrations. The result was lower unemployment and higher economic growth with long expansions and few recessions.

More recently—beginning during the George W. Bush administration but really taking wings in the current Obama administration—policy has returned toward more and more government intervention, with results we are all experiencing.

The clear lesson is to find and select those leaders, regardless of political party, who along with their advisers are most firmly committed to the principles of economic freedom and who know how to implement and maintain them.

HKO comment:

Taylor also notes the need for some consistency in our policy.  Reagan took long term solutions and we largely stuck with them thought successive administration of both parties.  Short term fixes and stimulus , temporary tax breaks, that do not address the long term horizon makes it nearly impossible for most businesses to plan and invest.  In fact the more they feel the game is rigged the less likely they are to play.

We are a victim of our own success. With a thriving economy we think we can solve any problem and afford any program, and we start to betray the very principles, such as economic freedom, that we used to build a solid economy.

Franz Kafka

In my three or more decades of business experience and relationships I have only encountered a very small portion of the business owners. Yet it is striking how many I have encountered that had an encounter with the government that could best be described as Kafkaesque.

For those unfamiliar with the author, Franz Kafka, the term refers to his novels and generally means a situation having a nightmarishly complex, bizarre, or illogical quality, often involving a bureaucracy. Most business owners I know are honest, moral and ethical .  Their success is marked by sacrifice, hard work, and responsibility.  They are very charitable and generous with their employees, colleagues and their church and community.

Yet they too often crossed a government bureaucrat or are held accountable to a regulation that the regulators themselves seem to have trouble understanding. Their experience is often very expensive and can be threatening to their enterprise.  Trying their best to do the right thing, these business owners are treated as criminals without the benefit of trial. They spend a fortune on lawyers trying to resolve a problem where they have no leverage and the problem is anything but clear.

This harsh reality is not limited to any single Federal agency; the story is the same with just about any of them.  In this world, laws can be applied retroactively, you can be held liable for parties you never met, and you are guilty until proven innocent.  Regulations that are impossible to comprehend are enforced by zealous bureaucrats with impunity.  When you hear these stories you wonder why the unemployment rate isn’t triple what it is.  Who would risk capital and a lifetime of work to the whims of a bureaucrat?

If you want laws to be respected you must make the laws respectable.

The First blow to the Democratic majority was the election to fill the Senate seat of Ted Kennedy which was surprisingly won by Republican Scott Brown.  In the regular election the Democrats are trying to retake the seat with the candidacy of Harvard law professor Elizabeth Warren.  Much has been said about Elizabeth Warren’s claim of Indian ancestry and what impact it had on her academic career.

Professor Warren claimed minority status as a Cherokee Indian when applying to her academic position as a law professor at Harvard.  Her claim was based on family ‘lore’ and her belief in her Indian heritage because of the predominance of high cheek bones in her family.  Investigators, however found there was practically no documented ancestry to validate her claim.  One investigator determined that she may have been 1/32 Cherokee. But Guy Benson noted in Townhall, Surprise: Genealogist Who “Confirmed” Warren’s 1/32 Cherokee Heritage Admits Error, that even this claim was in error and undocumented.

Ms. Warren claimed that she did not use the false heritage to gain advantage falsely, but that she just wanted to meet interesting people. Yet she was listed on the University of Pennsylvania’s and Harvard’s faculty directory as a minority.  Furthermore she asserted that her success was not due to her minority claim but due to her work and accomplishments.

She graduated from low ranked undergraduate (University of Houston) and law school (University of Syracuse). Her research has been  poorly rated by peer reviews .

Investor’s Business Daily noted in Cherokee Liz’s Shoddy Scholarship:

A Northwestern University peer review of her 2005 paper on the subject, for example, ripped it apart, arguing “the methods were so poor they gave cover to those who want to dismiss the problems of the uninsured — they can say the only paper out there uses a suspect method.”

ABC News suggested she was exercising a hidden agenda to promote a government-run health system. Sure enough, President Obama in 2009 seized on her findings to argue for socialized medicine: “The cost of health care now causes a bankruptcy in America every 30 seconds.”

In fact, as ABC pointed out, the claim cannot be supported by empirical evidence. Asked where he got the flawed data, the White House cited the 2005 study by “Professor Warren.”

In 2010, as Obama was floating Warren’s name as someone to run his new Consumer Financial Protection Bureau, “The Atlantic” magazine reviewed her academic work and found a disturbing “pattern” of using bogus metrics to inflate the case for left-wing causes. “Deeply, deeply flawed,” it said of her research. “This isn’t Harvard (Law) caliber material — not even Harvard undergraduate.”

Her curriculum vitae shows she bounced from college to college, working as a lecturer or researcher, for a full decade after graduating from Rutgers Law, ranked 82nd by Top-Law-Schools.com. (She got her bachelor’s degree from the University of Houston, one of the least competitive colleges in the country).

She was offered a full professorship after she started listing herself as a minority. Harvard hired her in the mid-1990s, when the school was under fire for not having enough minority professors.

Yet with this inauspicious academic background she earns $429,981 as a law professor plus hundreds of thousands more in consulting and royalty fees.

What is a terrible embarrassment for her, should be an even greater embarrassment for a University with the stature of Harvard.  It is also a humiliation for those who want to keep affirmative action from becoming an avenue of fraud and mediocrity.

Jamie Dimon

The J.P. Morgan loss is a non story.  It is not illegal to lose money. The loss was born by the shareholders, as it should be and they – not the regulators - should hold Morgan and Jamie Dimon accountable. Robert Samuelson noted as much in Investors Business Daily in JPMorgan Chase Loss Is No Reason For New Regulation. It is worth noting that it is in the section of IBD called “From the Left.”

On a similar note Tom Frost writes The Danger with Big Banks in the 5/15/12 Wall Street Journal.

Taxpayer safety-net programs, such as the Federal Deposit Insurance Corporation (FDIC), should be available only to banks in business to provide insured deposits. Financial institutions that provide primarily investment, hedging and speculative services don’t deserve protection either by the FDIC’s explicit guarantees or by an implicit understanding that taxpayers will bail them out because there is no other alternative. Indeed, this kind of protection is a perversion of capitalism and can distort its good outcomes.

This seems incredibly obvious to me.

The president’s campaign assault on Bain Capital because Romney had to close some plants and lay off workers obviously chose to ignore the far greater number of  companies and jobs that were created by the capital he raised. (Newt Gingrich lost all credibility when he took the same course during the primary). Obama seems to prefer failure in ‘noble’ efforts like Solyndra and other failed solar companies.  The critical difference is the accountability Romney had to his shareholders risking their own money and the total lack of accountability Obama had using taxpayers’ money.