Government Competition Update May 18, 2014Posted by federalist in Government, Government Regulation, Markets.
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What remains of state sovereignty in this country is both entertaining and heartening.
Of course state competition for business has a long history. Before government became a distinguishing factor businesses would often establish themselves based on access to needed natural resources, labor, and markets. Gradually each state’s tax and regulatory burden became a significant part of that equation. Now the political environment itself is becoming an explicit factor.
For example, the last round of gun control hysteria had quite disparate results. States that enacted draconian new gun laws have found themselves losing firearm businesses to more friendly states.
More recently the CEO of a California company complained publicly that its government is becoming reminiscent of the communist Vietnam he fled 35 years ago. Texas is one of the states that has been reaching out to companies with this compelling invitation from its governor:
Texas’ low taxes, predictable regulations, fair courts and world-class workforce make our state the ideal place for any business looking to relocate or expand….
Government Shakedowns May 4, 2014Posted by federalist in Government Regulation, Markets.
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He knows that it’s cheaper to settle than it is to fight this investigation.
Most government shakedowns don’t get coverage like this in the Wall Street Journal. But then, as the FERC lawyers paraphrased above noted, most people realize it’s cheaper and easier to just settle.
In its legitimate role the government enforces clear laws and applies well-defined penalties to lawbreakers. In practice the government has promulgated so many laws that they are uncountable. Executive agencies ostensibly ordained to enforce these laws then compound them with rules and regulations so extensive and opaque that even expert enforcers often cannot say with certainty what is or is not permitted.
I have previously noted that the greatest peril of this situation is selective enforcement. I have since observed a more nefarious phenomenon: the government shakedown.
What motivates regulators in a system in which one can argue that virtually anyone is doing something wrong? Criminal convictions for clear violations of the law are great, certainly. But evidently when it’s too hard to find or convict criminals the next best thing for a regulator is a settlement. And, like all gangsters, the government goes after people with money.
I’ve seen this from traffic courts to tax assessors to market regulators: Pick an amount that is low enough that the target will decide it’s cheaper to settle than to fight. When you run out of criminals start with the wealthy, or just pull people over at random. Threaten them with laws and rules that may not even exist. Find the highest number they’ll pay to avoid further hassle, and if they turn out to be fighters just close the case and move on to the next target. There are no penalties for government enforcement agents who engage in such harassment. On the contrary, it seems, they are rewarded for “settlements” even if no wrongdoing was admitted or even committed. And since shakedowns are easier than full-scale prosecutions that could be lost under the judicial scrutiny of the courts and juries it often appears that enforcers would rather accumulate these token settlements than pursue the hard criminals they were created to take down.
We need more public scrutiny of the everyday government shakedown. And we need more people like the Gates brothers to stand up and say, “Even though it’s cheaper for me to pay you to leave me alone, I’m going to fight you because what you are doing is wrong.”