In Their Opinion...

colin_read.jpg
Colin Read is a professor of economics and finance and former dean of the School of Business and Economics at SUNY Plattsburgh. His fifth book, "The Rise and Fall of an Economic Empire," will be published by MacMillan Palgrave in September. He also runs an economic and business consulting company, and can be reached through his website www.economicinsights.net.

Colin Read: Political climate makes it hard to serve

Last week I argued that while economists abhor concentration of power, politics thrives on it.

The motto for economists may be everything in moderation, which perhaps is why you can’t name many exciting economics majors, Mick Jagger aside.

On the other hand, we see many examples of excess in politics and among politicians.

This week I suspect we witnessed another casualty from the ruthless world of politics.

Our congressman, Bill Owens, has decided not to run for a fourth term. While most agree it is our loss, I’m sure few begrudge him for it.

I could not imagine any politician making decisions that meet universal agreement. But, when one judges the lot of another, I conclude that Mr. Owens served our region well and honorably by seeking compromise and building integrity, trust and respect among his colleagues.

To paraphrase the social commentator Samuel Johnson, politics is the last refuge of scoundrels. To understand why, I hearken back to “The Market for Lemons,” a concept that won George Akerlof a Nobel Prize. He deduced something you may have discovered for yourself. Mr. Owens may have discovered that too.

Akerlof used an analogy. Cars are complex machines. Some work better than others, even within the same make and model. Owners only discover the problems and peculiarities of their particular car over time. If they buy a lemon, some would, unfortunately, like to unload it upon some unsuspecting sucker. However, there are also legitimate reasons to sell a car.

The problem is that it is next to impossible to signal to the unsuspecting public whether one is selling a good car or is peddling a lemon masquerading as of high quality. Only over time do we discover the true nature of what we have purchased. We may, by then, suffer “buyer’s remorse.”

The market will devalue a particular model if a sufficiently large proportion of its cars are lemons. The problem is, if you are the lucky owner of a car that is not a lemon, it is difficult to signal to others that they can trust you when you claim your car is of high quality. Owners of good cars find it unprofitable to sell their car in the highly discounted market. The bad drives out the good, and only lemons prevail.

This is why warranties, reputation and integrity are important. A reputable dealer won’t peddle a lemon, or may offer a warranty to ensure you their promises are credible. The warranty, or the integrity and reputation of an individual, acts to create trust for buyers so they know that either the car they purchase is not a lemon, or, if it is, the seller will make things right.

Politics, too, suffers the same fate. If all politicians are cast with the same negative brush, honest politicians with integrity find it too disheartening to serve.

Ideally, politics is the art of debate and persuasion, compromise and collegiality, combined with some horse-trading and honest dealing. While each congressman takes a pledge to serve the people and the U.S. Constitution, they also implicitly pledge to foster faith and trust within the institution. Ultimately, it is their integrity that earns them the respect that allows them to do good work on our behalf.

Some in Congress have sacrificed transparency, integrity and compromise in pursuit of power. They seem unable to have the honest debate, make the hard-fought compromises, and agree to stick to their agreements with high principle and integrity and without demonizing others. When respect is lost, the body politic degenerates.

We are left suffering voter’s remorse. And, when honest public servants find themselves having to constantly deal with others who are untrustworthy, either they too sacrifice their integrity, or they seek another avenue for public service. Once lost, respect is almost impossible to get back.

We often find well-intentioned candidates with integrity who can build respect and forge those relationships that bode well for us all. The problem is not in attracting good candidates, but rather is in creating a sense of transparency, integrity, trust, compromise and collegiality so we can keep them in office. If we do not, the best leave and the rest remain. Meanwhile, our faith in Congress erodes.

Colin Read chairs the finance and economics faculty at SUNY Plattsburgh and has published a dozen books on global and local finance and economics.

Published: