Sunday, May 10, 2009

Gangster Government: Eliot Ness and Al Capone as business partners and the Athens Antidote.

A kid demands "a piece of the action" from Captain Kirk and Mr. Spock on a planet run by gangsters.

One cold Ohio night in January, 1968, I watched an episode of Star Trek play the concept of gangster government for laughs. I was fifteen and enjoyed it immensely.

The Federation's previous visit to the planet of Sigma Iotia II a hundred years before had inadvertently left behind a book, entitled "Chicago Mobs of the Twenties." The highly imitative Iotians then crafted a planet-wide system of governance based the concept of "a piece of the action."

It was, as I said, a very funny episode. I mean, how can you look at this image and not laugh?

Flash forward forty-one years. Today we have gangster government, and it ain't funny. Not even a suppressed chuckle's worth.

On Thursday, Michael Barone, commentator of the status quo, wrote this in Investor's Business Daily.

Property Rights Trumped By UAW In First Episode Of Gangster Government


Last Friday, the day after Chrysler filed for bankruptcy, I drove past the company's headquarters on I-75 in Auburn Hills, Mich. As I glanced at the pentagram logo, I felt myself tearing up a little bit. Anyone who grew up in the Detroit area, as I did, can't help but be sad to see a once-great company fail.

But my sadness turned to anger later when I heard what bankruptcy lawyer Tom Lauria said on a WJR talk show that morning.

"One of my clients," Lauria told host Frank Beckmann, "was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight."

Lauria represented one of the bondholder firms, Perella Weinberg, which initially rejected the Obama deal that would give the bondholders about 33 cents on the dollar for their secured debts while giving the United Auto Workers retirees about 50 cents on the dollar for their unsecured debts.

Gross Violation

This, of course, is a violation of one of the basic principles of bankruptcy law, which is that secured creditors — those who loaned money only on the contractual promise that if the debt was unpaid they'd get specific property back — get paid off in full before unsecured creditors get anything.

Perella Weinberg withdrew its objection to the settlement, but other bondholders did not, which triggered the bankruptcy filing.

After that came a denunciation of the objecting bondholders as "speculators" by Barack Obama in his press conference last Thursday. And then death threats to bondholders from parties unknown.

The White House denied that it strong-armed Perella Weinberg. The firm issued a statement saying it decided to accept the settlement, but it pointedly did not deny that it had been threatened by the White House. Which is to say, the threat worked.
The same goes for big banks that have received billions in government TARP money.

Many of them want to give back the money, but the government won't let them. They also voted to accept the Chrysler settlement. Nice little bank ya got there, wouldn't want anything to happen to it.

Left-wing bloggers have been saying that the White House's denial of making threats should be taken at face value and that Lauria's statement is not evidence to the contrary. But that's ridiculous. Lauria is a reputable lawyer and a contributor to Democratic candidates. He has no motive to lie. The White House does.

Think carefully about what's happening here. The White House, presumably car czar Steven Rattner and deputy Ron Bloom, is seeking to transfer the property of one group of people to another group that is politically favored.

In the process it is setting aside basic property rights in favor of rewarding the United Auto Workers for the support the union has given the Democratic Party. The only possible limit on the White House's power is the bankruptcy judge, who might not go along.

Michigan politicians of both parties joined Obama in denouncing the holdout bondholders. They point to the sad plight of UAW retirees not getting full payment of the health care benefits the union negotiated with Chrysler.

But the plight of the beneficiaries of the pension funds represented by the bondholders is sad, too. Ordinarily you would expect these claims to be weighed and determined by the rule of law. But apparently not in this administration.

What 'Empathy' Really Means

Obama's attitude toward the rule of law is apparent in the words he used to describe what he is looking for in a nominee to replace Justice David Souter. He wants "someone who understands justice is not just about some abstract legal theory," he said, but someone who has "empathy."

In other words, judges should decide cases so that the right people win, not according to the rule of law.

The Chrysler negotiations will not be the last occasion for this administration to engage in bailout favoritism and crony capitalism. There's a May 31 deadline to come up with a settlement for General Motors. And there will be others.

In the meantime, who is going to buy bonds from unionized companies if the government is going to take their money away and give it to the union? We have just seen an episode of Gangster Government. It is likely to be part of a continuing series.

The Harrisonburg, Virginia, Daily News concurs in an editorial today entitled "Gangster Government" -- Obama Rejects The Rule Of Law:

A frightening aspect of President Obama’s near dictatorial control of the American economy isn’t merely the cataclysmic shift in the relationship between the federal government and business. Rather, it is what Mr. Obama’s power grab represents: disrespect for the rule of law and the Constitution.

Indeed. It is not like this comes a surprise to American gun owners. Like John McClain in Die Hard, we can only shout at Barrone and Co. in exasperation, "Welcome to the party, pal!"

Meet Barack Hussein Obama, the new Capo di tutti Capi -- the Boss of Bosses.

Nice arrogant sneer, huh? Why is this guy's facial expression straight off of a History Channel special on Mussolini?

Unfortunately the old paradigm of gangsters being run out of business by government action in response to an aroused public a la The Untouchables is no longer true, if it ever was. Imagine a remake of that Costner movie with Eliot Ness and Al Capone as business partners.

Capone: "Hey, Ness, work wit me on this an' I'll make you President." Ness: "Hey, why not? It's the Chicago Way."

Of course, there is no need to imagine it, for that is the system we have today.

But if this tyranny is no newcomer to the long sad, tale of human affairs, history also offers a remedy.

The Athens Antidote to Gangster Government

Bill White, who had fought in the Pacific while still in his teens and come home an ex-sergeant, had gotten angrier as the day wore on. At two in the afternoon he had harangued the group of veterans in the Essankay, saying: “You call yourselves GIs—you go over there and fight for three and four years—you come back and you let a bunch of draft dodgers who stayed here where it was safe, and you were making it safe for them, push you around. … If you people don’t stop this, and now is the time and place, you people wouldn’t make a pimple on a fighting GI’s ass. Get guns…”

In the early evening White went to get the guns himself. He sent two GIs to get a truck and, with a few other veterans, perhaps a dozen, he headed for the National Guard armory. There, he said in a 1969 interview, he “broke down the armory doors and took all the rifles, two Thompson sub-machine guns, and all the ammunition we could carry, loaded it up in the two-ton truck and went back to GI headquarters and passed out seventy high-powered rifles and two bandoleers of ammunition with each one.”

-- The Battle of Athens by Lones Seiber, American Heritage Magazine, February 1985,

The Battle of Athens was a rebellion of citizens in Athens, Tennessee, against a corrupt and violent local government in August 1946. The citizens, led by veterans freshly returned from World War II, had been victimized by the local Democratic Party political machine which used the police as enforcers and stolen elections to maintain their reign.

It was the efforts of the corrupt machine to steal the 1946 election that led to the rebellion. Innocents were shot and GIs were beaten by the machine. The GIs armed themselves, laid siege to the county jail where the Sheriff had retreated with the ballot boxes. A fire fight broke out, culminated by Molotov cocktails and improvised dynamite satchel charges. The deputies surrendered, the ballot boxes were secured, and by dawn the battered town was at peace, patrolled by armed ex-GIs.

The state attorney general had threatened to send in the National Guard, but backed down when it was pointed out to him that the Guard would likely side with the ex-GIs. The national press, most prominently among them the New York Times, condemned the GIs for taking the law into their own hands. This ignored the fact that they had begged for help from both state and federal governments but had been turned down because of a reluctance to remove crooks of their own party. Go here, here, here and here for a more complete description of the Battle of Athens.

When the ballots were counted, the GI candidate for Sheriff won. All of the reform slate won. The national press still fulminated but peace and good government had come to McMinn County, at least for a time.

There are many lessons of the McMinn County War and the Battle of Athens, but the principal one is this: gangster governments do not give way to anything less than force. This is true whether it is one enforced by a crooked county sheriff or led by a gangster president. The difference is only one of scale.

If we wish to be delivered of gangster government, we must stand ready to provide the Athens Antidote if all else fails.

Are you ready now? How much more time do you think the gangsters will give you?

In case you missed it the first time, let me end with the words of Bill White.

"If you people don’t stop this, and now is the time and place, you people wouldn’t make a pimple on a fighting GI’s ass. Get guns…"

Remember, when democracy turns to tyranny, you STILL get to vote.


Defender said...

Great column, Mr. V.

Chrysler sounds like Kelo writ large.

JPFO suggests it is time to starve the Beast of its tax nutrition. Those who object to the Athens method might at least try the Adkins Diet for Leviathans.
I've told my Congressman and Senators that one more federal gun law is where I get off the good-citizen merry-go-round. But what the hell. They get 500 emails and letters a day, they say. No particular reason they'd read mine.
But it seems highly unlikely that those 500 daily messages are encouraging them to "Keep up the good work!"

Ride Fast said...

[...] A Piece of the Action [...]

"I'm coming over there with a few of my boys"

Anonymous said...

The third War for Independence is upon the near horizon...would to God we could avert it through peaceful means...just as Lincoln's administration would not let the South go, neither will the present administration "LUTHA" and live in peace. Not until every vestige of freedom is taken from us.

Gird yourselves.

AvgJoe said...

Mike, don't forget GM and the bond holders. Obama used taxpayer or fresh federal reserve flat dollars to buy ten percent of GM's bonds. Obama said that gave him 50 percent of the company and the UAW 35 percent between them owned 85 percent of the company. Never mind the bond holders used to own 50 percent of GM.
And the show has just started. My hunch is we haven't seen anything yet. The players Obama has working with him are good at being political activist but do not have the skills to run a business and know how to make money outside of taking it with government's involvement in some kind of angle.

LowRecoil said...

The sooner people realize that this is the only option, the sooner recovery can begin.

They chose to ignore the other boxes. They have dictated the only option available to us. The only question left- has your line in the sand been crossed and will you hold firm or move your line back?

Defender said...

Right, Joe. People who've never even HELD a real job.

What Day is it, since the inauguration on Jan 21? Day 100 was last week?
Clinton was a rank amateur. This, his "third term," has all the distractions removed.

Defender said...

I hope the entire Harrisonburg paper is as savvy and outspoken as the editorial page.
I saw some coverage of the mentioned Congressional hearings on the Bowl Championship System. One of those arrogant effers said of the BCS: "Unless you reform it, you should change the name to the 'B.S.' System."
Is NFL Nation getting pissed enough yet? Eventually, and not a long eventually, they WILL alienate everyone.
I get the impression that Mr. Wagoner of GM was one of the rare CEOs who consider workers at all levels CO-workers and not expendable "animate capital." No wonder they cut him loose. That's bad for the company!

Sean said...

You won't have long to wait to see how it goes. They have already overeached, they will continue to overeach until someone, or something stops them. And it will start by accident, not design. Thugs are not stopped by protests of innocence and legitimacy. And freedom is not free.

RatDog said...

It's rarely been said better than this:

Commandancy of the Alamo
Bexar, Feby 24th, 1836

To the People of Texas and All Americans in the World--

Fellow Citizens and Compatriots

I am besieged with a thousand or more of the Mexicans under Santa Anna. I have sustained a continual Bombardment and cannonade for 24 hours and have not lost a man. The enemy has demanded surrender at discretion, otherwise, the garrison is to be put to the sword, if the fort is taken. I have answered the demand with a cannon shot, and our flag still waves proudly over the wall. I shall never surrender or retreat. Then, I call on you in the name of Liberty, of patriotism, of everything dear to the American character, to come to our aid with all dispatch. The enemy is receiving reinforcements daily and will no doubt increase to three or four thousand in four or five days. If this call is neglected I am determined to sustain myself as long as possible and die like a soldier who never forgets what is due his honor and that of his country.


William Barret Travis
Lt. Col. Comd't

P.S. The Lord is on our side -- when the enemy appeared in sight we had not three bushels of corn -- We have since found in deserted houses 80 or 90 bushels & got into the walls 20 or 30 head of Beeves.

Lock and load, friends.