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

Monday, July 30, 2012

Angus King's Almost Legal Insider's Investment Club. - Part One

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More on The Small Enterprise Growth Fund (since 2014 known as The Maine Venture Fund), signed into law by Angus King to become the most secretive Maine state corporation ever .

I have been writing about the SEGF since 2009, when I  participated in competition at the  Juice Conference for what seemed to be a micro-economy investment, promoted as contributed by an "anonymous donor", later revealed to be the SEGF.

At that conference and on the SEGF's website the taxpayer's role in subsidizing this investment company is promoted with the explanation that for every dollar that the Maine taxpayers "invest", high growth investors contribute nine dollars.

When I first heard this statement and until a few days ago, I took it to be a case of incorrect language as the model that I had constructed in my mind was one in which investments are made on an individual basis in individual companies and so it seemed to me that it would be the taxpayers who throw in the one dollar for every nine that the high growth investors invest and not the other way around.

But the other day, it finally occurred to me to take this oft-repeated statement as true, and that led to the speculation that we are talking about a group of investors who have agreed to put in nine dollars to match every tax payer dollar that is "appropriated" to the Small Enterprise Growth Fund (since 2014 known as The Maine Venture Fund) via FAME. This private investment fund might be managed like a mutual funds investment corporation by the funds administrators, who are paid out of the "revolving" fund as stated in the legislation that chartered the SEGF.

I am speculating that the management of this private investment group is funded by the Maine State taxpayers- and that the investment group had to already be in place when the legislation chartering the SEGF was created, and may even have had a role in tailoring the legislation to their "special needs". In fact as the exemption from general law that I wrote about in a previous post provides, this private and highly secretive group of private investors could even have been employed by the state at the time the legislation was written, which would pose a legal problem if such were the case because , even by statutory law, it was illegal to personally profit from a government position prior to the enactment of the SEGF charter, which stands as an attempt to override the Maine state constitution by statutory law, which is why I call it Angus King's "almost legal" investor's club- as to be fully legal it would have to be compliant with the Maine State constitution. meaning it would have to be a private sector investment corporation subject to general laws governing all corporations- however formed.

Another possible scenario as to how this secretive fund works is that the  fund administers might create private side funds for each individual business investment and then seek the investors to match the taxpayer's 10%. This would mean that instead of the taxpayers funding the management of a private investment group, the taxpayers would be funding the financing costs of one of the government's "targeted sector" enterprises. In that case the need for the investors to already be in place at the time the legislation was written is not necessarily so. However- there is no way to know, having received only the same limited information that is available on the SEGF website when I requested the annual report at both the legislative library and the bureau of corporations, shedding no light on the subject of this speculation.

I base my speculations on the parsing of the words used in the charter for the SEGF. Following is the section on the creation of "the fund"  with my notes interspersed.

From the special act of legislation that chartered the Small Enterprise growth Fund

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.

[ 1995, c. 699, §3 (NEW) .]

( Note-the words repeated by numerous speakers of the panel at the Juice Conference were that the taxpayer's investment always rolled over, and since the "exit strategy" was prioritized in the competition, and since the "exit strategy" serves only the "high growth investor"'s profit motivation. those spoken words- along with what is written between the legislative lines (see below) support that the taxpayer investment is made on terms generally associated with non-profits, while the high growth investors are granted terms appropriate to their name)

1-A. Creation of side funds. The board may create one or more side funds for placement of certain funds received by the board. A side fund may be structured as a revolving fund in addition to the Small Enterprise Growth Fund or as a fund in which the investor will have funds drawn and returned over an agreed time period.
[ 2009, c. 475, §4 (NEW) .]

(Note- Apparently amended in 2009 - This seems to make clear that there can be different types of funds as suggested in my note above- one type of fund is the "revolving fund", and another in which funds are returned to the investor over an agreed period of time but without mention of a profit earning agreement.

However , taken in the entirety of this section, this seems to be saying that the state investment corporation can guarantee to the "investor", that his funds will be returned over a period of time. Such terms are commonly stipulated with loans in which the profit is in the interest collected on the loan and the agreement is to pay the amount back in increments. Investments usually involve taking a greater risk in return for the chance of making a greater profit. An investor can lose the money that he invests. The terms of 1-A allow for an investor to invest risk free and to establish a date at which money will be returned . In this research paper Evaluation of Maine's Public Investment in Research and Development by the Office of Economic Development at the University of South Carolina, (2001), IntelliCare, a company that received investment funds, says of  the SEGF  " “They wanted equity deals with debt risk,”, which delayed negotiations for a year until the SEGF eased up on its terms)

2. Administrative expenses. Costs and expenses of maintaining and servicing program funds and administering the Small Enterprise Growth Program established by this chapter may be paid out of amounts in the program funds.
[ 2009, c. 475, §4 (AMD) .]

( Note- not specific here about which program funds or side funds are used to pay administration costs and therefor if all administration costs are paid out of the tax-payer investor revolving fund and none out of additional "side funds" this stipulation is satisfied. Since it is impossible to find out what goes on behind the closed doors of the SEGF, this is pure speculation- I am only noting that which is possibly consistent with the wording of the law- after all if all funds were treated equally, there would be no need for "side funds"))

3. Management fees. The board may charge and accept management fees for management of money placed in program funds other than money placed directly by the State.
[ 2009, c. 475, §4 (NEW) .]

(Note- in other words management fees over the "9 dollars that high growth investors contribute for every dollar that Maine taxpayer unknowingly invest in this fund" - and where would the administrative costs of those management fees be coming from? And what is the going rate for money management fees in the private sector? in the public sector? I guess all of that is on a "need to know basis" and in the arrogance of those responsible for this  construction, taxpayer investors are not on that basis- and apparently neither is anyone beyond the inner circle)

4. Agreements. The board may enter into an agreement or contract with a 3rd party for investment in a side fund. The board may allocate ownership in a side fund through the agreement. The board may also repay money received and return profits according to terms in the agreement. The board may create a formula or terms for the sharing of profits on a side fund in the agreement.
[ 2009, c. 475, §4 (NEW) .]

(Note- Couldn't be clearer, side funds have profit sharing agreements and can be privately owned, while the administration costs of those side funds can be paid by the general Maine taxpayer- ie out of the "revolving fund" as stipulated in #3. Once again- the public does not have any knowledge of what these agreement are, what deals are struck or what the public is being charged for the negotiation of the deals that benefit private capitalists- which as we have already seen, may or may not be those employed by  the Maine state government.- but as we have also seen according to the charter for Fame, the benefit that private investors make is deemed to be "incidental" to the "public benefit",which as far as I can ascertain is either rhetoric about creating jobs, or compliance with Agenda Twenty One- an easy time saving, cost effective formula to satisfy the government ordained sainthood of our "high growth investors")

5. Profits. The profits on a side fund retained by the board must be contributed to the fund.
[ 2009, c. 475, §4 (NEW) .]

(Note- Keywords here are "retained by the board" - in other words whatever remains after satisfying the profit-making agreements with 3rd party investors.

One of the notable attributes about this section is what it does not include, which are any rights, considerations or stipulations involving the taxpayer's investments. This is written like a online website terms of agreement in which all of the terms are on the side of the website, except that the taxpayer can't opt out.

 The "appropriated funds" which come by way of the taxpayer are treated like a non-profit contribution, except that non-profit contributions are both voluntary and made in full knowledge of the contributor. It is unlikely that most taxpayers know that they are subsidizing this state capital investment company. When the constitution prohibits the legislature from chartering corporations by special acts of legislation, this is exactly what it is intended to prevent. The high growth investors are a special interest group for whose interests the charter for the SEGF is written. Even the secrecy in which the SEGF conducts its business is statutorily provided for in the section on confidentiality, which appears to be standard practice in the private sector, which is where this investment company belongs. By creating an investment corporation that serves as an "instrumentality of the state", an unfair advantage is created for the state investment corporation over private sector competition, which does not have access to taxpayer funding. To call it "an essential government function" begs the question- What form of government are we talking about here? Marxism?)
1995, c. 699, §3 (NEW). 2009, c. 475, §4 (AMD).

In the spirit of fairness to Angus King, there are a lot of "NEW" sections dated 2009- but the very conception of the SEGF was unconstitutional from the get-go. Article IV Part Third Section 14 prohibits the legislature from chartering corporations by special act of legislation with an exception for "municipal purposes". There is another exception for an object that cannot be attained the other way, which I suppose is why the legislature throws in the statement that this is "an essential government function" Since When?

This post will be continued on another day. There is a lot more to say.

Although this is not a government organization-just a non-profit high growth investors group-similar to the SEGF- some of the sources of funding listed here come from Maine State INC, including both the SEGF and FAME,and so it belongs here as a quasi- that "innovative" concoction of government, private, and non-profit sectors all wrapped up into one totalitarian package.

(Note It is possible to interpret the listing of "sources of funding" found on the Maine Angels website as merely providing information about other sources

However when one clicks on the links for "Officers" and "Governance" on the Maine Angels website, one cannot get in without a password and so there is not really an avenue to determine what they actually mean. Being that the SEGF is as secretive as the Maine Angels, the public just knows what they want us to know, which is found on their portfolio investments lists and even that is investments that they want the public to know about and there is no assurance that the public has access to the entire investment list.

The image of the corporations in Maine State Inc and its associated network of quasi's is carefully crafted and that alone is revealing. The public can only know what they want us to know .)

Here is part of the description
MAINE ANGELS was founded to enhance regional economic development in and through the private sector, by providing a cooperative mechanism for interested individuals to collaboratively locate, investigate and make investments in early-stage, high risk/return opportunities.

Amazing that they can be a non-profit that develops high return opportunities- all for the "public benefit" of course!

Definition for "public benefit" found at Ch. 701  Small Enterprise Growth Program

12. "Public benefit" means that the disbursement will advance and assist the people of the State of Maine.

(Note -Such an argument can be made by diverse parties for diverse reasons but Maine once had a method for allowing the people themselves to call the shots- that was called public bonds.)

Saturday, July 14, 2012

Secular Saints of the Corporate State

 From the charter for the Finance Authority of Maine

 The above statement is found in the charter for the Finance Authority of Maine. It is a most astounding statement because it constitutes a legislative decree about the character of certain individuals and associations which practically ordains them into sainthood. By legislative decree, individuals and associations which privately benefit through the activities of the Finance Authority of Maine are motivated by only the purest of motives to serve the "public benefit" - whatever that may be, and whenever the powers that be, want it to be it.  Any private benefits that confer upon themselves, as a public-private relationship, is a pure chance of circumstance.

Which type of government defines human character by legislative decree? Not that created by the founders of the United States Constitution.

The Federalist Papers recorded the thought process which became the United States Constitution. Publius first examined the full range of human character- from the best to the worst - and after considering all, designed a system of checks and balances. This contrasts with Marxism which projected a state which would "wither away", a condition which can only occur after the state has transformed human character into a homogeneity, tolerating no conflicts of interest.

The philosophy stated in the charter for Finance Authority of Maine deems that any benefit going to private individuals, as a result of the activities of the FAME corporation, is incidental to the public benefit. The intent of that statement is further clarified in the charter for the SEGF. (signed into law by Angus King)  There we are told in the section titled "conflicts of Interest" that Title 17, section 3104 does not apply to representatives of the SEGF.

Title 17, section 3104 is a general law which states:
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).]
The Maine state constitution, Article IV, Part Third, Section 14, states that all corporations, however formed, are subject to general Law.

General law, Title 17, section 3104, states that government employees cannot financially benefit from contracts made on behalf of the state.

The charter of the SEGF ( known since 2014  as the Maine Venture Fund) exempts the SEGF from being subject to general law, Title 17, section 3104.

Not only is the SEGF unconstitutional in the fact that it was chartered by special act of legislation to serve the purposes of the state, a violation of Article IV, Part Third Section 14, of the Maine Constitution, prohibiting the Legislature from chartering corporations for any purpose other than municipal purposes, but it also violates Article IV, Part Third Section 14 a second time when it unconstitutionally releases the SEGF from being subject to a general law, in my humble layman's opinion.

In was repeated many times by the board presiding at the Juice Conference I attended in 2009, that 10% of the capitalization of the SEGF comes from the Maine state taxpayer, invested in a "rollover fund" which functions like a nonprofit, continually reinvesting in the fund, never realizing a profit.

The SEGF promotes itself as creating jobs paying higher than two-thirds of the jobs in this state. That is but one instance of how an artificially created upper crust of the Maine economy is being subsidized by the general Maine taxpayer since central management of our economy by public-private relationships was instituted under Governor Longley in the 1970's.

The other night I listened to Paul Ryan explain to Greta Van Susteran why Harry Reid has not been required by the Senate to submit a budget for three years, in violation of the United States Constitution. The reason is that the Constitution does not provide for a penalty for not doing so. The culture in Augusta operates under a similar set of principals but what Augusta has done in transforming our constitutional system of government is even worse than not submitting a budget. It has replaced the American free enterprise system with a centrally managed economy, which since its inception has statistically made the rich richer and the poor poorer

The Maine statistics complement a report released last month by the Congressional Budget Office showing that real, after-tax income grew by 275 percent from 1979 to 2007 for the top 1 percent of the population with the highest income. By comparison, the six out of 10 residents in the middle of the scale saw real income rise by under 40 percent during the period. Portland Press Herald , November 16, 2011
The 2014 Portland Press Herald article by Jessica Hall describes a report done by Investment Consulting Associates, or ICA, of Massachusetts.
(The investigation) found that the Pine Tree Development Zone program’s costs exceed its benefits. Specifically, it said the PTDZ delivered total direct benefits to the state of $358 million in 2012, in terms of people employed and salaries and total sales in the state. The program, however, had $457 million in total direct costs related to lost taxes, administrative costs, overhead and other expenses.
…. According to the ICA report, the total value of corporate incentives was divided by the total number of newly created jobs, which provides a “rate per created job” or information on what governments “paid” for one new job.
Maine awarded total incentives worth $159,000 per created job for the period from 2010 through 2013, the report found. Portland Press Herald. Pine Tree Zones tax breaks costing state more than they deliver by Jessica Hall April 14 2014
That is why we need a  movement to bring a higher public profile to contenders for Olympia Snowe's seat such as Andrew Ian Dodge. like Charlie Summers, Dodge will vote to repeal Obama Tax but unlike Summers, and Angus King, Dodge is not inbred into the Augusta culture. As Secretary of State, Summers could have demanded that the vast network of corporate instrumentalities of the state be subject to the same general laws to which corporations in the private sector are subject, but by virtue of the fact that state corporations are not listed at the Bureau Of Corporations, that is not the case. Summers went along with the existing status quo Augusta culture which routinely overrides the Maine State Constitution with statutory laws, transforming Maine's constitutional system of government into something else. Maine needs Senators from outside the Augusta system, with the guts to challenge the current operational paradigm.

Additional Resources

UTube of  Henry Lamb speaking on the Green Religion and Agenda Twenty One, arguably, the do-coded meaning of the formulaic "public benefit" served by the SEGF (Maine Venture Fund).

I was introduced to the SEGF, in 2009, when I attended the Juice Conference. As I watched the semi-finalists, it was clear that all knew and conformed to the template. Required is service to the green agenda, to satisfy "public benefit", and a statement that one's exit strategy is to sell the business, to satisfy the profit motive of private high growth investors  Brevity is so overvalued in this culture that one is told that the measure of a good business plan is that it can be explained in the time it takes to ride a five minute elevator to the top. If a plan cannot be explained with such brevity, it is designated as a bad plan, not deserving of further consideration.

Agenda Twenty One describes how the "public purpose" justifies high growth investors to "incidentally make a profit" via redistribution of wealth by the state.

There will be a talk on Agenda Twenty One given by Rosa Kouri Monday, August 13 at 6:30pm at The Baptist Church, Waldoboro (71 Grace Ave)