The 2014 MN Legislature will be taking up legislation on Sunday Liquor Sales. After a comment on that I made on the Facebook page, I was invited by Walter Hudson to speak about unproductive government and the government’s role in promoting cultural decline and the erosion of the middle class at the Republican Liberty Caucus on January 16. This has implications for tax policy generally, including principles to keep in mind when producing legislation on alcohol sales.
Three Types of Entrepreneurship
In my Facebook comment, one of the main points I mentioned was our shift from a productive to an unproductive economy in the United States. Economists refer to three types of entrepreneurship: productive, destructive, and unproductive.
The Glass-Steagall Act, also known as the Banking Act of 1933 (48 Stat. 162), was passed by Congress in 1933 and prohibits commercial banks from engaging in the investment business. This act is an example of principled regulation of business because it (1) protects private property of citizens, (2) encourages efficient banking practices, (3) eliminates exorbitant Wall Street profits which is the basis of much government and banking system collusion and cronyism, and (3) eliminates the cost of much government oversight and unproductive legal costs.
It was enacted as an emergency response to the failure of nearly 5,000 banks during the Great Depression. The act was originally part of President Franklin D. Roosevelt’s New Deal program and became a permanent measure in 1945. It gave tighter regulation of national banks to the Federal Reserve System; prohibited bank sales of Securities; and created the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits with a pool of money appropriated from banks.
As it turned out, this was very sound legislation that significantly stabilized the U.S. banking system until its repeal in 1999. This was immediately followed by a wave of corporate scandals in 2001, unsound government home loan guarantee legislation that subsidized banks with taxpayer money in 2005 leading to the housing bubble of 2007, and an explosion in fraudulent financial securities and derivatives that led to Treasury Secretary Paulson’s extortion of a $700 million bailout from taxpayers for irresponsible behavior of his Wall Street colleagues.
“The Blind Leading the Blind” by Sebastian Vrancx (1573-1647)
The metaphor “the blind leading the blind” comes from ancient wisdom and is an apt metaphor for Western politics and higher education today. Not that there aren’t very smart and shrewd politicians or many new discoveries in the sciences. But, when it comes to knowledge of where we want to go and how to get there, our culture is full of statements and policies that reflect the ancient metaphor taught in the Bible, the Upanishads, and Roman Classics that complain of the blind leading the blind. Sextus Empiricus (160-210 a.d.) wrote in Outlines of Scepticism: “Nor does the non-expert teach the non-expert—any more than the blind can lead the blind.”
This saying is just one example of pertinent ancient wisdom discarded in the twentieth century by a rejection of conventional wisdom that followed the rise in faith in modern science and the nation state. This modern faith in science and the state became a basis for the rejection of religion as superstition and an opiate, and the idea that the principles informing the U.S. Constitution could be rejected on the basis that it was “the philosophy of dead white men,” and in this age of pluralism, everyone’s cultural views were as valid as everyone else’s. Continue reading
Edward Snowden is a lightning rod for when law conflicts with principle
Edward Snowden’s revelations are, in part, a result of the growing divergence of law and principle in the United States. When laws are rooted in political lobbying efforts, or rules created by administrative agencies, and unconnected to principle they increasingly diverge from the principles of respect for others, human rights, and individual freedom.
For him, it is a matter of principle. “The government has granted itself power it is not entitled to. There is no public oversight. The result is people like myself have the latitude to go further than they are allowed to,” he said.—The Guardian
The Mayo Clinic was rewarded for lobbying the legislature to define Rochester, MN as a “Destination Medical Center,” giving it special favors
The use of legal definition has become a common strategy for legislatures to fund special interests that contribute to political parties. Most people became aware that legal redefinition was going on at some level when marriage was redefined from its biological definition of a union of male and female, to a social definition of two individuals committed to a partnership. But while the legal redefinition of marriage could be defended on the basis of equal rights, despite its ultimate objective related to financial redistribution to a new class of people, much legislation, like Minnesota’s recent aid and tax omnibus bill (HF677), uses new definitions to create special interest legislation that is opposed to equal treatment under the law:
the bill defines a “medical business entity” as a business that “collectively employs more than 30,000 persons in the state.