Imagine that you are a successful small-business entrepreneur.

And then imagine that the government was forcing you to spend $30,000 to build something utterly useless just to prove that you were serious about your business.  Sound crazy?  That is essentially what is happening to Minnesota funeral-home entrepreneurs:

Verlin Stoll is a classic American entrepreneur.   Although he’s only 27 years old, Verlin opened his first business, Crescent Tide funeral home, in St. Paul last April.  He prides himself on being “a different kind of funeral and cremation service” by providing high-quality funeral goods at a lower cost than his competitors.

With basic services at merely $250, Verlin saves his customers serious money.  The bigger funeral homes on average charge ten times as much.  Indeed, Crescent Tide is one of the only businesses in the area that benefits low-income families who cannot afford the high prices of the big funeral-home companies.

Predictably, Verlin’s business model is a success.  And he wants to expand on that success by hiring new employees and building another business so even more Minnesotans can benefit from his services.  Unfortunately, there’s an obstacle standing in his way:

Big government.

Minnesota refuses to let Verlin build a second funeral home unless he first builds a $30,000 embalming room.  He doesn’t have to actually use the room, it just has to be there.  As Institute for Justice economic liberty expert Katelynn McBride explains: (more…)

Americans are frustrated and tired with Washington, D.C.  The modern day Tea Party movement and its impact throughout the country is evidence of people’s frustration with inept and out-of-touch government.  The recent Occupy movement arose partly out of this same frustration.  The common thread throughout our country is that those in Washington just don’t get it and Americans want their country back.

We are tired of regulations that stifle job creation.  We’re tired of the Obama administration blocking domestic oil production even while oil spikes to over $100 a barrel and we are continually reliant on foreign countries for our energy needs.  We’re tired of the failure of the career politicians to cut $1.2 trillion over the next year 10 years and balance our federal budget – that’s only 2% of the entire budget over that time.  We don’t have a revenue problem but a spending problem so getting our country’s finances and debt under control is our generation’s greatest priority, and we must either have the courage to cut our government’s spending and lower taxes — or have the courage to put the leaders in Washington who will break this culture of business as usual.

The problem is that Washington is simply out of touch.  The Beltway Bubble culture of elected officials, bureaucrats, special interests and lobbyists that look after one another while ignoring the real world’s concerns.  Once we send them to DC, they tend to change and are usually there for life; moving from staff, to Member of Congress to lobbyist.  Often serving for stretch of a time in an Administration.  It isn’t so much a revolving door as musical chairs. And when the music stops we lose.

This cozy relationship is laid out in detail in a newly published book by Hoover Institute Fellow Peter Schweizer, Throw Them All Out.  Schweizer details the sweetheart deals special interests get from the taxpayers and the ways Members of Congress and staff can use their position to enrich themselves.

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From The Hill:

On Tuesday of next week, a House Energy and Commerce subcommittee will hold a hearing titled “White House Transparency, Visitor Logs and Lobbyists.” The hearing comes after a report by the Center for Public Integrity detailing disclosure gaps in visitor records released by the White House.

In a memo describing the hearing, staff for the House Oversight and Investigations Subcommittee cite the Center’s report about the visitor records. They also list a number of questions for the Obama administration on how its disclosure policy has come to function.

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Rhetorically, President Obama prides himself on bashing “greedy corporations.”  Insurance companies, the health care industry and Wall Street have all been subjected to verbal abuse from the president.  Despite his statements, the Obama Administration policy often rests on corporatism – the policy of using government to enhance market share of a few favorite firms.

The record is clear — President Obama has little reservation about plying companies with tax incentives, bailout money, secured loans – even to promote off-shore oil drilling in Brazil — or policy initiatives if it fits his worldview.  The president continues to tout the “success” of corporate bailouts for Wall Street and the car companies.

A classic example of corporatism is the recent news reports that Steven Westly a major contributor to the Obama campaign and a promoter of “alternative energy,” received half-billion dollars in federal aid for his venture capital firm.   The Center for Public Integrity discovered that since Westly raised the money for Obama, four companies in the portfolio of The Westly Group, his venture capital firm, received $510 million in loans, grants and stimulus money from the U.S. Department of Energy. And, the report added, Secretary of Energy Steven Chu, on the White House’s recommendation, appointed Westly in August to the 12-member Secretary of Energy’s Advisory Board.

The sad reality is that Westly will look like a piker when Google is done ravishing the Treasury.  Google has entered the political ring siding itself clearly in the left’s corner.

Google is President Obama’s favorite corporation.

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When you think about a highly aggressive cartel teaming up with politicians to pass protectionist laws that kick entrepreneurs out of work, you probably don’t think about interior designers.

But you should.

The American Society of Interior Designers (ASID) represents less than 3 percent of all designers, but its members have designated themselves as spokespeople for the entire industry. ASID has spent over 30 years and millions of dollars lobbying from coast to coast for interior design licensing schemes.  Not surprisingly, the schemes they propose would force all interior designers to have the exact same credentials as required for membership in ASID.

The group has worked relentlessly to enlist state legislatures in its campaign for total industry cartelization. The Institute for Justice has documented these efforts in a study titled “Designing Cartels.”

Florida is ground zero right now in this epic battle.

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Over the past month, Google made waves with the announcement that it has tweaked its search algorithms to penalize ‘content farms.’ These are “low quality sites whose main goal is to attract search traffic by piling up (mostly) useless content.” The lesson from Google is simple: no system devised by the mind of man is immune to being gamed by other men. Google’s merit is that it can respond quickly to thwart the gaming. That will, in turn, breed more gaming, but Google will, if it is attentive, not fall too far behind. If it slacks off, it will quickly be overtaken by a more nimble rival.

The same, unfortunately, is not true of society as a whole. J.E. Dyer argued in Commentary that the battle in Wisconsin represented the crisis of progressivism. But that is not all it represented. It also represented a shot in the battle against the problem that Mancur Olsen identified in his remarkable 1982 work on The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities: the tendency of stable societies to build up special interest groups (or distributional coalitions) that frequently fortify their position with government recognition or funding, and in turn reduce the flexibility and growth of the economy as a whole. Dyer refers to this as the problem of “special-interest activism,” but its implications are broader than the problem of over-spending.

Olsen offered his theory, in part, to explain Britain’s economic underperformance from the late 19th to the late 20th centuries. In my judgment, it remains the single most persuasive work on the subject, superior to several better-known books. But it now seems particularly applicable to the United States, which has over the past 65 years — except during a few interludes — been gamed ever more intensely. The entitlements burden, in Olsen’s terms, is the result of the Baby Boomers — who have become a distributional coalition if there ever was one — defending benefits that, because the costs fall on younger, less attentive, and less numerous voters, for many years raised no outcry.

But precisely because the U.S. has been so stable, we are burdened with many more such coalitions, most of them not explicitly centered on spending, and some supported only indirectly by the state. In academia, the professoriate defends the traditional apprentice system, even though that system is profoundly dysfunctional for the younger generation. In higher education, the elite design the admissions systems at which their children excel, which must over time reduce social mobility. In arms control, as Richard Pearle noted at The Heritage Foundation the week before last, we have an activist cottage industry that appears to be incapable of recognizing how much times have changed since its so-called glory days of the 1970s.

It is not surprising that all of these groups pose as liberal — even radical — while being at the same time deeply conservative in their attachment to the self-serving status quo.

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Tim Carney to discuss unions, Wisconsin and the influence of special interests. Then Pejman Yousefzadeh discusses Chicago’s new Mayor, Rahm Emanuel.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

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Hey mom and dads, it’s election week!  Does your child like to argue?  Does he like to boss his younger siblings around?  Does he love the sound of his own voice?

If you answered “yes” to any of these questions, your child is a natural born politician.  Now to ensure his success in the political world, send him to Camp Politics for a three-week intensive training program:

Once he gets elected to office, the most important thing for him to learn is how to stay there.  If he does a bad job, people will want to get him out of office.  So your child will need to learn how to silence those that want to speak out against him.

Of course, this violates basic free speech rights.  But Camp Politics has figured out a sure-fire way around the First Amendment that means politics will remain a game for special interests and political insiders.

It’s called campaign finance laws.

We all know that speaking takes money.  And the only way ordinary Americans can speak out effectively about politics is to pool their resources with their friends and neighbors.  But campaign finance laws limit the amount of money people can spend on political ads and organizing and they wrap people in red tape to the point that they can’t even speak!

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Yesterday, the White House blog asked “as special interest billionaires continued to pour secret donations of millions of dollars each into front groups supporting Republicans, we asked the obvious question: “What do they expect in return?“”   They added, “Congressional Republicans have made clear that lobbyists have a seat at the table even when they are formulating their party’s broader strategy and governing vision.”

People in glass White Houses shouldn’t throw stones.

• “Google’s Marissa Mayer is hosting President Obama for a Democratic party fundraiser tonight. Tickets are $30,000-a-head….” – San Francisco Chronicle, October 21, 2010

• “After analyzing the unencrypted WiFi payload data captured by its Street View cars, Google now admits that the system captured entire e-mails, URLs and even user passwords.” - ZDNet, October 23, 2010

• “The Federal Trade Commission [has] closed its investigation into Google’s collection of consumer data through its Street View cars….”  San Francisco Chronicle, October 27, 2010

The FTC decision is a classic DC whitewash, but it a pattern for this administration which has repeatedly given Google “get out of jail free” cards, no-bid contracts and undisclosed lobbying and business access to top administration officials.  And when Big Government exposed the administration coordinating privately with Google, what happened?

Nothing.

That isn’t true everywhere.

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My eye-opening experience with Enron revealed to my surprise just how it is that certain interests actually drive Big Green, and make otherwise inconceivable policy ideas into threats and often even reality. The revelation was such that it left me shaking my head in wonder as to how the (now suddenly) obvious, at least seeing how it escapes the interest of at least the establishment press cheerleading the same agenda: when you rob Peter to pay Paul, you are guaranteed the enthusiastic support of Paul.

In fact — as I learned regarding Enron’s and BP’s pet projects, “carbon cap-and-trade” and related ‘green jobs’ schemes all designed to make uneconomic investments in windmills etc. pay off — sometimes the entire enterprise is Paul’s idea.

So it is that we see with deep pocketed gents now scrambling to protect their bets on uneconomic investments and rent-seeking schemes, by supporting the campaign to defeat Proposition 23 in California. Prop 23 would delay California’s climatically meaningless but economically suicidal state-level adoption of Kyoto agenda, called AB 32. Oddly, there is no condemnation of these bags of money being thrown at killing a ballot initiative, despite the opprobrium heaped upon those few who have dared venture in to help the “Yes” campaign.

This is a shame, for the question Cui bono? is so readily answered simply by scanning the growing list of those digging deep to make sure the ‘green’ gravy train of wealth transfers isn’t derailed (regardless of the fairly obvious economic consequences if they are successful, which in a rational world would be of great interest to a watchdog press).

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Let’s go back to those hopey-changie days of the Obama campaign for president when he railed constantly against all those “special interests” and evil lobbyists that he claimed were ruining the political process. Let us recall that once elected he claimed he’d have the “strictest ethics rules” of any president ever.

Obama has made sure that his message has been anti-special interests, anti-lobbyists, anti-business-as-usual… heck just plain anti-business, for that matter. It’s all been quite a show. Unfortunately for all the talk his actions speak to the opposite of his spin — more on that in a moment. But even if President Obama was serious about his anti-lobbyist rhetoric his party has utterly ignored him on the issue.

A recent Bloomberg report reveals that lobbyists have raised $1.5 million for Democrat campaign funds during the first six months of the Obama regime despite Obama’s constant anti-lobbyist refrain. That is far more than the GOP has been able to raise.

As much as Obama rails against the influence held by lobbyists in Washington, candidates rely on them to help fund increasingly expensive campaigns. Reports released today show lobbyists also personally contributed to Democrats including House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.

Bloomberg reports that just two campaign donation “bundlers” have brought in a combined $860,700 into the coffers of the Democratic Congressional Campaign Committee since Obama took office. The most successful fundraiser, former Pelosi operative Ryan Rudominer, brought in $716,300 from the electric energy lobby while the second highest fundraiser was Tony Podesta. Podesta represents BP oil, among others and brought in $144,400.

Apparently the party at which Obama sits as headman isn’t paying much mind to the boss’ entreaties. More likely, they all know it’s just hokum and hopey-changie jaw-jaw and not really meant to be taken seriously.

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I’m mad as hell, and I’m going to do something about it.

I’ve been to Missouri quite a few times since becoming “Joe the Plumber”: Rolling hills, farmland, beautiful rivers, vibrant cities, honest people. So I’m not in the least surprised that the rural town of Caulfield has produced a true statesman. A statesman that all freedom-loving Americans have searched for since the Reagan years.

I AM surprised and disgusted that these same “conservatives” who have been shouting fiscal conservatism from the mountain tops are now throwing a true statesman under the bus instead of rallying to his side.

Chuck Purgason is a State Senator for a portion of southern Missouri. He’s worked his way up from the House to the Senate ever since his “Tea Party” moment in 1996. He has proven the hard way that you actually can be a man of integrity in a government full of wolves. When liberal U.S. Senator Kit Bond (R) decided to retire, he anointed RINO Congressman Roy Blunt (R) to be his heir apparent. After Roy Blunt’s votes for the TARP Bailout, Cash for Clunkers, No Child Left Behind, taking the most lobbyist money, etc. (I really could go on and on and on . . . ) Chuck said there was no way he was going to let Blunt represent Missouri in the US Senate.

State Senator Chuck Purgason threw his hat into the race for US Senate against mega power broker Roy Blunt.

Now this is where the story begins to get interesting. Just a week or so ago, Democratic Governor Jay Nixon ($170,000+ donations from unions) called for a special session to pass a $150M “tax cut” to Ford Motor Company. Every Republican started lining up like good little bees because tax cuts are good – right? Besides, Missouri has a lot of unions – they wouldn’t win their re-elections if they didn’t vote for this bill.

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Today the Senate returns to session having not yet addressed Senator Chuck Schumer’s troubling legislation, the Democracy is Strengthened by Casting Light on Spending in Elections Act (“DISCLOSE Act”).  Senator Schumer sought and failed to pass the DISCLOSE Act – a bill that would restrict the First Amendment rights of Americans – by the Fourth of July, the day on which we celebrate our nation’s independence.

The DISCLOSE Act is a desperate attempt to influence the November elections, and minimize Democrat losses.  Senator Schumer and the legislation’s other sponsors aim to have a law on the books that will take effect prior to November regardless of whether a regulatory system is in place to enforce the burdensome new reporting requirements.  The Act, its reporting burdens, and penalties are set to take effect 30 days after it has been signed by President Obama.

• The DISCLOSE Act will require small businesses, corporations, and non-profit organizations to electronically file burdensome financial disclosure reports within 24 hours of making an independent expenditure.  Without action by the FEC, these groups will have to electronically file a form that does not yet exist, and face a $10,000 penalty should their filing be found inadequate.

• Radically expand the length of disclaimers on televised political advertisements.  The Act will compel the head of an organization to appear on screen in a “stand by your ad” disclaimer.  The top donor to an organization will also have to appear on camera to stand by the ad.  The names of additional top donors to the organization must be listed on screen for a period of six seconds.  These disclaimers will be the end of the 30 second advertisement, because over half of the time will be devoted to disclaimers.

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Editors Note: This post is re-printed with permission from The Nation magazine, where it appears as the February 4, 2010 cover story. You can see a video interview with Professor Lessig about the piece here, or take action on issues raised in the piece by visiting FixCongressFirst.org.

We should remember what it felt like one year ago, as the ability to recall it emotionally will pass and it is an emotional memory as much as anything else. It was a moment rare in a democracy’s history. The feeling was palpable–to supporters and opponents alike–that something important had happened. America had elected, the young candidate promised, a transformational president. And wrapped in a campaign that had produced the biggest influx of new voters and small-dollar contributions in a generation, the claim seemed credible, almost intoxicating, and just in time.

Yet a year into the presidency of Barack Obama, it is already clear that this administration is an opportunity missed. Not because it is too conservative. Not because it is too liberal. But because it is too conventional. Obama has given up the rhetoric of his early campaign–a campaign that promised to “challenge the broken system in Washington” and to “fundamentally change the way Washington works.” Indeed, “fundamental change” is no longer even a hint.

Instead, we are now seeing the consequences of a decision made at the most vulnerable point of Obama’s campaign–just when it seemed that he might really have beaten the party’s presumed nominee. For at that moment, Obama handed the architecture of his new administration over to a team that thought what America needed most was another Bill Clinton. A team chosen by the brother of one of DC’s most powerful lobbyists, and a White House headed by the quintessential DC politician. A team that could envision nothing more than the ordinary politics of Washington–the kind of politics Obama had called “small.” A team whose imagination–politically–is tiny.

These tiny minds–brilliant though they may be in the conventional game of DC–have given up what distinguished Obama’s extraordinary campaign. Not the promise of healthcare reform or global warming legislation–Hillary Clinton had embraced both of those ideas, and every other substantive proposal that Obama advanced. Instead, the passion that Obama inspired grew from the recognition that something fundamental had gone wrong in the way our government functions, and his commitment to reform it.

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In his new book Obamanomics: How Barack Obama is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses, Timothy P. Carney explains that Barack Obama’s “progressive” rhetoric masks good old-fashioned crony capitalism, in which the favored few and politcally well-connected get all sorts of benefits paid for with public dollars. Whether the area is Wall Street, health care reform, union organizing, or K Street lobbying, the same pattern is everywhere: using the government’s power to distribute goodies and rig markets.

A columnist at the Washington Examiner and a non-partisan reporter, Carney also lays into the Republican Party for its massive contribution to the problem when it wielded power. Carney provides a game plan to take the country back and restore truly free markets that will benefit everyone.

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The late George Stigler, winner of the Nobel Prize in economics, is famous in part because of his work on “regulatory capture,” which occurs when interest groups use the coercive power of government to thwart competition and undeservedly line their own pockets.

A perfect (and distasteful) example of this can be found in today’s Washington Post, which reports that the IRS plans to impose new regulations dictating who can prepare tax returns. Not surprisingly, the new rules have the support of big tax preparation shops such as H&R Block and Jackson Hewitt, which see this as an opportunity to squeeze smaller competitors out of the market.

The IRS and the big firms claim more regulations are needed to protect consumers from shoddy work, but this is the usual rationale for licensing laws and other government-imposed barriers to entry and the Institute for Justice repeatedly has shown such rules are designed to benefit insiders rather than consumers.

Tax preparers do make many mistakes, to be sure, but that is a reflection of a nightmarish tax code, and the annual tax test conducted by Money magazine showed that even the most-skilled professionals – such as CPAs, tax lawyers, and enrolled agents – were unable to figure out how to correctly fill out a hypothetical family’s tax return. But since the IRS routinely makes major mistakes as well, perhaps the moral of the story is that we need fundamental tax reform, not IRS rules to create a cartel for the benefit of H&R Block and other big firms. Would any of this be an issue if we had a flat tax or national sales tax?

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Throughout the debate over health care reform, there has been a great deal of discussion over the role of special interests in influencing the votes of lawmakers. Liberal democrats, progressive think tanks and mainstream media have repeatedly accused anyone who opposes government run health care of standing with special interests instead of with needy Americans, painting them as greedy and selfish. And now that a bill has passed in the House and is on its way to the Senate, big government proponents of a ‘public option’ are already attacking their fellow Democrats’ own bill, insisting that it may as well have been written by special interests.

Funny they should mention that. Because, just like the stimulus bill, it was written by special interests.

While it’s true that Republicans certainly receive their fair share of donations from the health industry, the surprising truth is that Democrats actually receive more.  Because there’s one giant special interest sector that everyone seems to be leaving out:  Big Labor.  And in the monarchy of labor these days,  there is one queen that’s at the top of the money chain, and that’s the Service Employees International Union (SEIU), the top billing union in its parent coalition, Change to Win. Especially when it comes to the issue of health care.

Let’s start first by breaking down the numbers.

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