Monday, June 26, 2017

How the Deep State destroys and corrupts

I recently read this piece by former AG Michael Mukasey on the legal limits of the increasingly kafka-esque Robert Mueller 'Russian Interference' probe. You know, the one that has no crime at the center, which has 15 aggressively leaking Democrat party lawyers and a full time publicist conducting what is in effect a counter-intelligence investigation of Russian espionage activities. Oh and a thinly veiled anti-Trump witch hunt to find someone, anyone who will deal dirt, any dirt, whether true or not on the President.  Which tells me that the Russian 'black op' to screw with the legitimacy of our elections has succeeded.

But I'm not here to talk about the stupidity of the Trumpies (although to get to this pass they are without a doubt sloppy and stupid) or even the self righteous power hunger of DC lawyers (although they make a Gorgon look abstemious). I'm here to talk about a paragraph in Mukasey's column that records a milestone for the Federal State's brutal corruption of an entire industry:

One of Mr. Mueller’s early hires among the dozen-plus lawyers already aboard has a troubling history with the word “corruptly.” Andrew Weissmann led the Enron prosecution team that pressed an aggressive interpretation of “corruptly,” which permitted a conviction even absent the kind of guilty knowledge the law normally associates with criminal charges. As a result, the accounting firm Arthur Andersen was convicted. By the time the conviction was reversed on appeal to the Supreme Court in 2005—in large part due to the erroneous application of “corruptly” in the statute at issue—Arthur Andersen had already ceased operation.

By the time 'justice' was done Arthur Andersen had collapsed into Bankruptcy  based upon conviction of what was in effect a 'crimeless' crime. Thousands of AA partners had their life savings wiped out and upwards of 100,000 men and women lost their jobs overnight. For not committing a crime but for providing services to a company that did.

This example of catastrophic and capricious federal brutality has had quite an effect on the remaining 4 major accounting firms. First, it allowed them to raise their rates and per profitability on their commodity compliance business. By my simple estimates per partner profits doubled in the decade after the AA travesty. Second, it turned nominally conservative institutions that operated somewhat independently of the Federal State into one of its arms -  watching their competitor and its owners be destroyed for not committing a crime put the fear of God into the rest of the firms, causing them to dump whole lines of business at firesale prices.

One interesting personal anecdote illustrates this: I was a PwC partner in St. Louis and after I left the firm I went to the first "Tea Party" Tax Day protest held in Downtown St. Louis on April 15. I parked in the Firm's parking garage and of the 30 or so St. Louis Partners that parked in the Partner lot, there was not a single car. On Tax Day. This was unprecedented. They apparently were so frightened of being associated with the enemies of the Federal State that they made sure none of them were even at work that day.

Which is a problem. We rely on non Federal institutions to be one of the checks on the Federal State but more and more institutions have been deeply corrupted  - either through massive dependence on Federal money (the states, cities, universities, large charities) or through fear that the Feds can destroy them with an absent minded flick of the switch (Banks, Accounting Firms, Federal Contractors, Telecommunications providers, Healthcare companies, broadcast media companies. 

And I believe this domination by a largely faceless but immensely powerful bureaucracy is killing the nation. Which is why I argue that we must:

Break it up, break it all up.

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