Abramoff and Schumpeter

I have commented several times about Jack Abramoff, but I figured the latest news was better covered by the MSM. One thing we should be aware of is that this is not just a Republican scandal, as much as many of you would like. This is a scandal on politics in general. When you give money to a candidate, initially you want to have someone in office who believes as you do and will vote to support your interests. That has been corrupted to a quid pro quo; you want someone in there that will help you with your financial interests. Maybe it has always been this way.

In the Washington Times article about Abramoff, I was struck by these paragraphs:

Lobbyist Jack Abramoff pleaded guilty yesterday in federal court to charges of conspiracy, tax evasion and mail fraud, agreeing to cooperate in an ongoing investigation into influence peddling on Capitol Hill.Abramoff admitted to U.S. District Judge Ellen Segal Huvelle he had taken part in a scheme involving the “corruption of public officials,” saying he gave campaign contributions and funded lavish trips and other items “in exchange for certain official acts.”

We go through periodic convulsions that clean out the system and put the “cold sweats” into a politician for a while. That’s good! We need to tear things down once in a while, so we can build a stronger structure. That goes for the stock market and that goes for the economy, too.

Joseph Schumpeter said it best:

…industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in… .

The boom in the economy started in 1974 and with a few corrections, continued until about 2001. And all the while we built in many problems that needed small corrections and without those small corrections, now need massive corrections; things like debt build-up, derivatives, the many bubbles, size of government. I am an optimist that what will come from the creative destruction will be better for our grandchildren, but I am a pessimist about the near term.

Update: They Call Me Vonski echos my comments and lists some of both parties involved with Abramoff.

Abramoff Schumpeter Mover Mike

Update: Blue Oregon echos my belief that Abramoff will bring about change.

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