Matt Is Still Making Excuses (So Are You)
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2017-11-24 07:00 by Karl Denninger
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Matt Is Still Making Excuses (So Are You)
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Matt Stoller and I, years ago, used to talk a fair bit on policy in the political realm.  We have rather different views that could be reasonably-characterized by some "left:right", but I think are more "socialist:libertarian", when you get down to it.

But that's all well and good, if you can confine your differences to policy and try to hash out how the government can function more-efficiently, which I think everyone can define as provides more benefit than it costs to a larger percentage of the population.

Of course we'll differ on what defines "benefit" and "cost."

The problem is that unlike my perspective on what happened, which hasn't changed very much in quite a long time, Matt's is basically the same perspective both the "right" and "left" hold.  Here's his perspective on where the Democrats went wrong:

It was January 1975, and the Watergate Babies had arrived in Washington looking for blood. The Watergate Babies—as the recently elected Democratic congressmen were known—were young, idealistic liberals who had been swept into office on a promise to clean up government, end the war in Vietnam, and rid the nation’s capital of the kind of corruption and dirty politics the Nixon White House had wrought. Richard Nixon himself had resigned just a few months earlier in August. But the Watergate Babies didn’t just campaign against Nixon; they took on the Democratic establishment, too. Newly elected Representative George Miller of California, then just 29 years old, announced, “We came here to take the Bastille.”

One of their first targets was an old man from Texarkana: a former cotton tenant farmer named Wright Patman who had served in Congress since 1929. He was also the chairman of the U.S. House Committee on Banking and Currency and had been for more than a decade. Antiwar liberal reformers realized that the key to power in Congress was through the committee system; being the chairman of a powerful committee meant having control over the flow of legislation. The problem was: Chairmen were selected based on their length of service. So liberal reformers already in office, buttressed by the Watergate Babies’ votes, demanded that the committee chairmen be picked by a full Democratic-caucus vote instead.

Matt goes on to point out a number of things: First, the the Watergate Babies tossed Mr. Patman, coming to power with an "anti-war" stance.  True.

But let's remember: Yes, Matt is talking about that Mr. Patman.  You know, the guy who's name is on Robinson-Patman, the law that makes illegal price discrimination in the sale of physical goods of like kind and quantity where the intent or outcome tends to injure competition.

So Mr. Patman (who was real old by then) went, and the Watergate Babies came in.  And this, Matt argues, is a so-called "paradox" in that now we have all these monopolistic businesses from health care to Amazon to Facebook to Netflix.  This, it is argued, is because the Democrats "lost their soul" (or maybe they traded it in for campaign contributions.)

Except.... they didn't.

You see, Robinson-Patman is still the law.  It was never repealed.  Neither was Clayton, or Sherman.  You can find all three of them today in the federal law books under 15 USC Chapter 1 and with a few notable exceptions and carve-outs, such as for Baseball, they exist today as they did then in the 1930s, 40s, 50s and 60s.

In other words those Watergate Babies did not alter the legislative landscape.

They simply ignored it.

This is no small matter; indeed, it's the biggest issue on the table today.  I will remind you that in the late '70s and early 80s the big medical industries (drugs, pharmacies, providers and insurance companies) tried to argue that they had gotten an exemption from said law.  In fact, they tried twice, after being sued twice.

They lost both cases at the Supreme Court.

It is not a surprise that after those two decisions medical spending as a percentage of GDP more than tripled.  Nor is it a surprise that starting at this point in time "explanation of benefits" statements looked like an extortion racket.

That's outrageous.  What's even more outrageous is that the State of California, in their Business and Professional Code (the state-level version of the federal CFRs) actually claims that price discrimination is ok with the state and cites the second LOSS at the Supreme Court, which occurred over practices in Arizona, as justification!  I discovered this while doing research a few months ago on a case in California where a man sued over hospital price discrimination, the case went up on appeal and the California Appeals Court cited the BPR code in turning him away.

Let that sink in for a minute: A state crafted a regulation that explicitly declared as public policy systematic violation of a standing Supreme Court decision resulting in the screwing of certain people within the state!  This is exactly identical to a state declaring in its law that notwithstanding the 13th Amendment blacks cannot vote in state and local elections.

What has the Federal Government done about this section of California Law?  Exactly nothing.

It wasn't that long ago that the Federal Government literally rolled the army into states that stuck their middle finger up toward Washington DC in regard to obeying federal laws.

Nor should it be a surprise that we now have companies cost-shifting for the purpose of destroying competitors, other firms operating only because they're tax farms, and still others strong-arming the FCC into forcing non-customers to give them billions worth of unpaid services so they can sell a $40-cost service for $10 -- and they still run a negative cash flow even after doing that!

I would tend to agree with Matt that the problem is in "mindset" except that he knows damn well that's not where the problem is.

The laws were never changed; they were simply ignored and there has been zero enforcement.

This is not just in the health care system and FANG stocks either.  It's against the law to employ illegal immigrants and employers have had an affirmative obligation to collect attestations before hiring in the form of W4s.  Said employers transmit that information with their first payroll tax deduction deposit to the government, which these days occurs on the first pay period.  You cannot evade this; I had to file those reports for every pay period with a detailed list of persons, SSNs and taxes withheld.  Today that happens electronically and instantly, not on paper.

So the government knows in each and every case where paychecks are cut that either (1) the SSN on that form is bogus or (2) it's someone else's (e.g. the other person is retired and collecting benefits, is dead, or is working somewhere else and it is ridiculous improbable that the same person is holding both jobs) -- within days.

If said "employer" is paying people under the table then that's being reported too since a CTR has to go into the government on any cash withdrawal over $10,000 and any structured or set of similar withdrawals that are as little as $2,000.  You can and are supposed to be investigated if it appears you're trying to evade reporting requirements as it is a specific crime to do so.

Never mind that it's a crime to not withhold employment taxes, standing alone.

Yet the law is, once again, ignored even though the government could easily enforce it.

It just chooses not to, exactly as it chooses not to enforce the law relating to monopolies and other anti-competitive behavior.

Oh by the way the same is true when it comes to sexual harassment and assault within the government.  But there it did in fact get even more egregious in that Congress exempted itself from its members having to pay any sort of financial penalty -- ever, along with imposing gag clauses on both claimants and the process.  And again, let me remind you that the vote in Congress was unanimous for this "law".

Matt's willful and intentional refusal to address this is where he goes of the rails and so does everyone else.  We can have disagreements on policy but laws are not suggestions that are subject to being ignored whenever the political winds blow a certain way, and enforced when they blow a different way.  Rather, they're laws and if they're bad there's a way to change them -- which leaves a nice trail on who voted for what and what changes were made, along with, usually, a record of the debate on said points and merits.

What Matt and everyone else in the political sphere critically needs to understand is that willfully and intentionally ignoring the law to screw some people for the benefit of others is why we have such an "inequality" problem.  It's why so many of our jobs are taken by illegal invaders.  It's why so many more are offshored.  It's why so many women are harassed and even assaulted yet cannot find justice, especially if a Congressperson or President (cough-Clinton-cough-cough!) does it.  It's why 20% of our uranium assets were sold to a bribing Russian firm that gave a hell of a lot of money to Clinton's "foundation" -- exactly when they did that is subject to some dispute, but that the FBI knew about it before the deal was done is not.  It's why retail jobs are disappearing across the land and Jeff Bezos laughs his ass off at cross-subsidization that he himself trumpets along with the entire mainstream business media as yet another firm being "Amazoned" when that behavior was outlawed over 100 years ago.  It why you can't get a price for an operation at the hospital that is actually binding and if you don't kowtow to their extortion game with "insurance" you get billed at 3, 5 or 10x the price -- which again, is illegal.

I'm willing to bet that roughly a quarter of what we call "GDP" is in fact stolen via these practices -- and both parties know it.

The true ugliness that can come from all of this, however, lies in a far deeper place.

You see if Joe Big-Company CEO doesn't have to follow the law because nobody will arrest him despite flagrantly breaking same then what's left when it comes to civil society?

Not a lot.

For now there's been a "peace" of sorts.  The poor get food stamps, Section 8 housing and Medicaid, along with plenty of opiates.  That probably has something to do with them remaining peaceful -- they're stoned.

For how long does that last?  What happens when some number of those who have been screwed blind for decades decide to spend their lives obtaining justice that the government's "law enforcement" apparatus refuses to provide?  Do you really think that application of justice will come with indictments, trials and juries?

Or will it come by torches, pitchforks, baseball bats, boiled rope and a nearly lamp-post -- facts, trials and due process be damned?

None of the people doing the screwing in the private sector, and damn few of them in the government sector, have any realistic "security posture" that will survive the first 30 seconds of that, should public opinion turn ugly.

This, above all else, is why the rule of law is important.

It gives the common man a peaceful means of redress without which he may eventually decide that he will never obtain via peaceful means within due process of law -- and everyone, including you and he, dies exactly once.

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