The B Word (Part 1)
Bureaucrats Will Be the Death of Us
No, I’m not talking about one of my favorite human beings on planet Earth’s favorite words.
Nor am I talking about a child born of parents not married to each other.
No, ma’am.
In this newsletter, the B word is “bureaucrat,” and today I’m going to discuss one of the many dangers of increased and unaccountable government bureaucracy.
Now, I first planned to simply synthesize some points from key texts on this topic, but in conducting my research for this edition of the newsletter, I stumbled upon something that was quite shocking, something that proves a point I planned to make all too well.
I’ll get to that something, but let’s first start with some context.
We’re likely coming to the end of an approximately 80-year cycle, the same type of cycle that the world has been going through for quite some time.
In his book Principles for Dealing with the Changing World Order, Ray Dalio shares the following:
“The long-term debt cycle that is now in the late-cycle phase was designed in 1944 in Bretton Woods, New Hampshire, and began in 1945, when World War II ended and the dollar/US-dominated world order began.”
Dalio claims that when we get to the late stages of these cycles, government bureaucracies reach their zenith.
William Strauss and Neil Howe - two authors who go into great detail about these 80-year cycles in their book The Fourth Turning: What Cycles of History Tell Us about America’s Next Rendezvous with Destiny - discuss how though government gets larger at this point in the cycle, people tend to lose trust in it and other major institutions.
Strauss and Howe state:
“Popular trust in virtually every American institution - from businesses and governments to churches and newspapers - keeps falling to new lows. Public debts soar, the middle class shrinks, welfare dependencies deepen, and cultural arguments worsen by the year.”
Sound familiar?
Strauss and Howe point out that, at this point in the cycle, we often find ourselves saddled massive government bureaucracy comprised of an “alphabet soup” of regulatory agencies (e.g., SEC, CFTC, EPA, FDA, etc.) that do little more than self-perpetuate at the expense of the taxpayer.
Worse than that, these agencies tend inhibit the doers - the actual creators of value in our society.
Actually, “inhibit the doers” is far too mild a way to put it.
I’m going to let uber-polymath, PhD in electrical engineering, genomics specialist, former Stanford professor, early crypto adopter and venture capitalist Balaji Srinivasan explain better.
The following quote comes from Papa Raoul’s interview with Balaji on Real Vision Crypto (free to sign up). (And for the record, more than half of this interview had nothing to do with crypto.)
Here are Balaji’s words:
“There’s something called harmonization… Google ‘FDA harmonization’… ‘SEC harmonization.’ It’s a process by which the American regulatory state regulates the world.
So, as analogy, take a small website. A small website, they will outsource their login to Facebook.com. And why did they do that? Because they don’t want to set up a whole login system and so on. But now, they’re beholden to Facebook, and they can just shut them off remotely. And in the same way, a small country, Czechoslovakia [Author’s note: Odd that he didn’t say ‘Czech Republic’; doesn’t do much for my argument that he’s a really smart guy] or something like that may outsource the regulation to FDA, SEC, etc…
Harmonization is literally done by unelected bureaucrats that have career tenure in the federal government and sitting in Silver Spring, Maryland, or somewhere near in the bowels of the federal bureaucracy. You don’t know their names. But they control biomedical and aviation and energy and financial policy for billions of people across the entire world. Have we run an election on this? The democratic accountability isn’t there because they can’t even be drummed out…
They’re not up for election, they can’t be fired by an elected official, and they have career tenure so they can’t be fired. And no reporter ever names them…
You never heard about people who are operating the federal bureaucracy… [It] has infinite hit points. It can’t go bankrupt. And one way of thinking about it, by the way, is more failure, more funding. After the financial crisis, the regulators basically… you get called into Congress, you get yelled at. And then what happens in the denouement is ‘How much budget to you need to make sure this doesn’t happen again?’ More failure, more funding…
‘Bureaucracy’ doesn’t really capture it because bureaucracy makes it seem like you can just push paper and somehow get through; ‘bureaucracy’ makes it seem like the DMV. This is not the DMV; the DMV is just a dumb machine where if you push on it hard enough, you’ll get your driver’s license renewal or whatever. You’ll just have to go and stand in line. This is not like that.
This is more like a moving wall that will - if you figure out the right way to actually satisfy the rules - it just moves in front of you. It’s like a moving pick in basketball… So it’s an analogy in that sense, because a moving pick’s an illegal defensive move.
[If] they just don’t like what you’re doing, they’ll come up with some reason to block you. And they’ll often get you on some other axis as opposed to the ones they don’t like you for. And going back to the TSA example, it’s called a retaliatory wait time. The TSA retaliatory wait time is you miss your flight. The FDA retaliatory wait time is you lose your company. Because guess what? You get choked out, and your approval for your drug or whatever has gone from three months to 15 months, and you don’t have venture capital to fund during that time period… You’re dead.”
This is the kind of stuff that a bureaucrat like Gary Gensler - the chairman of the SEC - does so well, and it’s why Forbes recently published a piece suggesting that he resign, aptly titled “Gary Gensler: Resign”.
BUT WAIT FOR THIS. This piece was wiped from the internet a day after its publication. If you click on the link in the tweet below, you’ll see that the page has been erased.
(You can read some segments from the original article at the link above and a .pdf of the piece is available here.) Apparently, the author of the original piece - Dr. Roslyn Layton, senior contributor to Forbes - wrote this piece, which featured some similar points but with a much softer tone.
Below are two quotes from the original piece by Dr. Layton:
“Gensler’s SEC demands complex, bewildering disclosures on how financial assets affect the weather; develops discriminatory rules without procedure and input; and applies regulation, not by rule of law, but caprice. He rejects Constitutional checks and balances, bristling at Congressional oversight which dares to question new SEC environmental, social and governance (ESG) orthodoxy.”
and
“He weaponizes the SEC’s war on cryptocurrency by claiming that every digital asset is probably a security. The SEC has not developed forthright policy on cryptocurrency; Congress has not instructed it to do so; and commissioners have never voted on a position, but Gensler nonetheless urges startups to “come in and talk to us” about “getting registered.” The agency’s Freedom of Information Act (FOIA) Office flippantly rejects investors’ good faith request for clarity and information.”
Real piece of shit work that Gensler, huh?
The author of The XRP Daily piece (also linked after “BUT WAIT FOR THIS” above) describes what they think happened:
“Therefore once the Forbes “Gary Gensler: Resign” hit piece was taken down, they made Dr. Layton revise the article to contain a much more soft-sounding title. CLEARLY the SEC made contact with Forbes Magazine to have the article taken down. Gary Gensler did not like being asked to Resign by one of the worlds largest finance publications.”
This author’s view is similar to Balaji’s:
So, what happens when you mess with the powers behind the Securities and Exchange Commission? They will try to get rid of you. Not literally, however they will do the best they can to make sure your opinion has been censored.
If in fact it is true that Gensler or someone at the SEC contacted Forbes to have the article taken down, then we are talking about an unelected bureaucrat telling the free press what to do. Sure, Forbes could have pushed back, but we don’t know what the SEC may have threatened the publication with.
This is what Balaji meant when he said that these unaccountable government bureaucracies are more dangerous than DMV-type bureaucracies.
Again, if this is true, it takes some real audacity for Biden to ream the Republicans for attacking Democracy when Gensler or a bureaucrat under Gensler may be stopping the press from publishing freely.
Many Republicans have made efforts to attack democracy. This is true. The most egregious case of this is perhaps certain Republicans standing behind Trump as he insisted the 2020 election was rigged. I’m not debating that.
But now we may have evidence that it’s also true that Democrats are attacking it (if you consider freedom of the press to be a part of a healthy democracy. I do).
Odd that a blinded ‘progressive’ partisan ideologue like Robert Reich failed to mention how his party may have taken part in hindering the freedom of the press in his little piece for The Guardian.
What’s strange to me is that some of the brightest among us have already called Gensler out for protecting the insiders in a rigged system…
But instead of Gensler owning up to all that he and the corrupt institution that he chairs has done wrong, he just seems to be trying to stop members of the free press from telling him to do what we’d all like him to do: resign.
But, ladies and gentlemen, boomer bureaucrats are gonna boom and not GAF what freedoms they trample and ladders they kick away in the process. This is how it goes these days.
Luckily, some mainstream media outlets still allow for some critique of Gensler.
Yes, stick-in-the-muds, I know we need some level of government bureaucracy. Lighten up.
What I plan to discuss in the subsequent parts of “The B Word” are the dangers of a government bureaucracy that has grown too expansive (and unaccountable)… ya know, like the type that served as a platform and apparatus for Adolf Hitler in the Weimar Republic toward the end of the last big 80-year cycle.
But that’s all for today, kiddos.
In the next edition of the newsletter, I’ll talk about how you might get showered in ‘free money’ next week if you hold ETH. Glory days!
Best,
Frank
Twitter: @frankcorva
Currently Reading: “The People Versus the Unelected,” by Matt Taibbi
