It’s worth remembering that Obama was the preferred candidate of Wall Street, and the industry gave to Democrats by a 2-1 margin at the beginning of last year. The top business donor to Democrats in 2008 was Goldman Sachs, and nearly 75 cents out of every dollar of Goldman’s political donations from 2006 to 2008 went to Democrats. Few can gainsay the investment, given how well Goldman Sachs has done under the Obama administration.

It’s not just Wall Street. Obama led in fundraising from most big business sectors, according to the Center for Responsive Politics. Aside from the desire to back the winner, and the cultural liberalness of East and West Coast plutocrats, why did Obama get so much support from precisely the constituency he demonizes?

Because it was good business. A host of big corporations bet that the much-vaunted Obama era would materialize. For instance, nearly 30 major corporations and environmental groups invested in Obama’s promise to force the American economy into a new cap-and-trade system via the United States Climate Action Partnership (CAP).

Whatever the benefits of such a scheme for the economy and environment as a whole, these corporations, led by General Electric, were looking simply to cash in on government policies. GE, which makes many wind, solar and nuclear doodads that would be profitable under “cap-and-trade,” was poised to make billions if Obama succeeded in seizing control of the “carbon economy.” GE is still protecting its bet, but after the failure in Copenhagen, the “climategate” scandals and perhaps most significantly, that implosion of Obama’s new progressive era, several heavyweights — Caterpillar, BP and ConocoPhillips — have pulled out of CAP, with rumors that more will follow. There are similar rumblings of discontent within the ranks of PhRMA, the trade association for the pharmaceutical industry, which had cut an $80 billion deal with the White House last year for its support of ObamaCare, only to see the whole thing unravel.

The lesson here is fairly simple: Big business is not “right wing,” it’s vampiric. It will pursue any opportunity to make a big profit at little risk. Getting in bed with politicians is increasingly the safest investment for these “crony capitalists.” But only if the politicians can actually deliver. The political failures of the Obama White House have translated into business failures for firms more eager to make money off taxpayers instead of consumers.

That’s good news. The bad news will be if the Republicans once again opt to be the cheap dates of big business. For years, the GOP defended big business in the spirit of free enterprise while businesses never showed much interest in the principle themselves. Now that their bet on the Democrats has crapped out, it’d be nice if they stopped trying to game the system and focused instead on satisfying the consumer.

Go back and read the title of this post. Then read this, to which I’ve linked before.  Ignore the reviews, pro and con, and just take it on its own terms… and see if you can refute the history.  I think you can’t.

There hasn’t been a “free market” in the USA for sometime.  The government’s power to tax and regulate, and to give tax breaks and regulatory exceptions, is the reason there is so much lobbying in the Beltway.  It could not have been otherwise, once corporate taxes got high, and the regulation of business became one of the chief functions of government.  The merry-go-round career path of government “service” to lobbyist, and often back to government “service,” is the biggest indicator of this.  The essential role of a lobbyist in the modern world is to figure out who should get the money that the lobbyist’s principals have to donate.

When big business couldn’t count on government to help it get captive markets, and to restrain competitors, it had to compete for consumers on the basis of price and quality.  That’s why Rockefeller kept cutting the price of kerosene in the 19th century, not exactly an act of violence against the consumers of the day.

It’s unfortunate that so many people still believe that we live in a “free market” economy and that “the market” is the cause for so much economic woe today.  But we have had a “mixed economy” that often crossed the line into “crony capitalism” or just plain “state capitalism” (especially in time of war), for over a century.  The government is by far the most responsible for our current economic mess.  The lobbyists of big business (the johns) wouldn’t have any place to spend their money if politicians weren’t pimping themselves out.  Those lobbyists are often the ones who write campaign finance law and regulations.

It’s simple.  If big business didn’t think it was going to get something out of it, why would it donate so much money to politicians?  And more particularly, why did it give so much to Obama?

Let’s hope that if the Republicans do get some power back, they don’t blow it this time.

But what is so very clear and simple in a play, motion picture or novel, is almost never as clear in real life.  But that doesn’t keep us from trying to disregard the complex in favor of the simple.  We want to blame someone for their evil deeds and we want the hero to show up just in the nick of time and save us just like in some old serial Western.

The financial market is a mess.  There are many problems – and many reasons why.  Surely, I tell myself, no one can look at this convoluted conundrum and believe there is a single villain.  But then along comes David Lazarus in the L.A. Times (Wednesday, September 24, Section C, page 5):

No one told these guys to invest billions in ill-conceived mortgages and they did so for no better purpose than to make themselves richer.

Well, that is either a statement of incredible ignorance or a plain lie, (an aside: Why do you go to work in the morning, David?  Is it for no better purpose than to make yourself richer?  There’s a name for that – it’s called incentive.  And the word is not necessarily synonymous with greed, in spite of what you may think). Just read any of several blogs here and/or a plethora of information coming out now from a variety of sources and it’s easy to see someone did indeed tell these banks to make ill-conceived loans.  It was our own Federal Government.  Not only that, two governmentally instituted (and supervised) organizations, Fannie Mae & Freddie Mac, were at the forefront of this mess!

Now it makes for good copy to equate Wall Street with the Bates Hotel and all mortgage-backed securities traders as The Borg .  It fits quite well into the mold of comic book villains.  But this is real life.  We don’t all live in Metropolis and there’s no such thing as Kryptonite. In real life there is no shortage of people to blame, (though come to think of it – a lot of them do seem to be Democrats…but I digress).

Yet here were are waiting for the hero.  Who will ride in on a white horse and save the damsel in distress?  Who will rescue the foreclosed-upon homeowner lying there, helpless, tied to the railroad tracks as the train fast approaches?  Who can we trust?  Why it’s… it’s… The Federal Government?

I think we need a new hero.  I also think David Lazarus should resign from the Times and go see Stan Lee about a job.

Here is a really good creative capitalism idea. All Americans benefit from increases in home ownership because of the values like hard work, community, and respect for property that ownership instills. Families want desperately to own their own homes and accumulate equity. Yet it is very hard for conventional banks that borrow money over the short term to lend over the kind of 30-year horizons that best help families buy houses.

How can the objective of ownership be best supported and how can the most adequate financing be assured? Voila, creative capitalism! How about chartering private companies as government sponsored enterprises with the mission of promoting home ownership affordability? Give them boards with some private representatives and some public representatives. Make clear that government stands behind their capital market innovations so they can borrow more cheaply and pass the savings on. Exempt them from the state local taxes that others pay. Give them specific objectives on affordability that they must meet. Rely on a special government regulator to assure that they balance their social responsibility with their drive to profit. Harness the profit motive to meet a social objective.

This is roughly the rationale behind Fannie Mae and Freddie Mac. I would submit that it is about as good or as bad as most creative capitalism ideas involving joint profit making and social objectives. But one hopes that we are now witnessing the end of this particular experiment in creative capitalism: the government is moving to pick up the pieces of the mess the GSEs have made and their shareholders are losing most of their money.

What went wrong? The illusion that the companies were doing virtuous work made it impossible to build a political case for serious regulation. When there were social failures the companies always blamed their need to perform for the shareholders. When there were business failures it was always the result of their social obligations. Government budget discipline was not appropriate because it was always emphasized that they were “private companies.” But market discipline was nearly nonexistent given the general perception — now validated — that their debt was government backed. Little wonder with gains privatized and losses socialized that the enterprises have gambled their way into financial catastrophe.

I wonder how general the lesson here might be. My fear is fairly general. Inherent in the multiple objectives urged for creative capitalists is a loss of accountability with respect to performance. The sense that the mission is virtuous is always a great club for beating down skeptics. When institutions have special responsibilities it is necessary that they be supported in competition to the detriment of market efficiency.

It is hard in this world to do well. It is hard to do good. When I hear a claim that an institution is going to do both, I reach for my wallet. You should too.

And even with all of this, it might have worked out far less disastrously without social/political pressure to loan to people who were poor credit risks. Similar problems have been observed in public/private partnerships like utitilities

UPDATE:  Governments will probably continue to try to repeal the laws of economics (with the best of intentions, and the worst of results) until, oh, the heat death of the universe.  Or the Second Coming.

With all the propositions and bond measures that California voters are regularly asked to approve, you might have forgotten all about Proposition 1C, or even what it is. But it’s worth revisiting, because state leaders have plans to spend funds from this $2.85 billion bond in ways radically different than what Californians thought they were getting when they voted “yes.”

A little background: Proposition 1C was one of the four infrastructure bonds that Gov. Arnold Schwarzenegger and the Legislature put on the ballot in 2006. Its title was the “Housing and Emergency Shelter Trust Fund Act.”

Here’s how the Attorney General’s Office described Proposition 1C on the November 2006 ballot:

“For the purpose of providing shelters for battered women and their children, clean and safe housing for low-income senior citizens; homeownership assistance for the disabled, military veterans, and working families; and repairs and accessibility improvements to apartments for families and disabled citizens …”

But wait until you see where some of the money is now going.

Last week, the state Assembly approved a $26.4 million payment of Proposition 1C funds to help pay for the development of the 16-acre park that’s part of the Grand Avenue Project in downtown Los Angeles.

That project’s wealthy developers are slated to collect nearly $177 million in tax breaks and other subsidies.

The park is a key selling point of the overall project- some lovely green space to boost the values of the 2,600 condominiums and rental units, the 400,000 square feet of retail space, the 275-room hotel and the 50-story iconic tower that will neighbor it. As such, the project’s developers should be covering the park’s entire cost – not draining funds that voters expect to be helping the homeless.

This bait and switch, although immoral, is not, technically, illegal. Dig deeper into the language of Proposition 1C – the part very few voters actually read – and you’ll see that much of the money was slated for “development,” including “open space,” which can include park giveaways to developers.

What do you want to bet that most of the coverage of this emphasizes the evil corporate abusers of the public trust, and not the government stooges who make it possible in the first place? Who is more at fault, the corporations who make donations, or the government agencies that prostitute themselves?

Without government hookers, there would be no corporate johns.

UPDATE: A reader emails,

It isn’t just a matter of government hookers, since hookers can only entice, not force, the participation of johns. It’s more as if hookers had the ability to force johns to select from the menu of, uh, services they provide, and johns were forced by law to compete for the hookers’ services by making bids to various pimps. In this scenario, the pimps are the legislators, the regulating agencies are the hookers, and the corporations are the johns, who have to pay the pimps and tip the hookers.

I can’t disagree.