"A Great New Book" —Larry Kudlow, CNBCGet it on AmazonExplore the Book
Cars that get 200 MPG.
Cures for multiple sclerosis and cancer.
Someone saw Elvis in Dallas eating lunch with Jim Morrison.
Conspiracy theories satisfy a psychological need to blame others for our problems or explain why the world doesn’t work the way we wish it worked.
Maybe two nuns in Peoria found a cure for cancer in 1954 and Big Pharma really did pay J. Edgar Hoover to seize the formula to keep the multi-billion dollar oncology pharmaceutical money-printer cranking out the bucks at full speed.
Or maybe it’s just a crazy conspiracy theory that satisfies psychological needs of the people who believe it.
The real problem with crazy conspiracy theories is that they mask a real problem in America. When an industry does use its crony relationship with government to block innovation, both the government and industry can point to the cancer cure theory and say, “we hear this stuff all the time. It’s all Area 51 nonsense.”
These assurances satisfy the large majority of people who believe people in authority always operate with our best interest at heart. Even after seeing The Big Short.
And yet . . .
St. Louisans fought a three-year battle to be able to order up an UberX car so they could drink at the government-funded Ballpark Village and get home safely. Did the quasi-government Metropolitan Taxicab Commission block UberX for our good?
No. The whole fight was to protect incumbent taxicab companies from competition. Uber innovated and responded to a need while taxicab companies enlisted the power of government to keep St. Louis in the dark ages.
The federal government does this, too. When Democrats went to work on Dodd-Frank to rein in Wall Street, they turned to Wall Street to write the legislation. Somehow the bill that passed protected big Wall Street banks from competition from regional and community banks. So the people who blew up the economy in 2007 and 2008 got richer while hundreds of small community banks went out of business.
Want another example? Cholesterol.
Researchers have known for years that dietary cholesterol has a very nuanced and imprecise effect on blood serum cholesterol. But the government spent billions of dollars convincing everyone to ask for egg white omelets that taste like ass while knowing full well that whole eggs are healthier than egg whites. (If you eat egg whites, look it up.) The dietary cholesterol industry (doctors, food companies, dietitians, nannies) lobbied hard to hide the truth from people. Egg producers weren’t nearly as aggressive as medical textbook publishers and researchers.
The problem is that, as huge corporations get huge, they also get fat and lazy. Big organizations profit from predictability and consistency, and innovation screws with both. General Motors wants to make next year’s car models only different enough from last year’s so that consumers feel the itch to upgrade. They don’t want innovation that requires massive retooling or new vendor contracts or, God forbid, new union contracts.
And big unions don’t want innovation, either. They want three-year contracts that guarantee their members will do the exact same thing every day for 660 work days during the life of the contract. They happily lobby against innovation and competition. Heck, the entire union industry exists to eliminate competition and change.
Thwarting progress pisses people off, and politicians hate pissed-off people. So politicians create bureaucracies that take the flak. And the bosses of bureaucracies, the appointed suits with degrees from Ivy League schools who made million at Goldman Sachs before feeling the need to Serve Their Country by taking a government job, they don’t want to take flak, either. Instead, they lobby Congress for increased funding to build hierarchies of lifers–people who went to state colleges or directional colleges who are glad to have a job in the bureaucracy with good vacations and a kick-ass pension back by the full faith and the credit of the United States Government (and it’s $63 trillion in unfunded liabilities and debt).
These lifer dogs of the bureaucracy are the Flak Catchers, to borrow a phrase coined by author Tom Wolfe. The Flak Catchers have their own union. It’s all like a sick 1970s psychedelic painting–you never know which end is up or what you’re supposed to be looking at.
When someone invents a new product or even a new process that threatens to disrupt big incumbent companies with friends in government, this entire bureaucratic, lifer-dog, flak-catcher leviathan springs to life to “protect consumers” from the very things consumers want. Some of these innovations will even save a life. But the survival Too Big to Fail companies is far more important to the Flak Catchers and their bosses than the lives a few thousand (million) Americans. “There’s new Americans being born every minute (or running across the border), but I don’t see anyone creating a new Goldman Sachs, do you?”
In the meantime, your United States Government prohibits inventors from even telling you about their inventions. “The people are too stupid to understand, so keep your mouth shut or go to jail.” The First Amendment has no meaning inside the bureaucracy.
I need a theme for 2016, and I think I found it.
I want make life so miserable for the Flak Catchers that they throw up their hands and turn us over to the Appointees.
Congress is owned by the incumbents. The presidential candidates are either part of the incumbency cartel or too busy with other things. And the Flak Catchers can only take orders from their bosses or get out of the way. Flak Catchers will never turn against the system they’ve been part of–unless they’re willing to live in exile in Russia.
So the best hope for breaking the cartel is to make flak-catching such an unbearably degrading and humiliating job that the Flak Catchers pass us through to their Appointee bosses. The Appointees are a weak lot who will fold under the slightest pressure. That’s why the insulate themselves with Flak Catchers.
The reward for this effort is better products and dynamic new companies that challenge entrenched incumbents on a level playing field. The reward is a free market that actually operates like a market, not a DMV.
More to follow.