thousands of people converged on the nation’s capital to witness
the inauguration of Barack Obama. The select few who were lucky
enough to secure tickets to the swearing-in ceremony viewed the
event from the Capitol’s lawn, while over a million ticket-less
onlookers watched the ceremony on giant projector screens at the
National Mall. But the event was not just a real-life lesson in
Civics 101. It was an invaluable lesson in economics and a reminder
of the problems that arise when government controls the distribution
of resources. Given the current economic crisis and the power wielded
by the executive, it is a lesson to which President Obama should
Obama’s inauguration were in extremely high demand. Unfortunately,
markets did not allocate access to this scarce good; the government
did. Members of Congress were each allotted a couple hundred tickets
to distribute freely to their constituents with only one rule: they
were to be given out for free. But days after Obama was elected
president, congressional offices were flooded with thousands of
requests for tickets to the historic event. With no pricing mechanism
for allocating the tickets, which were going for as
high as $40,000 on websites claiming to sell tickets, the government
resorted to its favorite form of distribution: the political process.
power to distribute tickets however
they pleased, Congress provided first dibs to lobbyists, high-dollar
political donors, and whomever else they owed favors. Predictably,
many elected officials were vague in describing how their tickets
were distributed. Some claimed to have used lotteries to give out
tickets by “random selection.” Most refused
to disclose where the tickets went, while others acknowledged
that some went to “friends and family.”
inauguration was publicized as the most
accessible in history, multiple reports indicated that, despite
Obama’s pledge of transparency and responsibility, special interests
played a highly influential role in the inaugural affairs. In the
week prior to the inauguration, The
Wall Street Journal reported that lobbyists and corporations
found loopholes in the latest congressional-ethics law that “allow[ed]
them to pay for special access to lawmakers and members of the incoming
Obama administration” during the inaugural festivities. By skirting
ethics legislation, lobbyists attended lavish VIP inaugural events
by paying big money – up to $55,000. These events allowed special-interest
groups to brush shoulders with some of the most influential members
of Obama’s administration.
also attempted to ensure that it had exclusive power to distribute
inaugural tickets by prohibiting average citizens from selling them.
Senator Dianne Feinstein passed legislation
through the Senate that criminalized the sale of inaugural tickets.
In addition, Feinstein secured
voluntary agreements from online auction websites such as eBay
to ban ticket resale.
are supposed to be free for the people,” said
Feinstein. “Nobody should have to pay for their tickets.”
did pay for a ticket, but the payment was to the government. The
Presidential Inaugural Committee (PIC), of which Feinstein is a
member, distributed tickets in exchange for up
to $50,000 in inaugural contributions.
double standard is clever if you’re a politician. If free people
were able to sell their inaugural tickets, then they might not go
to the politically appropriate authority, as deemed by Feinstein
and her political cohorts.
of the tickets distributed by the PIC went to the well-connected
elite: campaign donors, lobbyists, and party loyalists. According
to the watchdog group Public
Citizen, more than half of the inaugural financers who donated
$300,000 to the committee were also lucrative donors for the Obama
campaign. Among the 211 fundraisers that helped fund over $27.6
million for the inauguration were executives of firms receiving
financial bailout money from the federal government such as Citigroup
and Goldman Sachs.
episode is replete with valuable economic lessons that many in Washington,
the media, and voting booths across the country should understand
about the government’s precarious relationship with economics. For
one, the government cannot suspend the laws of supply and demand,
regardless of whether they subsidize, regulate, or criminalize the
market. The “free” tickets to the inauguration were far from free,
as supply was dwarfed by an enormous demand, and obtaining a ticket
required either lots of money or cozy political connections.
when governments, instead of markets, ration scarce resources, their
performance is dismal. Shortages and incompetence are commonplace
in government-run economies, because no amount of design by government
planners can anticipate the myriad demands of the people. Government
planners do not face the incentives provided by competition in private
enterprise. The inevitable result is poor management. The thousands
of ticket holders who were kept out of Obama’s swearing-in ceremony
know this well. Inaugural planners mismanaged
some of the entrances, leaving them stranded in an overcrowded
traffic tunnel and left out of the historic event.
the government is given the power to control such scarce and valuable
resources, political favors and special interests hover like vultures
over carrion. Lobbyists line up at the trough of government largesse,
while politicians, eager to gain reelection, engage in political
quid pro quo.
charged allocation of inauguration tickets and other favors to those
who are well connected is a sad reality of politics. It is a reality
that our new president needs to realize in the midst of our economic
troubles. Despite platitudes of responsibility and change, the administration’s
near-trillion-dollar economic stimulus package is laden
with political favors and other vote-buying schemes.
learned from the unseemly distribution of Obama’s inaugural tickets
should give him pause regarding his first acts as president. His
record-sized stimulus bill ignores the corrupting propensity Congress
has to distribute favors to constituents out of the taxpayer’s purse.
In addition, it rests on the dubious assumption that government
can better decide where resources should be devoted.
of mantras of change, politics is unlikely to change unless President
Obama heeds the lessons learned from the inaugural ceremony. His
first move should be a drastic reduction in the government’s size
and scope. Sadly, I think I am more likely to get a ticket to the
next inauguration than to see that happen.