Saints and Geniuses

With so many of our better angels on the job, how come we're falling behind?

(Source: Getty Images)

Bill Bonner, reckoning today from Youghal, Ireland...

We left you sitting on the edge of your chair yesterday, didn’t we, Dear Reader? You were wondering, as we were: how come the US falls behind? How come the rich get richer and the poor get poorer? Why do our schools get worse, not better? Why do our life expectancies fall? Why do our middle classes get poorer…while our military enters more and more conflicts, and loses them all?

With so many saints and geniuses on the job – Ms. Elizabeth Warren in the Senate…Nobel Prize winner, Paul Krugman at The New York Times…Ta-Nehisi Coates, here and there…do-gooders doing well in academia as well as government itself – clarifying ‘the science’… protecting us from AI, drugs, poverty, Russia, Chinese chips… censoring wrong-think…stimulating the economy with trillions of new dollars… enacting thousands of new laws and regulations (all aimed at the perfection of our society and the expansion of the government) – we pause to catch our breath –

America’s slippage is as spellbinding as it is inexplicable.

Under the Influence

Donald Trump blames foreigners – both those who offer us their labor (Mexicans)….and those who send us their finished products (Chinese).

Joe Biden favors domestic enemies – pretending that straight, white, Republican males want to end our democracy.

A better explanation comes from Vladimir Lenin. He thought there was a flaw in capitalism itself that causes a drift toward fascism. In the 1970s, and ‘80s, economist George Stigler, and others, developed the theory of ‘regulatory capture’ to explain it. The idea was that the angels working for the feds were subject to influence. Ruthless, profit driven capitalists lure them into sin. Big businesses ‘capture’ the agencies…and use them to stifle competition, increase sales, lower taxes, and raise profit margins.

That is the way most thinking politicians, if there are any, see it. RFK, Jr. takes the idea a little further. Big Pharma and the FDA took advantage of the Covid Hysteria, he says, to sell drugs and gain power. Raytheon and General Dynamics teamed up with the Pentagon to exploit America’s empire madness and sell more weapons.     

But the capture goes much further. The Drug Enforcement Agency protects illegal drug dealers – by keeping prices high and access limited. Police departments and prisons get bigger budgets, too. And the last thing anti-poverty warriors want is for the poor to suddenly become independent.  The poverty-fighters live on greasy grants and giveaways from feds; take them away and they would have to earn an honest living. And now there are whole new industries colluding with the feds to sell “green” energy as well as Diversity, Equity and Inclusion.

But there’s something missing in the “capture” hypothesis. Who’s being captured by whom?

All Too Human

Our contribution to the ‘capture’ theory is to observe that both the regulators and the regulated put on their pants one leg at a time. Both want the same things – power, money, status. And they both get it by conspiring against the public. One side has money (made by providing goods and services for grateful customers). The other has power – given to it by the deciders, and backed by the firepower of the police and the army. Neither is a devil. Neither is a saint. Instead, both are all too human.

Government programs depend on chaste federal agents, pure of heart, clear of head, and ready to forsake earthly temptations. ‘Regulatory capture’ imagines that they, Ms. Warren and the entire regulatory, Deep State payroll are like nuns in a remote convent, always praying for peace and prosperity, while in danger of being carried off and ravished by lusty Vikings.    

Of course, if the feds wanted to avoid ‘capture,’ they could easily strengthen their defenses. No speaking fees. No revolving door. No consulting for regulated industries. Why aren’t these measures taken?

Oh, dear reader, you disappoint us. Isn’t it obvious? These gals want a good time too!

And what about using the tax system, as Ms. Warren suggests, to right wrongs?  She aims to reduce inequality, she says, by taxing the wealth of the richest families.

But the more laws and regulations, the more enforcers and adjusters, the greater the opportunity for the elite who know how to get around them.   

Already, the tax code runs to 70,000 pages…with 3 million words…each of them intended to improve the world in some way. Surely, another few pages – with a property tax on wealthy families, such as the Kennedys, will help set things to right?

More Public Disservice

But wait…who writes those thousands of pages of tax code? Who puts the loopholes into the tax system and then advises rich people on where to find them?  What lawyers move from the upper ranks of the IRS to partnership in the major tax firms? Who do these ‘public servants’ really serve – the middle class, or their rich clients? ‘The People’…or the elite?

And who will write the new tax law? Who will consult…who will interpret…who will slip the plum into the pudding? Perhaps it could be inserted as an amendment to this helpful IRS instruction:

For purposes of Paragraph (3), an organization described in Paragraph (2) shall be deemed to include an organization described in Section 501(c) (4), (5), or (6) which would be described in Paragraph (2) if it were an organization described in Section 509(a)(3)

Who would know?  

But maybe the rich and powerful…along with their lawyers, lobbyists and Congressional representatives (for whom they paid good money!) will take a break.   Maybe they’ll go to the Hamptons for a long summer vacation while Ms. Warren writes the new tax law herself.

And Ms. Warren? Who does she work for? The few? Or the many? Have the capitalists been unable to tame her…or she, them? Did she remain hidden in some dark nook, innocent, in prayer…as the rest of Washington was captured?  

Or, by proposing yet another phony regulatory ‘solution’ is she merely anesthetizing ‘the people’…

…allowing the elite to rip them off even more?

Regards,

Bill Bonner