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article imageOp-Ed: All politics is agency theory

By John David Powell     Oct 6, 2013 in Politics
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.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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