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Nationalizing industry

By David Schlosser, candidate for U.S. Congress

When we hear about a country "nationalizing" its oil production, it means the ruler of the country has decided that centuries of history and economic analysis cannot possibly apply to him.  His superior powers of leadership and reasoning will create greater wealth than the businesses that were producing the oil.

Hugo Chavez offers a terrific demonstration of the logic of this idea.  Since nationalizing Venezuela’s oil industry, oil production (and associated revenue) plummeted from 3 million barrels a day in 1998 to only 1.6 million barrels today.  The world’s fifth largest oil producer now buys oil from Russia to meet commitments to its customers.  As an added bonus, Chavez gets to blame the United States for his troubles, rather than his ludicrously wrong-headed nationalization decision, for his disastrous state of affairs.

Although some of more liberal Americans fondly, if not fervently, hope for the nationalization a la Venezuela of corporations like Wal-Mart, most of us reasonably believe that such a thing could never occur in a competitive, free-market economy like ours.  And, yet, it happens all the time – hiding in plain sight.  Last week’s news offered an excellent example of how to nationalize an American industry, when the Office of the Comptroller of the Currency issued guidance on disclosure and marketing issues associated with gift cards. According to the OCC, the “guidance focuses on the need for national banks that issue gift cards to do so in a manner in which both purchasers and recipients are fully informed of the product's terms and conditions.”

Cloaked in the rhetoric of consumer protection, the gift-card issuing industry has nationalized a problem that individuals and states were solving.  The gift-card industry succeeded in transferring authority over these issues from citizens and states, to the perfectly manipulable hands of federal authorities.

Readers who have not suffered through an education in how things work in Washington, DC may not recognize what's going on here.  Why, they ask, would an industry choose to be placed under the authority of the OCC, or any other Federal bureaucracy?

Because it’s easier.

Lobbying, manipulating, and controlling a single Federal bureaucracy is easier than dealing with irate consumers.  It's easier than dealing with trial lawyers.  It's easier than dealing with investigative reporters.  It's easier than dealing with 50 state legislatures, 50 state consumer protection agencies, 50 state attorneys general.  It's easier than dealing with competitors who may offer more attractive deals.

It's easier because the gift-card industry – and virtually every other industry with a national reach – has only one point at which it needs to apply pressure in order to resolve all its issues.  Instead of dealing with you, or with representatives close to you, the industry can deal with representatives who are close to the industry.  With a few visits, phone calls, emails, cocktails, steaks, or golf games, the industry can usually find one or more legislators sympathetic enough to lean on the regulatory agency that decides when, where, and how to enforce a law or rule.

The exception that proves this rule is Enron.  When Enron went looking for Federal legislators and bureaucrats to rescue the company from its criminal misdeeds, there was no response.  While that’s not surprising, it is instructive to consider why Enron would have made those calls.  Enron’s executives believed the company’s lavish contributions earned it the right to ask for special favors.

The kind of privilege expected by Enron is standard operating procedure for special interests untainted by criminal activity.  That’s how to nationalize an industry in plain sight.  So, when a consumer complains that his gift card is losing value even though he's not using it, the gift-card industry can say, "That's regulated by the OCC - we don't have any control over it."  When a trial lawyer sues on behalf of consumers who are losing value on their gift cards even though they're not using them, the industry can say, "There's no legitimate legal claim because we're following the rules set by the Federal government."  When an investigative reporter from “60 Minutes” confronts an executive about why companies are charging consumers for not using their gift cards, the executive can say, "That's out of my hands - talk to the regulators in DC."  And when the representatives you talk with at the grocery store or Rotary Club want to do something about the gradually declining balance on your unused gift cards, the solution is pre-empted by Federal authority.

This helps explain why special interests are so keen on shoveling money at 435 members of Congress, 100 Senators, and a President.  It's easier than shoveling money at the thousands of state legislators, dozens of big-city mayors, and 50 governors.  It's easier - and cheaper - to nationalize an issue than to deal with you and the people who care about you.

And the solution is clear: we must return to our Constitutional roots of limited government and enumerated powers.  The authors of the US Constitution explicitly stated that the powers not granted to the Federal government in that document were reserved for individuals or for other levels of government.

If we permit the infinite power grab of the Federal government to steal these kinds of issues from the individuals and representatives who are closest to the challenges of every day life, we'll never resolve them.  If we permit the infinite power grab of the Federal government to continue unabated, we'll never drive the corrupting influence of money out of the political process; it will always be easier for special interests to invest a little money in one location than a lot of money in many locations.  If we continue to permit – even demand – the infinite Federal power grab, we'll never earn the influence over our elected representatives that we expect and deserve.

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Libertarian candidate for U.S. Congress David Schlosser, 38, lives in Flagstaff, Ariz., where he is a public relations manager for a global microprocessor company and has been a part-time instructor in the School of Communications at Northern Arizona University.  He brings nearly a decade of political experience to his campaign for Congress, and is a graduate of Trinity University and the University of Texas.  His wife, Anne, is a corporate training and development professional.  For more information about Schlosser and his campaign for Arizona’s First Congressional District, visit www.SchlosserForCongress.com.

Authorized and paid for by Schlosser for Congress, Scott Gude, Treasurer

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