Regulatory Dementors

I encourage you to get to know the story of Graig Zucker and “Buckyballs” (WSJ article of September 1, 2013).

Mr. Zucker and a partner discovered, promoted, and distributed Buckyballs until the US Government stopped him in the name of child safety, even though every household in the country has a drawer filled with thumbtacks and small nails. Here is an image of Buckyballs (more here):


The regulatory process has gone from cooperative regulation, to regulatory prosecution, to regulatory persecution of Mr. Zucker. After stopping the sale and distribution of “Buckeyballs” the Feds are now suing Mr. Zucker personally for the costs of the product recall they imposed (thereby causing his company to liquidate for lack of sales).

An entrepreneur discovers a product, finds an appropriate market for it, responds to public safety concerns in a prompt and responsible manner, and is then put out of business by the government and sued personally by the government.

The regulatory Dementors are upon us. Soulless creatures use bald political power to threaten, persecute, and destroy in the name of some social good that is arbitrarily and inconsistently regulated.

There is no longer a justification for taking business risk as your dollars and your efforts are subject to selective and arbitrary confiscation by regulatory authority, as well as personal liability for running your business in a legal manner.

Its so clearly time to elect people to Federal office who understand and believe in individual freedom and responsibility. You know, America.

Regards, Pete Weldon

The Education of James Taylor

Prior to performing a verse of America the Beautiful at Mr. Obama’s recent 2nd inaugural, singer/song writer James Taylor appeared on the Charlie Rose show and offered some interesting commentary on “corporate” America. Watch and listen here (his political commentary begins at about 28:35).

As a former singer /song writer I greatly admire James Taylor’s music and his career. What struck me as odd, however, was his complete misunderstanding of the realities of “corporate” America and the counter productive thinking and policy that comes from such misunderstanding. In the political world, James Taylor’s misinformed views are an example of “liberal think” that destroys opportunity in the name of “humanity.”

Here is a portion of James Taylor’s comments:

America is such a noble experiment. It’s really the light of the world. A lot of people are angry at us but mainly because of our, sort of, corporate colonialism that we practice. That’s not the American people. Those are individuals who are acting badly. That’s Standard Oil and Union Carbide in Bhopal, BP in the gulf. That’s a real problem for the future. Aside from carbon in the atmosphere, what we do with corporate organization and corporate power and how we make it serve human beings and the largest number of human beings at that, and not just enslave human beings and, you know, march backwards, that’s a big, hmmm, Gordian knot for human beings to deal with, this question…. because corporations don’t have the same human priorities… The Supreme Court and the Citizen’s United decision not withstanding, corporations are not human. They have a very selective and a very limited and not very humane priority (Charlie Rose interjects, and a very different mission)… and a very different mission. A robber Barron will at least put his name on a hospital, I know you will see a lot of football stadiums with “Enron” on them or whatever, … but the point is these things (corporations) use portions, little slices of people and there are three people waiting to take your job and do that little, you know, dedicate that little part of yourself to that number being as large as it can be, and that’s not… its just incomplete is what it is, its not whole and its not human. I think other countries have done a better job asking corporate power to serve human beings better than we have.

Mr. Taylor’s references are dated.

Standard Oil was broken up in 1911 and it can be credibly argued that its broad influence over petroleum production and distribution made possible the economic transition from group transportation (trains) to personal transportation (automobiles), adding significantly to individual freedom. No longer are individuals restricted to a small geographic area to find work and exercise a desire to travel, thanks to the personal automobile.

The “Bhopal” event occurred under Union Carbide’s ownership of a chemical plant in India in 1984. Union Carbide has been owned by Dow Chemical Company since 2001.

The “BP” Deepwater Horizon gulf oil leak occurred in the spring 0f 2010.

It can only be Mr. Taylor’s imagination that leads him to believe the “corporate” nature of these companies resulted in “bad behavior” that did not and does not serve human needs. Note that the consequences of these industrial accidents were paid for dearly by both the management and owners of the effected corporations, setting examples that promote responsible behavior. Also note that there is no evidence that government ownership or regulatory control of the means of production would avoid the occasional industrial tragedy (see Chernobyl, Three mile island, and Fukushima Daiichi). Finally, there is evidence that government regulation and favoritism interfere with the operation of markets in ways that negatively impact humanity through increasing prices and limiting choice (see as examples ethanol mandates, Obama Care, and the Dodd/Frank legislation).

Mr. Taylor then moves from stereotyping bad “corporate” behavior to stereotyping “corporate” priorities. Let’s accept that those priorities as seen by Mr. Taylor are limited to financial greed. Now it is time to understand what a “corporation” is and why it exits.

Like money, corporations, are man made structures designed to serve a purpose. In the case of money that purpose is to provide a trusted means of exchange between people that simplifies trading. In the case of corporations that purpose is to simplify the organization of resources so as to provide humanity with goods and services in an efficient manner. Note that the customers of corporations voluntarily enter into purchase transactions to meet their needs. Note that government imposes such things as an ethanol mandate through the force of law, not voluntary exchange. Which approach truly serves humanity? Which approach takes risks to invest in technology and production so that new products come into being to serve humanity? OK, the “Furby” may not serve humanity in any sense other than providing a curious entertainment but certainly laparoscopic surgery and wireless networks and smart phones do, as do supermarkets and materials and chemicals and fuels and restaurants and accountants and lawyers and doctors and hospitals, and …..

The next presumption that corporations “use portions, little slices of people and there are three people waiting to take your job” is false. Corporations offer job opportunities resulting from voluntary demand for goods and services they produce. Remember that no one is compelled to buy a Big Mac, or a designer dress, or a new home, or car, or smartphone, or six pack of beer. Yet, the corporations that meet these human needs take the risk that the customers will be there tomorrow and in doing do employ millions of people who have personal ambition and a desire to learn and apply their knowledge in meeting society’s needs (that is, they are willing to work). The last time I checked no one was being compelled to work for IBM, or Exxon, or Johnson and Johnson. However, the government is now compelling all citizens with health insurance to subsidize the cost of female (not male) reproductive health services, some in violation of their religious faith. Lastly, many US corporations live by credos that list the shareholder’s interest last in line exactly because they understand that their long term profitable survival is what, in the end, creates value for both humanity and for those who take the financial risk to make it all happen. Here is a corporate credo Mr. Taylor should read.

No one I know has ever proposed that a corporate interest represents the interests of all of humanity. This may well be why democratic governments over the years have sought to use tax revenues to supplement those human needs not directly served by a job. It is also why we have many other forms of organization including union, religious, social, charitable, and political organizations. In fact, in America the Beautiful you are free to start any organization you want and prove there is a market for your ideas by getting others to give you money to support your cause, whether it be corporate or otherwise. That is what Citizen’s United is all about; more speech, not less.

Regarding this last offering from Mr. Taylor, “I think other countries have done a better job asking corporate power to serve human beings better than we have.” It is not a given that “countries” (he means governments) have some moral authority to “ask” (he means impose) rules on corporations to “serve human beings better,” whatever that means. Morality is not the purview of government. Government actions only reflect the morality of the citizens. Mr. Taylor would do well to update his perspective for contemporary reality. It is the power of centralized government that imposes regulatory mandates founded in righteous misconception, that accrues $80,000,000,000,000 in unfunded entitlement liabilities with no plan to reduce those liabilities to manageable size, that is more than $16,000,000,000,000 in debt with no effort to reduce that burden, and that spends more than a $1,000,000,000,000 more per year than it takes in revenue. This runaway abuse of power by the government exceeds any negative impacts of corporate power by orders of magnitude. Who is going to pay for this? Corporations, at least, are accountable to the realities of the markets. Government is accountable to the voters, a majority of whom have accepted government bribes, accepted money and favors to satisfy their short term desires while they burden their children and grand children with unsupportable debt and lost opportunity. So much for the morality of government and its role in serving humanity.

James Taylor is a brilliant man and I encourage him to read and understand more about our national government and our modern welfare state, and where they are headed. When he is done understanding, he just might want to form a corporation whose mission is to fix it.

Regards, Pete Weldon

False Hope Is Replaced With Real Fear

On May 24, 2012 Don Gogel, CEO of Clayton, Dubilier & Rice discussed private equity in the presidential race with Charlie Rose. Mr. Gogel was a prominent supporter of Barack Obama in 2008.

This interview provides a clear and objective critique of Mr. Obama as President of the United States and of his current political campaign and tactics. (It also shows why Charlie Rose likes questions better than answers, but I won’t hold that against him.)

Those seeking reality and a clear path to replacing Mr. Obama should pay close attention.

Mr. Gogel soft petals his responses but the implications are clear. A former Obama supporter deeply questions Mr. Obama’s lack of leadership, his values, and his tactics based on the realities of his actions, not based on political partisanship.

Mr. Romney’s campaign should take note. The path to the White House and to a prosperous American future is through an honest and positive campaign.

Regards, Pete Weldon

Support free market capitalism and the profit motive

September 1, 2010

Last week’s SEC rule opening public company proxies to Director nominations by minority shareholders is another example of a march to compromised capitalism, a condition where every priority other than profit earned in a free market dominates the corporate agenda and is subject to undue influence. We should defend free market capitalism and the profit motive, for ultimately we depend on these principles to provide economic growth, employment, and security.

Increasing employment, paying off deficits, and meeting private and public retirement obligations requires decreases in government spending and increases in private economic activity and private wealth. Yet every important action by our political leadership contributes to the exact opposite result.

Federal debt has increased from $3.4 trillion in 2000, to $6.0 trillion in 2005, to an estimated $9.0 trillion in 2010, and to $16.0 trillion in 2020 based on assumptions that the economy will experience a recovery because it has always recovered before.

The Federal government borrows $787 billion dollars for “stimulus” spending, much of which has a onetime impact but which imposes more debt and interest payments on all Americans, our children, and grandchildren.

The Federal government enacts 2,454 pages of health care legislation that will cost us at least another trillion dollars while driving us toward nationalized health care without even trying market based reforms that would hold providers accountable to each of us for access, prices, and improve the quality of care while motivating continual health care innovation.

The Federal government enacts 2,464 pages of financial legislation (and here) dramatically increasing the regulation of risk in the financial industry while failing to address the ongoing risks of Federal guarantees for home mortgages. Federally guaranteed mortgages total $5 trillion of which $148 billion is currently considered bad debts to be borne by taxpayers (that would be you and me).

The Federal government is planning to increase taxes on dividends, interest, capital gains, and earned income for the highest earning, most productive taxpayers, investors, savers, and consumers beginning January 2011.

The national unemployment rate remains near 10% for those seeking jobs and above 16% including those not bothering to look.

Economic growth is less than 2% and what growth there is results largely from money borrowed for “stimulus” spending. The government tells us over $500 billion of “stimulus” spending has been paid out to an economy that generates $13 trillion dollars of goods and services annually. Where does the next “growth” come from?

State public pension and retirement health care obligations are one trillion dollars in the hole nationally and no one representing these interests seems willing to lessen the costs of this security blanket; a security blanket (or is it a time bomb?) again guaranteed by more debt and interest payments from all Americans, our children, and grandchildren.

Shall we also mention unfunded Federal Medicare and Social Security liabilities?

Virtually all Federal legislation and regulation enacted over the past 18 months (as well as much that preceded it and that is contemplated) greatly expands the Federal deficit, increases taxes, regulatory costs, and uncertainty, and fails to address already unsustainable retirement liabilities. The result discourages work, risk taking, and investment, and drives down the value of private enterprises whose worth we depend upon to fund retirement costs, and whose health we rely upon to generate real economic growth and increasing employment.

Do you want a better job or any job at all? Do you want to secure your retirement benefits and the value of your savings? Do you want a future where your children have more opportunities than you were afforded? If so, support free market capitalism and the profit motive.