Things We Read Today (50): Scandals, Rules, and the Economy

What Lesson Can We Learn?

It may be the optimism of a constitutional conservative to suggest it, but it appears that an important lesson may be on the cusp of being learned.

Commentators from Rush Limbaugh to the lesser-known mainstays of a libertarian Twitter feed are pointing out that the many scandals currently tightening their grip around the Obama administration are inevitable consequences of Big Government.  While true, that’s a lesson of practical process — of cause and effect within government — and such lessons are not so readily learned.

The technocratic conceit, after all, is that there are no consequences that cannot be repaired out of the equation.  Exhibit A for this point could be calls for “shield laws” for reporters and their sources, in response to the Obama Department of Justice’s sweeping up the phone records of the Associated Press and, apparently, spying on a particular Fox News journalist. The solution, in Exhibit A, is not to question whether a massive, powerful bureaucracy will inevitably misbehave, but to layer on new fixes to one narrow manifestation.

And for the broader public, the tendency is to personalize problems, to see them as the stumbles of the personalities involved rather than as a hole into which they were destined to fall.  For most, government is just some shapeless machine that politicians operate.  The lesson that Big Government naturally rolls in a destructive direction would require people to learn how it works.

For a lesson to be learned, and then to change thinking and behavior, its “why” has to be deeper than “because all politicians lie,” and its consequence has to be something that people see up close and regularly.  That’s the kind of lesson that may actually be gathering around the edges of scandals and economic woes alike.

Make It Happen… for Whose Benefit?

Last week, Jessica David tweeted a quote from Bill McCourt of the RI Manufacturers Association: “Everyone has to be an ambassador for our state.”  David works for the Rhode Island Foundation, which last autumn hosted the high profile “Make It Happen RI” event, intended to spur the state’s private sector to coordinate to improve the local economy.  At the event, the missing question to the answers that attendees supplied was: Why isn’t the private sector doing these things already, and making a profit at it?

The missing question to McCourt and David’s admirable sentiment is: Why should people be “ambassadors” for a know-a-guy state run (and run into the ground) by a deeply entrenched insider culture?  The instances are too numerous to list, but some examples are the governor’s executive orders, a former Senate President under an ethical cloud elevated to judge, the Speaker of the House manipulating legislative rules to quash ethics legislation, special deals in the name of “economic development,” and on and on.

An economy doesn’t grow just because everybody is able to find something to do within it.  An economy grows because its participants are adding to it.  They’re risking their resources on the likelihood that their value will return to them and then some, and they’re offering up their time and effort because doing so can achieve their other goals in life.

A system in which political connections create shortcuts for insiders and in which the rules are constantly subject to revision is not one in which people are going to be enticed to work even harder and risk even more.  Moreover, spreading positive messages about a place of which one is so suspicious can feel a bit like trying to rope friends into a pyramid scheme.

Richard Fernandez makes a similar point at the national level on Belmont Club:

One of the reasons that the United States has remained the last refuge for money fleeing instability abroad is that those investors trust its institutions. They believed — reasonably until now — that in America the rule of law reigned supreme. They thought — until the administration cast the question into serious doubt — that America was not the banana republic that the possessors of those fortunes sought to flee. That’s why the money comes to America and not, let us say, to the Congo. …

…  To a large extent the multiple crises engulfing the Obama administration are economic and informational — it’s a rebellion against the cost of lying. The sheer mendacity of key institutions has jacked up the risk premium on everything, and people instinctively know this.

The leading politicians of Rhode Island are hotly debating what title they should give a one-stop-shop guy you gotta know so more people can feel as if they’ll have a chance to know him.  Creating an Executive Office of the Commerce Secretary is not economic development.  Economic development is figuring out what quantifiable costs the local political and physical environments are adding to business and reducing those costs so business can happen.

Government isn’t inherently the problem, but when it is a significant part, then it has to be the first part solved.  Solutions that address (for example) out-dated real estate can only contribute to the sense of exclusion when they are handled by a government known to be prone to special favors.  Betty the small-businesswoman isn’t going to put her own family even more on the line when large developers and celebrities are able to offload their own risks onto her community.

The Scandals as an Example to Us All

Behind the initial weeks of chatter about the IRS’s targeting Tea Party groups for layers of extra scrutiny over their tax-exemption status has been another unasked question: How much time and financial resources were such organizations — mainly operated by part-time, amateur volunteers — not able to devote to their core missions because they were busy dealing with the taxman?

Once again, it comes down to resources and the cost of doing what one feels should be done.  Jillian Kay Melchior drives the point home with a must-read, but chilling, article about one such part-time, amateur volunteer, Catherine Engelbrecht:

The Engelbrechts were not, until recently, particularly political. They had been busy running a tiny manufacturing plant in Rosenberg, Texas. After years of working for others, Bryan, a trained machinist, wanted to open his own shop, so he saved his earnings, bought a computerized numerical-control machine, which does precision metal-cutting, and began operating out of his garage. “That was about 20 years ago,” he says. “Now, we’re up to about 30 employees.”

For two decades, Bryan and Catherine drove to work in their big truck. Engelbrecht Manufacturing Inc. now operates out of a 20,000-square-foot metal building on the prairie just outside of Houston, where a “semi-pet coyote lives in the field just behind us,” Bryan says. They went back to their country home each night. Stress was rare, and life was good.

When Catherine became involved with a local Tea Party group and True the Vote, however, she, her volunteer organizations, and her family’s business found themselves coincidentally in the spotlights not just of the IRS, but of the FBI, the federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Occupational Safety and Health Administration (OSHA), and the Texas Commission on Environmental Quality, as well, most of them more than once.  Each interaction cost time and money, into tens of thousands of dollars.

For anybody without a view from the center of the federal bureaucracy, these incidents are difficult to move from “anecdote” to “data.”  The subject of one such anecdote, Mitt Romney-backer Frank VanderSloot gives an indication why.  After the Obama campaign targeted VanderSloot, he found his personal and business finances under separate audits from the IRS and his business under the scrutiny of the Department of Labor, last week, he told Jamie Weinstein on the Daily Caller:

“I talked to only a handful of [people with similar stories] since,” VanderSloot said. “I’ve reached out to all of them. But only got calls back from a handful and most of the responses were they’re just laying low, you know, they took their own beatings and they don’t want any more of it and they don’t want to even talk about this.”

One of the institutional advantages that the United States has always had is the Constitutional principle that people should be free to engage in their political system.  A corollary principle that grew up alongside that right is that there are (there must be) areas of life outside of politics.  This was true even as the Civil War drew to a close, when Union General Ulysses S. Grant offered terms of surrender to Confederate General Robert E. Lee that allowed officers to keep their firearms and “each officer and man will be allowed to return to their homes, not to be disturbed by United States authority so long as they observe their paroles and the laws in force where they may reside,” taking their horses and mules along with them as their property.

Last year, it was becoming evident that campaign finance laws would expose individual and corporate donors to targeting by political activists.  The latest scandals indicate that government agencies are willing to open another front in those attacks, and government agencies have access to much more information than can be forced into the public under the banner of “transparency.”

All together, the message is: Stay out of it or pay tribute to the ruling factions.

Rhode Island Loses Another Anecdote

The lessons of the above all come together in the story of Marina Peterson, who is an anecdote in two ways.  First, she is Rhode Island’s local example of a possibly targeted Tea Party/True the Vote volunteer.  Shortly after a dust-up with the Bristol Fourth of July Parade brought national attention to the Rhode Island Tea Party, Peterson was subjected to three IRS audits in sequence, for tax years 2006, 2007, and 2008, in chronological order.

How much time and money did that prevent her, personally, from devoting to the local cause of good government and transparent elections?

The more important part of Randal Edgar’s Providence Journal story, though, is the Petersons’ response to Rhode Island’s last election:

Peterson expects the float to be entered again this year, but she doesn’t think she’ll be there to see it. She and her husband, William, Rhode Island residents for 17 years, are following their tea party instincts and moving to South Carolina. Their moving day is two weeks away.

“My husband’s still working, but when you start to think about living on a fixed income, waiting for the other shoe to drop, who knows what they’ll tax next,” she said.

She said their annual property tax — about $3,000 a year on their two-story home in Bristol — will drop to about $700.

As the article makes clear, the couple is transitioning into their retirement years, so they weren’t likely to be entering into entrepreneurial ventures to kick-start the economy.  Marina’s entrepreneurialism was of a civic nature.

But as was true for many, November’s election — nationally, at the state level, and across the span of local races — was just too strong a proof that positive change is unlikely around here.  The deck is stacked; the rules are malleable.  A state that elects a mayor who lies about his city’s financial condition to the U.S. Congress and then re-elects him even when the lie is pretty universally acknowledged does not instill confidence.

Just before the election, WPRI reporter Ted Nesi pondered some political implications of that outcome:

If [Congressman David] Cicilline wins, will Republicans ever again be able to convince anyone they can win the 1st District, considering the advantages they’d have squandered this year? GOP loyalists will credit Obama’s coattails, but it’s hard to imagine national Republicans deciding it’s worth another shot barring something dramatic.

Nesi follows the lead of too many mainstream journalists, in tracing the horse-race aspect of politics.  The worry should be much larger: If it’s “hard to imagine” Republicans’ investing political capital in a state that its supporters can’t help but “squander” — just as the operators of Big Government can’t help but fall into corrupt holes — shouldn’t it also be hard to imagine people’s investing their lives and livelihoods?

Whatever the case, it’s nigh upon impossible to imagine the Petersons, or the scores of people like them who leave Rhode Island every year, playing the role of “ambassador” for the Ocean State wherever they wind up.  What happens when this syndrome goes national is a question that we should all fear to have answered.

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