The System IS the Scam

I grew up watching Chicago television, and the obvious and ongoing corruption was not so much normal as a cost of doing business, like the flames shooting out of the blast furnaces at US Steel. It just was, always had been, and likely always would. As somebody at Second City Cop said recently, the last time Chicago Aldercreatures were honest was sometime before early 1837. But it was honest corruption, in a sense. You could get things done, it just cost a ridiculous amount, and often wasn’t done all that well. But not too many people died, and the pols got rich, so…

But, this, even by that standard is ridiculous. From The American Spectator.

The best rackets are legitimate.

A century ago, the people accepted flagrant public corruption. Dim cynicism the popular spirit, it’s likely they’d still be so disposed today. But the politicians and their swarms of supplicants have acquired subtlety and subterfuge. Why press their luck?

We still have the graft and boodle that Lincoln Steffens chronicled in The Shame of the Cities, but now it’s all above-board. The best schemes are almost indistinguishable from the regular function of government. Almost. In the back rooms, somebody puts in a word for somebody, somebody threatens somebody, but that’s the part we don’t hear about.

It’s the bad luck of Terry McAuliffe, the Clinton barnacle-turned-Democratic governor of Virginia and a rumored presidential candidate in 2020, that his wheedling and arm-twisting inside the federal bureaucracy is now a matter of public record. He got sued last week, along with Hillary Clinton’s brother Anthony Rodham, accused of running “a $120 million scam” to defraud Chinese immigrants.

Did McAuliffe break the law? That’s almost beside the point. The essence of modern graft is crony capitalism — you don’t break the law, you make the law work for you.

The game: set up an obstacle, then offer a way past it for a price. We usually think of crony capitalism as tilting the field in favor of one company or one industry through preferential regulation, but McAuliffe’s arrangement was an even purer form. After all, what is the nature of government? It is to forbid, to restrict, to alter affairs from their natural course. Government creates problems and then pretends to offer a solution.

The EB-5 investor visa program is one long chain of government-created problems and solutions.

Foreign direct investment is of course an unalloyed good for the U.S. economy, but immigration law stands in the way of many potential investors. The laissez-faire thing to do would be to make visas freely available and get out of the way, but that would be too simple.

Much better to complicate it with all sorts of rules and red tape, that can’t all be complied with so the only solution is to buy yourself some interest (otherwise known as pull).

McAuliffe was one of the guys who ran GreenTech, a company whose business model was designed to fit even more government regulations and incentives: GreenTech made electric cars, little Neighborhood Electric Vehicles that go 25 mph, and cost $16,000. You’ll notice I said “made,” and not “sold,” as there has been zero consumer interest in a pricey golf cart that can’t even hold golf clubs. […]

That had a lot to do with why the state of Virginia had refused to get involved with the project, despite McAuliffe’s pull there. In 2009, the state’s veteran economic development director told colleagues, “(I) still can’t get my head around this being anything other than a visa-for-sale scheme with potential national security implications.”

When an economic development official, whose business is crony capitalism, finds your model suspect, I think you’re due some congratulations. That’s like making Louis C.K. blush.

Eventually, McAuliffe set up shop in Mississippi, thanks to $8 million in land, grants, and other incentives. The state is now in litigation to claw back $6.4 million from the company.

It’s true when the influence peddlers think your scheme is too blatant a fraud, well maybe your scheme is, uh fraudulent.

The real problem, the more general problem, is that the government is in any position to be assessing the viability of a commercial venture, one that’s bent out of shape from the start thanks to political dictates.

If we’re going to do investor visas, they ought to be straightforward, and useful for any type of legitimate investment in American business. Allowing unapproved start-ups, of course, could open the door to different sorts of scams — a fake business goes belly-up and slips the cash back to its “investors.”

But that is a different problem, one with reasonably straightforward solutions, if one wants to solve problems, rather than create new ones to solve, for a price. Usually a very high price.

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About NEO
Lineman, Electrician, Industrial Control technician, Staking Engineer, Inspector, Quality Assurance Manager, Chief Operations Officer

6 Responses to The System IS the Scam

  1. the unit says:

    Ah, flames, corruption, problems, solutions! Lots of “tacit knowledge” contained herein. 🙂

    Like

  2. Reblogged this on boudicabpi2015.

    Like

  3. the unit says:

    Well, what I mean is this. Explaining graft, corrupation, problems and solutions, it isn’t cut and dry for me which can be explained by explicit knowledge, which I don’t have on such matters. Explicit knowledge as Wiki example “London is in the UK.” Have to study and consider the details. Must learn the tacit knowledge like, i.e. J.H. Pott’s attempt to make the Theory of Phlogiston much more understandable to a general audience. When flames are seen (“like the flames shooting out of the blast furnaces at US Steel”), it is phlogiston mixed with water. When mixed with earthy matter, it can not burn very well. Phlogiston is in everything in the universe and when it meets acid it reacts and is released as heat.
    Uh ok, I get it now. 🙂

    Liked by 1 person

    • NEO says:

      Well, you confused the crap out of me! I suspect you meant too, and it was fun! 🙂

      Liked by 1 person

      • the unit says:

        I must confess. I cannot tell a lie. Yep, I meant too. Old man just wants to have fun. 🙂

        Liked by 1 person

        • NEO says:

          Well the other old man enjoyed it! 🙂

          Liked by 1 person

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