by Martin Harris
The Cyprus aftermath –banking crisis leading to a wealth-tax on depositors leading to capital-flight-prevention measures leading to mobs-in-the-streets leading to more money-printing elsewhere for bail-out—is also leading to the predictable investigation “so it won’t ever happen again”. Not being recited is the “what difference does it make?” impatient fuggedaboutit used only when the casualties are Americans in the national service, not money in the global economy. Even before its formal start, the investigation has already caused the revelation that the well-connected in local politics and clans used their positions to benefit from, as it’s labeled by the honesty-in-markets folks, insider trading and/or front-running based on advanced knowledge by law-makers of the laws they themselves were about to make. That sort of self-serving venal behavior, in the idealized world of theoretical politics, ain’t s’sposed to happen. In the young American Republic, the Jeffersonian ideal of enlightened yeomen briefly serving their country in political office as a temporary respite from the home farm or trade, leaving office no wealthier than when they entered it, was demonstrated by Jefferson himself: neither his plantation nor his Capitol connections enabled him to amass wealth and, indeed, Monticello was sold to settle his debts after his death. That was then; now, in Cyprus, it turns out that there are 132 suspect cases of self-declared anti-capitalism legislators using their advance knowledge of the wealth-tax they were about to impose on depositors using the island nation’s two banks to reduce or remove their own, and those of their near relations, deposit accounts. Only The Wall Street Journal reported at considerable length on the insider trading, as the wire services –AP and UPI here, Reuters there– apparently found it too normal to warrant more than a brief news item.
In “normal” capitalism, successful investing (or de-investing) is similarly based on both known information and future expectations, which explains why English investor Nathan Rothschild used his pigeon-flock to get advance news of the French defeat at Waterloo in 1815 and score considerable profit thereby; but more recently it’s been illegal for corporate officials or politicians in possession of not-yet-public knowledge to act on it for personal gain: SCOTUS ruled so in 1909 (Strong v. Repide) and the Securities & Exchange Commission published detailed rules in 1934. Holders of office, whether they’re in capitalistic business (think Big Oil) or above-crass-business governance (think Progressivism) are required to advance the interests of their constituents, shareholders or voters, and not their own. It doesn’t work out that way. Teapot Dome, in the early 20’s is still the textbook example of politicians exercising their own brand of capitalistic free enterprise, selling access and favors in a Federal oil-lease context and profiting personally thereby.
A more recent textbook case (literally) is that of the K-12 educators in the Atlanta School District, who enabled their students to cheat on tests so as to profit from the pay-for-improved-achievement-results clauses their union had just previously built into their pay contracts. Doesn’t the Progressive-Left (statistically, the great majority of educators is so registered) teach its students to disdain “mere profit” and “greed trumping need” as re-distributionist equality-of-outcome political ideology? Slightly more distant, temporally and physically, have been comparable Vermont instances of those presenting themselves as “above-mere-capitalism” practicing their personal version of it very well indeed.
Of greatest dollar value was probably the Public-Service-Board-triggered wide swings in stock value for Central Vermont Public Service Company in its last profitable decade, the 1990’s, as the PSB became increasingly involved in wholesale power purchases –Hydro-Quebec, for example– and CVPS was forced into a range of non-traditional electricity functions. From its formation as a holding company built from a dozen local-town hydro-projects in 1929, it was bought out by Canadian Gaz-Metro in 2012. During the 90’s, CVPS lost its previously prized windows-and-orphans reliable-investment status as the shareholder stock value swung repeatedly between the teens and the twenties, and rumors of advanced trading, short sales, and the like by those in the know in Montpelier were rife at the time.
Ranking second is possibly the four-decade long campaign against Vermont Yankee, the 1972 nuclear-power plant originally owned by Vermont utilities and since 2002 by Entergy Corporation. Some aspects of it have been funny –for example, warm-water greenhouse table crops proposed by the early operators were opposed by the same local-vore advocates who now want a grant to do it themselves—but there have been no rumors of insider trading in either Montpelier or New Orleans, because Entergy stock has remained solidly in the 50’s, while paying a windows-and-orphans type 5% dividend. Recently, in recognition of implacable regulatory hostility (and not trumped by federal regulatory approval) Entergy has written down its investment at Vernon by 2/3, but only the tax-collectors will be harmed by that decision. The VY history is included here primarily because of the inevitable negative impact on the private capitalism budgets of Vermont rate-payers, and secondarily because of the extent to which entities which stand to profit from the eventual cold-shut-down, while they aspire to non-competitive, anti-capitalistic awards of service areas and rate schedules, are quietly supporting the anti-VY campaign in ways which might be called vulture-capitalistic.
Ranking third is probably the recent involvement of Montpelier pols, legislative and executive, with various alternative-energy purveyors seeking contracts and permits, favorable rate schedules and subsidies, for various wind, bio-mass, farm-methane, and similar small-scale generation to feed power, at a generous per-mw-hr producer rate, into the distribution grid when on-line, often in overt rejection of substantial local opposition. This time the rumors swirl around charges of crony-capitalism (contributions to “buy” favorable votes and permits) rather than insider-trading.
Ranking fourth and fifth, and probably more, are the multiple examples of Progressive Vermont legislators, campaigning and winning on all the usual I-can-make-a-difference-on-social-justice promises, moving after a term or two into a more stress-free less-campaign-risk permanent job in the poverty industry. Think Addison and Windsor Counties, and doubtless more. Final irony: such jobs were once less-well-paid than comparable private-sector slots. Not any more.