The Ati-thesis , Marxism

"By that definition, a state capitalist country is one where the government controls the economy and essentially acts like a single huge corporation, extracting the surplus value from the workforce in order to invest it in further production.[3] Friedrich Engels, in Socialism: Utopian and Scientific, argues that state capitalism would be the final stage of capitalism consisting of ownership and management of large-scale production and communication by the bourgeois state.[4]"

Quoted from Wikepedia

Saturday, June 30, 2012

My Encounter With Big Government INC.


In 2009 I attended a competition for what I thought was a small business grant, but later I found was "an investment". I made this mistake in part because I learned of it through the Maine Art Commission which had been sending announcements all year about the availability of stimulus grants - but when one opened the link, it was inevitably and exclusively for non-profits. When The Maine Arts Commission announced a competition for small business investment from "an anonymous donor" I assumed it was a grant for a variety of reasons, including that it was for a very modest amount and that the source was anonymous. I wasn't paying much attention to those details as I had never entered such a competition before and there was a lot to processing taking place in a short amount of time. As later became apparent the "anonymous donor" was F, an investment corporation chartered by the Maine legislature to serve as an "instrumentality of the state"

Throughout the entire process brevity was required, from filling out the initial application to presenting an "elevator pitch" which means pitching a business idea in no more than five or ten minutes. According to the thinking of government economic developers, if a plan is good , one can present it in five minutes.  The "guidelines" for the "elevator pitch" advised talking about one's vision and so I did- but only as context

I was surprised when the response from Mr John Burns was "excellent" and even more surprised when the question that he asked was to explain more about my vision in the two minutes that remained in the allotted time . I didn't see how I could say much more than I already said unless I said a great deal more and clearly there was no time for that.

Despite Mr Burn's enthusiastic response, I was not the one he selected as a semi-finalist from his group. That would be someone whose idea was for an "organic running tee shirt". He had a better "exit strategy" than I. He said that he would just sell his business to his competition, which I thought, was likely Nike or Adidas, companies notorious for producng their product in China which happens to be one of the most polluted countries on earth. Sure, I'd buy an organic tee-shirt made in China. Why not?

As was revealed in the follow up correspondence, when Mr John Burns said "excellent !". he was not talking about the mold making project. he was talking about my vision. His written comments were something to the effect that I had the mold-making aspects all worked out but I hadn't presented a good plan for my vision, which is because a vision is an idea or a concept  that pre-exists a plan- and of course because it is ludicrous to suppose that one could achieve the larger scope of the vision with such a small investment. Mr Burns also said that I did not have an "exit strategy", which further conversation revealed means a plan to sell the business so that the high growth investors can make a profit. This is true. I did not have an exit strategy because it has nothing to do with my motivations, which is to preserve the ceramic life style for future generations. Andersen Studio has always been committed to being made in America. Chances are if one sells the business to high growth investors, production will be outsourced to China or which ever is the country du jour with the "cheapest" labor. This is what has happened to the pottery  industry in Great Briton.

Of course this sort of misunderstanding and cross purposes is part and parcel of trying to present an idea in five minutes. I think Mr Burns was listening for that one thing- how will the high growth investor make his profit? Where is the "exit strategy?, which to my ears has little to do with "creating jobs" which is how the government justifies "appropriating" from unknowing taxpayers, what amounts to 10% of the SEGF"s investment capital, which the legislation/charter states will be used to cover administration costs. My idea is not only about creating jobs but preserving a meaningful working lifestyle, which provides an opportunity for those involved to develop an income of their own making. Two things that my father told me that left a long lasting impression are that our business creates jobs and that if one wants to be content, make one's self part of something larger than one's self. A ceramic slip-casting studio does both.

The experience just described stimulated my investigation into the legislation that has been written by Maine legislatures over the last thirty or so years, which became this blog. The fact that The SEGF was described by The Maine Arts Commission as an "anonymous donor" is emblematic of the SEGF's unique position in the state of Maine's network of corporate instrumentalities of the state. Of all the corporations that the Maine State legislature has chartered, none is more secretive than the Small Enterprise Growth Fund (since 2014 known as the Maine Venture Fund). and one of the most closely guarded secrets is the identity of the high growth investors and any details about the deals that are negotiated with those investors. I  know from the speeches made at the conference described above, and from reading the legislative charter, that the tax payer capitalizes 10% of the SEGF's "fund" - that the taxpayer investment always "rolls over' to re-invest in "the fund" in the manner of an investment in a non-profit corporation -but nothing is known about those who capitalize the other 90% of That SEGF's fund or the profits that they make.

The SEGf was signed into law by Angus King, a current contender for Olympia Snowe's Senate seat. Despite the fact that Articles IV part Third, Sections 13 of the Maine State constitution, requires the state  legislature to establish general laws governing corporations and that Artcle 14 states that all corporations however formed are subject to general laws, one will not find the SEGF or any of the other corporate instrumentalities of the state in a name search at the Bureau of Corporations, which operates under the Secretary of State. Our current Secretary of State is Charlie Summers, another contender for Olympia Snowe's seat.

I sent an email inquiry addressed to Charlie Summers in his capacity as Secretary Of State asking if the network of corporate state instrumentalities is being governed by general law as set out in the Maine State Constitution.

I was given various answers- first, yes , then no, and then a reference to all the special statutes written for that special network of corporations. I will provide more information on those, later on. Although I mentioned the SEGF, the Maine Development Foundation, The Loring Authority, and the Midcoast Regional Redevelopment Foundation only as instances of the entire network, my inquiry was treated as asking  only about those specific corporations and not about the entire network.

Eventually I was sent the latest annual report of the SEGF, which does not contain any information additional to what is on their website. This partly suggests that the SEGF is subject to general corporate laws. Seemingly, The SEGF files an annual report containing the  minimal required information with the Secretary Of State - but in that the SEGF is not listed in a corporate name search on the Bureau Of Corporations website, one must make a special request to even know that they have filed an annual report with the Bureau and so the SEGF is being given "special" treatment. Given that the annual report was not immediately supplied in response to my request, there remains a question as to whether the Bureau of Corporations might have contacted the SEGF and obtained the "annual report" at that time to satisfy my inquiry. Although I framed my inquiry in the context of  the constitution, the response was references to statutes, as if to say that the Maine State Constitution is superseded by Statutory law

General" laws are laws that apply to all alike. "Special" laws require "special acts of legislation", which the Maine State Constitution prohibits as a means of chartering a corporations with an exception for "municipal purposes". It is reasonable to argue that the intention of Article IV part Third Section 14 of the  Maine State Constitution is to prohibit the legislature from chartering corporations as instrumentalities of the state.

To my knowledge there is no general provision in corporate laws that permits corporations to make use of tax payer dollars. If there is a legitimate business reason for secrecy protecting the identiy of the investors in the SEGF and the deals the board strikes with them, then that should be reason enough to prohibit the use of taxpayer doallars by the SEGF capital investment company. Where taxpayer dollars are involved , it is fair to demand a reasonable degree of transparency. Even the language used in the legislative charter which informs us that tax payer dollars are involved is cloaked. Nowhere does it identify that amount as 10% of the capitol funds available to the SEGF. I only know that because it was repeatedly stated by the panel at the Juice conference, which included members of the board of the SEGF.

1. Creation of fund. There is established the Small Enterprise Growth Fund, which is a revolving fund used to provide funding for disbursements to qualifying small businesses in the State seeking to pursue an eligible project. The fund must be deposited with and maintained and administered by the Finance Authority of Maine and consists of appropriations provided for that purpose, interest accrued on the fund balance, funds received by the board to be applied to the fund, all funds remaining in the Pine Tree Partnership Fund and any funds received from repayment, interest, royalties, equities or other interests in business enterprises, products or services. The fund is a nonlapsing fund.

FAME ( Finance Authority of Maine) is another member of the Corporate Instrumentality of the State Network.

In the special legislation chartering FAME one finds this enlightening philosophy
"The authority will serve a public purpose and perform an essential governmental function in the exercise of the powers and duties conferred upon it by this chapter. Any benefits accruing to private individuals or associations, as a result of the activities of the authority, are deemed by the Legislature to be incidental to the public purposes to be achieved by the implementation of this chapter. [1985, c. 344, §5 (AMD).] [1985, c. 344, §5 (AMD).] From the charter for the Finance Authority of Maine
Patchwork that together with this from the legislative charter for the SEGF:
Notwithstanding Title 5, section 18, subsection 1, paragraph B, each member of the board, and each employee, contractor, agent or other representative of the board is deemed an "executive employee" solely for purposes of Title 5, section 18, and for no other purpose. Title 17, section 3104 does not apply to any of those representatives. If a member does not participate in an action or deliberation with respect to a particular project, that member is presumed not to have personally and substantially participated in a decision of the board with respect to that project. Every interest of a board member in any matter before the board must bedisclosed to the board in writing. [1995, c. 699, §3 (NEW).]

This section is somewaht confusing since I cannot locat a section 18 in Title Five found HERE
However I did locate Title 17, section 3104

3104. Conflicts of interest; purchases by the State
No trustee, superintendent, treasurer or other person holding a place of trust in any state office or public institution of the State shall be pecuniarily interested directly or indirectly in any contracts made in behalf of the State or of the institution in which he holds such place of trust, and any contract made in violation hereof is void. This section shall not apply to purchases of the State by the Governor under authority of Title 1, section 814. [1975, c. 771, §164 (AMD).]
With a provional and loose interpretation of the law it sounds like "each member of the board, and each employee, contractor, agent or other representative of the board" can personally benefit from the activities of the SEGf as long as they are not present at the deliberations. This would produce a need for secrecy at the SEGF but I say provisionally because I do not know what is in Title Five and Section 18 and loosely in regards to the interpretation of " If a member does not participate in an action or deliberation with respect to a particular project".

However it certanly raises specualtions when one reads that it is writ into the special legislaton chartering the SEGF that the board and associations are exempt from Title 17 , section 3104 of the Maine statues. This charter  is not just a special act of legislation it is an extra special specialty act of legislation, and bears repeating, that it was isgned into law by Angus King.

Other References

IRS Defintion of "An Essential Government Function"

Internal Revenue Code section 7871(e) states that "for the purposes of this section, the term 'essential governmental function' shall not include any function which is not customarily performed by State and local governments with general taxing powers". The financing of certain types of public projects such as roads, water and sewer facilities, government buildings, as well as police and emergency services clearly fall into this category.

Object of Government in the Preamble to the Maine State Constitution
Objects of government. We the people of Maine, in order to establish justice, insure tranquility, provide for our mutual defense, promote our common welfare, and secure to ourselves and our posterity the blessings of liberty, acknowledging with grateful hearts the goodness of the Sovereign Ruler of the Universe in affording us an opportunity, so favorable to the design; and, imploring God's aid and direction in its accomplishment, do agree to form ourselves into a free and independent State, by the style and title of the State of Maine and do ordain and establish the following Constitution for the government of the same.

Other Posts about The SEGF

 LD1- A Transference of the Power of Taxation?
This post was written in May, shortly after Governor Baldacci signed it in April. I maintained a link to the legislation on my blog, which I frequently referenced. Around about November, I clicked on the link and it opened to a completely different text which said the bill had been amended by striking out everything  and replacing all with an entirely different text. In the original version , the authority was the SEGF, in the new version, the authority is FAME. The original version is now called the "original paper text"

I inquired at the Legislature's library about when teh bill was amended and I was told it was amended before it was passed into law.

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