Russian billionaire Aleksandr Lebedev is selling all his Russian assets and moving his money elsewhere. The reason? According to the New York Times, Lebedev, who has supported the opposition to President Putin’s increasingly authoritarian rule, stated that police and regulatory inspections had become overly intense. “The special services steamrolled my businesses into the pavement,” he said. “I give up.”
It’s a classic case showing the benefit of a highly regulated economy and an extremely complex tax code. In such a system, the rules and regulations and tax provisions are so numerous and so complicated that it’s always easy for the state to find violations committed by people in the business world.
The result is inevitably a beautifully submissive and conformist business community. Business leaders know that if they keep their mouths shut about government wrongdoing or, even better, openly praise the government, the government will leave them alone. The businessmen know, however, that if they speak out against government wrongdoing or corruption, the government is likely to come smashing down on them with burdensome and intrusive inspections, followed by criminal indictments for regulatory breaches or some sort of tax fraud.
The situation is no different, of course, here in the United States. Have you ever noticed how rarely major U.S. companies and business leaders criticize the conduct of the U.S. government in foreign affairs? Hardly a peep about such things as torture, invasions, occupations, denial of due process, kangaroo tribunals, indefinite detention, assassination, support of dictatorships, and other such policies?
All we hear coming out of the business community are the standard inane bromides, such as “Praise the troops for defending our freedoms here at home” or “Thank goodness the U.S. government is spreading democracy around the world.”
Oh sure, it’s possible that all those business leaders in America’s major corporations honestly believe all that claptrap. After all, like the rest of us, most of them were sent into the government-approved school system where they were trained to become good, little citizens — i.e., those who don’t challenge or question what their government is doing, especially when it comes to matters relating to “national security.”
But business leaders in America have a very good appreciation of the power of the federal government, especially when it comes to regulatory bureaucrats and the IRS. If a businessman says the wrong thing, such as openly condemning President Obama’s assassination program, he knows that there is a good possibility that the federal hammer will be coming down hard on him soon. And the beauty of it is that the government can piously deny that it is punishing the man for opposing the government’s policies and claim that it is simply enforcing the criminal laws.
A good example of this phenomenon took place after 9/11. President Bush and his officials approached various telecoms and requested them to turn over confidential information relating to their customers. The business leaders knew that the president was asking them to break the law and to violate their privacy agreements with their customers. But they also knew what could happen to them if they refused to go along with the illegality — the government could destroy them with regulatory and tax investigations and indictments, not to mention denying them government contracts.
So, the businessmen went along with the deal, rationalizing to themselves that they were doing it for the fatherland and in the interests of “national security.”
Except for Qwest CEO Joseph Nacchio. To his everlasting credit, Nacchio refused to go along with the illegality and chose to side with his customers.
Nacchio paid a high price for his principles. Oh, no, the government didn’t put him in jail for refusing to comply with the president’s illegal scheme. Instead, they sent him to the penitentiary for committing a regulatory violation — “insider trading” — in much the same way that Putin is going after business people who dare to challenge his regime.
One of the best descriptions for the benefit of a state-regulated economy was set forth by Ayn Rand in her novel Atlas Shrugged in a statement made by the slimy state bureaucrat Dr. Floyd Ferris:
“Did you really think that we want those laws to be observed?” said Dr. Ferris. “We want them broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against — then you’ll know that this is not the age for beautiful gestures. We’re after power and we mean it. You fellows were pikers, but we know the real trick, and you’d better get wise to it. There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted — and you create a nation of law-breakers — and then you cash in on guilt. Now, that’s the system, Mr. Rearden, that’s the game, and once you understand it, you’ll be much easier to deal with.”