The New McCain … Freshman Sen. Scott Brown (left) has the rare ability to actually be bipartisan. And get away with it. Brown has campaigned for McCain during his tough primary battle. Massachusetts, the bluest of blue states, has never been a particularly comfortable place for Republicans. The Bay State hasn't thrown its electors behind a GOP presidential candidate since Ronald Reagan won the White House, and it hasn't had a Republican member of the House in more than a decade. But earlier this year, Scott Brown decided he could defy the odds. As he traveled the state campaigning for the late Sen. Ted Kennedy's vacant seat, he ran as a partisan, an antidote conservative who promised to stick it to Obama and the Senate Democrats, especially on health care … The circle around Brown doesn't care much for the term "maverick," and its triteness. But after Sen. John McCain's surprising disavowal of the title, the heir may well be Brown, the middle-sitter who's never a sure thing for either party. "Sometimes he'll be the 41st vote, other times he'll be the 60th," says Eric Fehrnstrom, a Massachusetts political consultant who has done some work for Brown's reelection in 2012, when he'll have to run for a full term of his own. On Democrats' financial-reform package, Brown surprisedeven his own party when he decided to vote yes, giving his would-be opponents exactly 60 votes. – Newsweek
Dominant Social Theme: A new maverick like John McCain?
Free-Market Analysis: In this article we will briefly explore the collision between the Internet and the powers-that-be, and how it is changing the American political process – and thus the economic and investment climate. This is an ongoing process that has not yet reached a critical mass. But our argument is that it will reach such a critical mass sooner or later, and that Scott Brown's recent actions are symptomatic of the difficulty that the US system is having in responding to the nation's underlying discontent.
This is an important story with deep roots. It goes back at least to Bill Clinton, who was the first Internet president. In fact, over time, his administration's policies were excoriated on the Internet, and he paid the price when the 'Net's powerful Matt Drudge published a story on his sometime-lover Monica Lewinsky. Then there was George Bush whose many lapses, prevarications and increasing executive diffidence were amply documented on the 'Net over time, causing his approval rating to slump to 30 percent or so. Now there is Barack Obama, whose rapid descent to a popularity rating around the mid-40 percent mark has pundits scratching their collective heads.
Soon there will be new elections and new political faces. But the underlying tenor is one of frustration and it is an emotion that will continue to build. This is the important point. Freshman Senator Scott Brown is culprit number one in this regard. He was elected by a Tea Party movement in Massachusetts partially as a protest vote against business-as-usual. A Republican who took over Senator Edward Kennedy's open political seat, Brown was seen to be an anti-incumbent, someone who would stand against the constantly expanding power and ever-larger expenditures in Congress.
But it hasn't worked out that way. Brown actually produced the 60th vote for the just-passed financial reform bill that President Barack Obama will soon sign. While there is no doubt that Wall Street needs reform, a 2,300 page bill with 200 separate regulatory enactments is not reform so much as merely more enabling legislation for lawyers and banking entities. The problems with US financial markets have to do with Federal Reserve money printing, and the central banking mechanism itself was left entirely unscathed in this latest regulatory overhaul. The problem, not addressed, will contunually reoccur.
But the larger, troubling issue is Scott Brown's participation – as symbolic of a larger problem. American voters have yet to find a way to stop the deluge of monetary corruption and regulatory dysfunction emanating from Washington. American voters were put off by the Clinton administration's Internet revelations that showed a backdrop of corruption and double-dealing. The same eventually happened to President Bush's administration and the Obama administration has virtually collapsed from a public relations standpoint after little more than a year in office. All indications are that the power on Capitol Hill could shift back to Republicans when Congressional candidates are next voted on in November.
Yet despite the increasingly elevated level of frustration with the political process and its results, the socialization of America continues apace. The health care bill just passed by Congress and signed into law and now this financial reform legislation must certainly further reduce the functionality of free-markets while elevating government programs and control. What we are seeing is an electorate that wants less government spending, less war, and fewer broad programming mandates. What the nation's political class is presenting is more of the same. Business as usual. Scott Brown's apostasy is a case in point.
This is not an academic conversation. Here at the Bell, we have written many times that the changes wrought by the Internet, a powerful communication-tool, are cumulative and driven by a process. The damage-control utilized by US powers-that-be is geared toward defusing sociopolitical crises with the idea that once-defused the particular difficulty will not reoccur. But what has been built by the Internet is not a "crisis" but a point of view, a discontent with business as usual (fraud and deceit) that is shared by a larger and larger segment of the American population.
Something will have to give, in our humble opinion. Here at the Bell we have been predicting this for years. We figured it would take a few cycles of US party politics. Voters would turn to both Democrats and Republicans, perhaps several times, to address increasingly emphatic concerns. The question we have has to do with US voter reactions when the issues that have been raised with ever-increasing fervor seem to go unaddressed. In other words, the Internet has provided a platform for expressing grievances and even for providing a new political reality. But the system itself has not responded in kind.
What happens in such situations is that the body-politic itself becomes galvanized. Nature abhors a vacuum.
We were not surprised at all by the coalescence of the vague Tea Party movement. While the perspective of American punditry is that the Tea Party movement has been co-opted by the Republican party, we would humbly submit that this is not a true reading of the situation. The inchoate Tea Party movement may have been formalized and reconfigured to make it palatable, but the underlying frustrations remain the same and cannot be palliated by political formulations and rhetoric.
The election of Scott Brown was a dramatic shot across the bow to those who wish to sustain the American system as it is in the face of the Internet's increasingly insistent truth telling. But in fact Scott Brown has merely perpetuated business-as-usual by voting for various sorts of expensive omnibus legislation of the sort that increasingly has people up in arms. The disconnect between what people want from Washington – less government, less regulation, less war, less monetary debasement and few taxes is not forthcoming. We would submit this disconnect cannot last forever.
We know what the answer of the power-elite may be. It may attempt to foment a larger Middle East war to defuse a domestic political problem – one that is gradually occurring in Europe as well as in America. But here again we are not sure that even a war will make much a difference, given the larger picture. For our answers, we look back in history to what happened after the advent of the Gutenberg press. First came the Renaissance, then the Reformation and finally the populating of the New World with a new and freer society.
Whether or not history repeats is not for us to say, or not now. But the divergence between a people's discontent and the solutions they are being offered cannot last forever. There are bigger changes to come in our opinion, ones that will affect the larger, Western sociopolitical system, and the investment climate as well. And we are on record as welcoming that process.