Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Off-the-Books America (We are becoming two Americas -- the regulated and the off-the-books)
American Thinker ^ | 12/21/2010 | Christopher Chantrill

Posted on 12/21/2010 7:02:47 AM PST by SeekAndFind

We are becoming two Americas -- not the familiar complaint about the rich and the poor, but rather the regulated and the off-the-books Americas.

Last week, Victor Davis Hanson wrote about the hollowed-out society in the Central Valley around his native Fresno, California.  He wrote:

I wanted to witness, even if superficially, what is happening to a state that has the highest sales and income taxes, the most lavish entitlements, the near-worst public schools (based on federal test scores), and the largest number of illegal aliens in the nation, along with an overregulated private sector, a stagnant and shrinking manufacturing base, and an elite environmental ethos that restricts commerce and productivity without curbing consumption.

The elementary school that he attended as a child is now 94 percent Hispanic and well below standards in English and math.  The rural roads are "fast turning into rubble."  The irrigation cutoffs have idled tens of thousands of acres, and unemployment is 15 to 20 percent. 

There are many rural "trailer-house compounds" filled with junked cars, lean-tos, and trash, but for some reason, the regulatory state does not reach out and regulate them.

It is almost as if the more California regulates, the more it does not regulate. Its public employees prefer to go after misdemeanors in the upscale areas to justify our expensive oversight industry, while ignoring the felonies in the downtrodden areas, which are becoming feral and beyond the ability of any inspector to do anything but feel irrelevant.

And, of course, nobody is doing anything about "the epidemic dumping of trash, furniture, and often toxic substances throughout California's rural hinterland."

For us middle-class drones, all this seems rather weird.  How could the government be allowing all this illegal activity?  How can our liberal ruling class, that lives to regulate everything that moves, allow this to happen?

But really, it all makes sense.  An off-the-books economy is a direct result of the centralized regulatory state.  And since the people who live and work in the off-the-books economy are often the poor and minorities, liberals just look the other way and read a page or two from Barbara Ehrenreich's Nickeled and Dimed to get themselves all riled up about Walmart.  

Suppose you are about to start on the bottom rung of the construction business, as a one-man residential fencing contractor.  If you hire American laborers, they might want to work as formal employees.  Let's just figure out what that would cost in Washington State, at the minimum wage of, say, $7.00 per hour.  There's the FICA tax of 7.65%.  There's the unemployment tax that, for a construction firm, is probably at the limit of 6 percent.  Then there is workers compensation.  That's presently at $1.30 per hour for Landscape Construction and Renovation, or 18.6 percent of the hourly wage!  All told, we are paying the government 32.2% in payroll taxes!  You think that a seat-of-the-pants start-up contractor is going to pay all that (let alone plow through the bureaucratic forms)?  No, he's going to hire illegal workers, because they want to get paid in cash.  Bank account?  Forget it: he'll cash checks at The Money Tree.

Let's look beyond the case of the gyppo contractor and the illegal alien workers.  What about the marginal unskilled kid from the inner city or the white working class?  Is he better off with his employer paying FICA, unemployment, and workers' compensation?  Of course not.  He'd be much better off if he got the money in cash rather than the promises of Social Security in forty years, unemployment benefits, and workers' comp, all adding up to 32 percent of his wages that he never sees.

When ObamaCare gets going, of course, this situation will only get worse.

Every time the government enacts a new benefit or tax or economic regulation, it increases the cost of doing business for ordinary, law-abiding businesses.  Every marginal business affected by the new tax or regulation has to make a decision: does it try to obey the law, or does it go "off the books"?  Of course, our liberal rulers understand the problem.  That is why they often exempt small businesses from the latest regulation.  But what they are admitting, every time they do it, is that their high-tax social-benefit state is profoundly unjust.

One of these days, some right-wing demagogue is going to turn the general disgust with liberal injustice into a national political movement of bitter clingers. 

But don't expect the ruling class to notice until it is too late.  As Deirdre McCloskey writes: a typical oligarchy rises, closes to new entrants, and then goes to sleep. 

Meanwhile, the regulatory state starts to break apart from its internal contradictions, and more and more of the rest of us decide to work off the books.  But there comes a time when it is not just economically necessary to avoid unjust laws and taxes.  It becomes a moral imperative.

Christopher Chantrill (mailto:chrischantrill@gmail.com) is a frequent contributor to American Thinker.  See his usgovernmentspending.com and also usgovernmentdebt.us.  At americanmanifesto.org he is blogging and writing An American Manifesto: Life After Liberalism.



TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: offthebooks; regulations
Navigation: use the links below to view more comments.
first 1-2021-30 next last

1 posted on 12/21/2010 7:02:50 AM PST by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

Remember the old west? They had the “Regulators”. They started out by trying to fix things. Then they got carried away, then they were wiped out. History always repeats itself if we don’t learn from it.


2 posted on 12/21/2010 7:06:57 AM PST by RC2
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

btt


3 posted on 12/21/2010 7:11:59 AM PST by Cacique (quos Deus vult perdere, prius dementat ( Islamia Delenda Est ))
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
It is almost as if the more California regulates, the more it does not regulate. Its public employees prefer to go after misdemeanors in the upscale areas to justify our expensive oversight industry, while ignoring the felonies in the downtrodden areas, which are becoming feral and beyond the ability of any inspector to do anything but feel irrelevant.

It simply boils down to this: at the end of the day, the regulators want to go home. This means they hassle folks they know won't put up much of a fight. They don't venture into areas where they know they might not be heard from again unless they are foolhardy, or have law enforcement backup.

4 posted on 12/21/2010 7:18:56 AM PST by IYAS9YAS (Liberalism can be summed up thusly: someone craps their pants and we all have to wear diapers)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Well that's what communism does: it forces markets to go "underground" and calls them "black," like a union guy calls a regular hardworking guy a "scab."

America is divided up in infinite ways now: racially, educationally, by credit score, by weeks unemployed, etc; with winners and losers being picked by political and business elites.

5 posted on 12/21/2010 7:18:59 AM PST by the invisib1e hand (oy. Again I say, oy.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
When ObamaCare gets going, of course, this situation will only get worse.

Which is exactly why this admin pushed for the tax cut extensions. They KNOW the extension will have no effect and in two years they can say, "See. We kept the tax rates and it didn't work."

If the GOP doesn't have balls to say, "It was the overburdening regulation and government interference in business that kept the economy from recovering" then the dems will win the argument.

The ONLY way this economy will ever recover is if Obamacare is repealed, the feds (EPA, HUD, DOE, etc,) are stripped of their powers and a ten percent (or more) TAX CUT is instituted. And since none of that will happen the dems have already put a govt. structure in place to literally take over the U.S. economy.

6 posted on 12/21/2010 7:20:16 AM PST by raybbr (Someone who invades another country is NOT an immigrant - illegal or otherwise.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Many now on unemployment are supplementing with work-for-cash jobs. This makes it impossible to hire them, which is why extended unemployment benefits is only going to extend unemployment.


7 posted on 12/21/2010 7:23:28 AM PST by wayoverontheright
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Like when the “tree doctor” comes to your house and offers to cut down your sweet gum tree for $300, and you tell them no. Then they say they’ll do it for $200 if you pay them cash...


8 posted on 12/21/2010 7:24:46 AM PST by OrioleFan (Republicans believe every day is the 4th of July, democrats believe every day is April 15.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

—bflr—


9 posted on 12/21/2010 7:35:35 AM PST by rellimpank (--don't believe anything the media or government says about firearms or explosives--)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Some excllent points here. One thing that has long hobbled the economies of countries like Italy and Mexico is the huge “informal” economy which flourishes off the books (and away from the tax rolls).


10 posted on 12/21/2010 7:37:57 AM PST by Elwood P. Doud (America, you voted for a negro socialist with an Islamic name - so why act surprised?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

“But there comes a time when it is not just economically necessary to avoid unjust laws and taxes. It becomes a moral imperative.”

Interesting comment.


11 posted on 12/21/2010 7:43:35 AM PST by PetroniusMaximus
[ Post Reply | Private Reply | To 1 | View Replies]

To: the invisib1e hand
Well that's what communism does: it forces markets to go "underground"...

It's not just communism; any overly large, and therefore oppressive, government makes this happen. Years ago my economist BIL called this "the Italian solution." Lots and lots of regs, widely ignored unless something really flagrant requires enforcement. That also means a lot of corruption and pay offs.

12 posted on 12/21/2010 7:45:25 AM PST by Pearls Before Swine (/s, in case you need to ask)
[ Post Reply | Private Reply | To 5 | View Replies]

To: Elwood P. Doud

“Span of control” is a common management education theme. It is commonly stated in terms of the number of people that a manager can reasonably manage and still know what is really going on. So, applying this theory to government regulation, it is easy to see that if one area is over-observed/regulated, then other areas will drop below the radar horizon of the regulators.


13 posted on 12/21/2010 7:47:07 AM PST by Pecos (Liberty and Honor will not die on my watch.)
[ Post Reply | Private Reply | To 10 | View Replies]

To: PetroniusMaximus

We’ve got so many pages of laws, literally hundreds of thousands or even millions, on the books right now — Federal, State, City and Municipal, that even LAWYERS themselves and LEGISLATORS don’t know what they are.

Nancy Pelosi doesn’t even know what’s in the Healthcare Bill her congress crafted and tells us to pass it so that we would know what’s in it.

You and I are probably violating some law right now without knowing it. Yet, it’s not an excuse to break the law....

And they expect us to abide by the regulations they can’t even remember...


14 posted on 12/21/2010 7:49:21 AM PST by SeekAndFind
[ Post Reply | Private Reply | To 11 | View Replies]

To: IYAS9YAS
It simply boils down to this: at the end of the day, the regulators want to go home. This means they hassle folks they know won't put up much of a fight. They don't venture into areas where they know they might not be heard from again unless they are foolhardy, or have law enforcement backup.

Same rule applies when cops are used as revenue generation agents for the government. It is simply more profitable and less lethal to write tickets than to go after real crooks.

15 posted on 12/21/2010 7:50:27 AM PST by pnh102 (Regarding liberalism, always attribute to malice what you think can be explained by stupidity. - Me)
[ Post Reply | Private Reply | To 4 | View Replies]

To: Elwood P. Doud

And at the far end of the spectrum you have the Soviet Union, where to live you had to learn how to “beat the system.” 70 years of that effectively destroyed civil society.


16 posted on 12/21/2010 7:57:33 AM PST by happyathome
[ Post Reply | Private Reply | To 10 | View Replies]

To: Elwood P. Doud

And at the far end of the spectrum you have the Soviet Union, where to live you had to learn how to “beat the system.” 70 years of that effectively destroyed civil society.


17 posted on 12/21/2010 7:57:42 AM PST by happyathome
[ Post Reply | Private Reply | To 10 | View Replies]

To: SeekAndFind
"We are becoming two Americas -- the regulated and the off-the-books"

Sounds like the former Soviet Union...didn't end so well for them.
18 posted on 12/21/2010 8:44:26 AM PST by indthkr
[ Post Reply | Private Reply | To 1 | View Replies]

To: Pearls Before Swine

I put government into two categories. Everything that isn’t our constitutional gov’t, interpreted according to natural law, is either overtly communist or on its way to being so.


19 posted on 12/21/2010 8:56:20 AM PST by the invisib1e hand (oy. Again I say, oy.)
[ Post Reply | Private Reply | To 12 | View Replies]

To: SeekAndFind

Interesting article. I remember reading a fascinating account (I think it was from former Czech president Vaclev Havel) about the fall of the Iron Curtain. The author made the point that the collapse of those totalitarian governments in Eastern Europe became inevitable once a certain critical mass of the population felt so confident in the moral bankruptcy of “The State” that they stopped even pretending to obey the laws.


20 posted on 12/21/2010 9:13:53 AM PST by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first 1-2021-30 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson