We faced a financial collapse that was brought about by a toxic blend of public sector and private sector policies designed by some of the most educated in our country.  It is not surprising that a different candidate such as President Obama would be welcomed as a desperate alternative, and then quickly rejected when he continues downs the same path of detachment from the voters.

The rise of the populist movements, however, does not present an acceptable alternative.  Just because big problems were created by the educated does not mean they can be solved by the ignorant.

As angry as the voters are with Wall Street, they want solutions, not demons; and populists love demons. It is just much easier to blame a villain that to explain a complicated problem.  It is the complexity that renders both the intellectual elites and the populists so ineffective.

The intellectuals in power will never know as much as the mass of voters.  The Democrats often voice that the voters are incapable of managing their own financial affairs, and the Republicans act as if the voters need moral guidance from the anointed leaders.

The reason the markets work so well is that it responds much quicker to consumer choices and allocates capital so much more efficiently.  Regulations, which are needed, should establish basic rules, keep the playing field level and fair, and provide open information. When the governing class begins to make choices for consumers that they should make for themselves, then the markets and capital sources become corrupt.

But the complexities of governing does not lend itself to simple ideological statements attributed to populist movements.

Success is often knowing what worked yesterday.  Policies that worked decades ago may not work today.  After WWII large American corporations were able to pay generous union benefits because there was little competition from overseas industries that were still recovering from the devastation of a war fought on their soil. Today growing new economies such as China and India are not only producing more but consuming more. Our companies and our workers face an entirely different realm of competitive pressures.

Alfred Knopf noted “An economist is a man who states the obvious in terms of the incomprehensible”. While many voters understand the fundamentals of economics, even if they have never taken a course in the subject, the principles are not always intuitive.  It is easier to blame free trade for lost jobs than to understand benefits of trade that are often less obvious, but still real and important.

Policies that work in small doses do not always work in larger doses. When subprime lending was a local business with the broker knowing the lender and the borrower, defaults were rare. ( I invested in several and never lost a dime.)  But when the mammoth appetites of Wall Street and Fannie Mae drove huge sums into the market, the brokers were unable to apply the same level of prudence.

Just because a small stimulus may have been seen to work at one time in one amount does not mean that it will be equally effective at a different time and in a different amount. The impact of stimulus spending cannot be viewed in isolation from the total and relative size of the total debt. Nor can its effects be isolated from a political atmosphere that greatly discourages business. Excessive government debt squeezes capital out of the private market, and bills such as the union card check legislation, cap and trade and the health care bill makes businesses feel more like a target of retribution than a job creating partner.

In 1987 Reagan refused to intervene in the market in the wake of the market crash and we recovered quickly with the market growing 9 fold in ten years. Yet government economists credit stimulus polices for recoveries that took much longer. Could it be that such policies actually delayed the recoveries that they claim to stimulate?

We need a balance of those with real world experience and understanding and those with a true intellectual understanding (not to be confused with academic credentialism) of the tried and true principles of a sound economy and sound government. Somewhere between the elitists and the populists the leader for our time will surface.

The following was a reader’s comment to my article in American Thinker, “Why Elitists Fail“

Human beings can exist in one of only two modes: by controlling nature, or by controlling those who control nature. Those in the first category survive by acting in accordance with the facts of reality. Those in the second survive by manipulating the perceptions of other men. The method of thinking required for one is the opposite of that required for the other, and cannot coexist in the same man. Those most successful at manipulating the perceptions of other men (the political elite) will always be those least connected to reality.

We are ruled by parasites, who must constantly evade the knowledge of their own dependency, and who have no conception of their hosts’ limits. They will suck us dry, while neither knowing–nor caring if they did know–that their own deaths must necessarily follow.

From “Why Elitists Fail” in American Thinker, January 30, 2010

Even the brightest minds cannot escape emotional impediments to a rational conclusion. Combining such emotional rationalism with a focus on theories detached from the verification of practical experience can be downright dangerous. This is why it concerns so many that Obama’s administration has the lowest number of appointees from the private sector in his cabinet of any president in history.

The average American knows that taking a dollar from one person and giving it to another does not create a stimulus. The average parent knows that protecting one from the consequences of bad decisions does not teach one to make good decisions. The individual citizen knows that the government will not make better health care decisions or better investment decisions because they will never know as much as all the citizens. The voter who knows the consequences of too much debt on his household does not find it more acceptable when a lot of zeros are added to the balance and the loan account is moved to Washington, D.C.

Camille Paglia steps aside from the sycophants and holds her own party accountable for its elitist attitudes.  Read her whole article in Salon here.

Excerpts:

I just don’t get it. Why the insane rush to pass a bill, any bill, in three weeks? And why such an abject failure by the Obama administration to present the issues to the public in a rational, detailed, informational way? The U.S. is gigantic; many of our states are bigger than whole European nations. The bureaucracy required to institute and manage a nationalized health system here would be Byzantine beyond belief and would vampirically absorb whatever savings Obama thinks could be made. And the transition period would be a nightmare of red tape and mammoth screw-ups, which we can ill afford with a faltering economy.

As with the massive boondoggle of the stimulus package, which Obama foolishly let Congress turn into a pork rut, too much has been attempted all at once; focused, targeted initiatives would, instead, have won wide public support. How is it possible that Democrats, through their own clumsiness and arrogance, have sabotaged healthcare reform yet again? Blaming obstructionist Republicans is nonsensical, because Democrats control the White House and both Houses of Congress. It isn’t conservative rumors or lies that are stopping healthcare legislation; it’s the justifiable alarm of an electorate that has been cut out of the loop and is watching its representatives construct a tangled labyrinth for others but not for themselves. No, the airheads of Congress will keep their own plush healthcare plan — it’s the rest of us guinea pigs who will be thrown to the wolves.

And what do Democrats stand for, if they are so ready to defame concerned citizens as the “mob” — a word betraying a Marie Antoinette delusion of superiority to ordinary mortals. I thought my party was populist, attentive to the needs and wishes of those outside the power structure. And as a product of the 1960s, I thought the Democratic party was passionately committed to freedom of thought and speech.

But somehow liberals have drifted into a strange servility toward big government, which they revere as a godlike foster father-mother who can dispense all bounty and magically heal all ills. The ethical collapse of the left was nowhere more evident than in the near total silence of liberal media and Web sites at the Obama administration’s outrageous solicitation to private citizens to report unacceptable “casual conversations” to the White House. If Republicans had done this, there would have been an angry explosion by Democrats from coast to coast. I was stunned at the failure of liberals to see the blatant totalitarianism in this incident, which the president should have immediately denounced. His failure to do so implicates him in it.