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Free Minds & Free Markets

California's War on 'Economic Crimes' Sounds Like Something From Soviet Russia

A state senator wants to crack down on "economic crimes" in the state's underground economy.

For those of us who grew up during the Cold War, the TV series "The Americans" is a blast. The main characters are Soviet "illegals"—a married couple who pose as travel agents, but engage in espionage and murder on behalf of the Russians in their spare time. I'm not sure it's realistic, but the back stories (Afghan war, Nicaraguan Contras) certainly are. The series, which I started watching recently, brings back memories from that era.

Another recent matter has brought back old thoughts of Yuri Andropov and Leonid Brezhnev, as well. Oddly enough, it came in a statement sent by California Attorney General Xavier Becerra's office touting legislation to crack down on "California's growing underground economy." What really grabbed my attention was its quotation from Senate Bill 1272's author, Sen. Cathleen Galgiani, D-Stockton. She praised a pilot program for cracking down on "economic crimes."

That's an arcane term one doesn't hear much in the United States, given our longstanding love of enterprise. It echoes terms from the Communist world. In those totalitarian societies, virtually every form of private economic activity was forbidden. Soviet, Bulgarian or Cuban citizens were not allowed to own property, start businesses, or buy and sell things in the black market, which is just another term for the "underground economy." Those who did so faced public trials and harsh sentences. The "economic criminal" lingo often was code language for "Jews."

Of course, Becerra and Galgiani were not purposely echoing these things any more than President George W. Bush was purposely channeling authoritarian societies when he chose the unfortunate term "homeland security" as the moniker for a federal agency. But the underlying economic idea behind the new proposal is a creepy throwback, nonetheless.

Yes, there are serious economic-related crimes that the government must fight (fraud, theft, blackmail), but the Justice Department already targets those felonies. This bill would do something different. It seeks to crack down on the underground economy because it "results in significant uncollected revenues that are desperately needed to fund basic government services," said Galgiani. In other words, if you engage in unapproved economic activity, you are stealing from the state. Wow.

The Soviet Union was extreme, but all governments regulate and ban myriad behaviors between willing buyers and sellers. Because those behaviors—from selling raw milk from your cows to hiring a contractor without a license—are sought after, they go on anyway. The government hires more agents and spends more money to stop them. It rarely reforms the irrational underlying laws or controls its spending, which are the root of the problem.

"Here in California, home to the world's sixth-largest economy, every worker who powers this engine deserves rights at work, every upstanding business owner deserves a fair market and every taxpayer deserves to see their hard-earned money used to fund vital services," Becerra said in his statement. That sounds nice, but all he's proposing is to arrest, fine and jail more people who skirt the state's many counterproductive regulations.

Many of these "economic crimes" simply involve working without the proper license. A study from the Institute for Justice finds that California has far more onerous licensing requirements than most other states. Our state makes it really hard for people to earn an honest living in many fields and professions. In response, Sen. Mike Morrell, R-Rancho Cucamonga, has introduced Senate Bill 999, which would remove shampooing, hair-curling and a few other basic hair-care tasks from the state's health and safety codes. Sponsored by my employer, the R Street Institute, the bill is a small step in the right direction.

Under current law, if you want to shampoo people's hair for pay, you must spend around $7,500 in tuition, books and tools from a state-approved school and attend 1,500 hours in classroom training. Then you must take two exams and pay a fee. If you start shampooing customers' hair for a fee in your home or office without going through that rigmarole, you have committed an economic crime. Becerra and Galgiani are creating a Tax Recovery and Criminal Enforcement Task Force to make it easier to punish you.

The shampooing situation is one of hundreds of examples. Most of the time, these barriers to entry have no more justifiable rationale than the Soviet Union's crack down on "profiteering" by people who sold food to hungry people when the shelves on the state-run stores were empty. In reality, these American licensing requirements typically became law because interest groups want to protect their market share by imposing hurdles on any potential competition.

Heavily regulated California is not in the same league as the long-dead Soviet regime. But some of the fundamental thinking—imposing excessive burdens on economic activity, then stepping up enforcement against those who get around the rules—is eerily similar. How about we start the new task force after lawmakers ditch the state's unfair economic barriers?

Steven Greenhut is Western region director for the R Street Institute. He was a Register editorial writer from 1998-2009. Write to him at sgreenhut@rstreet.org. This column was first published in the Orange County Register.

Photo Credit: Feoktistov Dmitry/ZUMA Press/Newscom

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  • Finrod||

  • BestUsedCarSales||

    Interesting that their way of splitting still leaves the three major cities in control of all the people of the inland empire, while generating 4 more guaranteed democratic senators.

  • Elias Fakaname||

    Turn the progressive population centers into the equivalent of roach motels. Where proggies get in, but they don't get out.

  • Scarecrow Repair & Chippering||

    Yeah, that's a joke. The real differences are urban vs rural. Start with Marin County north of San Francisco and split off the coast all the way to San Diego. Sacramento can stay or leave; it wouldn't be nearly so bad without all the lobby money pouring in.

    The Central Valley and the foothills / mountains will get by fine on their own, and all those damned tourists flocking to Tahoe would leave enough money to piss off the coastal nannies.

  • UnrepentantCurmudgeon||

    The real differences in the country as a whole are urban vs rural. It's a culture gap that will never be resolved until we've paved over the entire country with a Starbucks on every third street corner.

  • WillPaine||

    If every person in America lived like the Singaporeans do, all would fit into an area the size of Texas.

  • Cynical Asshole||

  • Don't look at me.||

    "Heavily regulated California is not in the same league as the long-dead Soviet regime"
    The Soviets would envy the work being done by today's California's lawmakers.

  • XM||

    The immigrants busted in these war against the underground economy will be spending time in our luxurious jails, instead of being cruelly deported by American Hitler Donald Trump?

  • Phillip||

    Nah, Jerry'll pardon them, lest they be deported :)

  • XM||

    The immigrants busted in these war against the underground economy will be spending time in our luxurious jails, instead of being cruelly deported by American Hitler Donald Trump?

  • Fuck you, Shikha (Nunya)||

    They are exempt, of course.

  • sharmota4zeb||

    1) This is not as bad as punishing people who illegally sell food to hungry people, because saving the lives of starving people is worth breaking a law or two.

    2) How are California's illegal aliens going to pay the rent if they can't get paid under the table to care for the kids and lawns of wealthy California residents?

    3) The quickest way to eliminate bad laws, like the regulations that drive economic activity underground, is to strictly and universally enforce those laws.

  • SQRLSY One||

    "3) The quickest way to eliminate bad laws, like the regulations that drive economic activity underground, is to strictly and universally enforce those laws."

    This is true! It is true ***IF*** you can manage to make Emperor Donald and the Senators (and their ilk and their spoiled brats) obey those exact same bad laws, AND get the exact same punishments, if busted, as the rest of us! WITHOUT using lawyers to delay the punishments for 30 years while cases are being appealed!!! I recall a few cases over the years of big-wigs being busted for hiring illegal humans, yes I do... And NONE of them got their dicks slapped!

    GOOD LUCK getting the above paragraph's policies deployed, is all I can say! "Who will police the police" is an ancient and still-unsolved problem or question...

  • gaoxiaen||

    Bailiff, whack his peepee. Next case, the Pope.

  • WillPaine||

    And remember; everything the Nazis did was completely legal.

  • Jerryskids||

    The worst thing about this rigmarole is that the onerous paperwork is there just to disguise what's really going on - note that the concern here is that the state is losing revenue, yet I'm sure these people would be horrified if you were to simply offer them an envelope full of cash in lieu of the paperwork. Oh, heavens no, we're not soliciting bribes or extorting money from the citizenry, we're just humble public servants selflessly interested solely in the health and welfare of the people we serve. Bullshit. You want money, I got money, you're going to take it. A mugger simply sticks a gun in your ribs and demands you hand over your wallet, the whole transaction takes about ten seconds and there's no pretense that the mugger's not simply stealing your money. But it's not enough that you just take my money, you're going to make me crawl to you on my knees through broken glass and make a formal plea for you to take my money, you psychopathic, sick, twisted, evil bastards just so you can keep your precious self-esteem, continue lying to yourself about what it is you really are.

  • gaoxiaen||

    Instead, we pay people to tell us what to do when most people would do that for free.

  • Tionico||

    then remove the useless counterproductive licensing charade and simly require the business to register then collect/pay the taxes on the labour/services they provide a willing public. That way Shawana can start braiding hair tomorrow with no delays/investment and may well be OK with the gummit hooh hahs who enabled her to get to work tomorrow to hold out their hand for a cut of her labour.

    This is all about Nannies out of control. A pox upon them ANd upon their Mommies who never trained them to be useful idiots, just idiots.

  • Libertarian||

    The economy is the economy. There is no "underground economy." Only activities that the State declares illegal.

  • Leo Kovalensky II||

    Kulak! Wrecker!

  • Elias Fakaname||

    Sounds like something an Uzbek would say. Uzbeks are the weak link in the great chain of socialism. Giorgio told me so comrades.

  • ace_m82||

    Actually, technically speaking, there are about 7.5 billion "economies". There is no one "economy". Economies are just "wise uses of scarce resources".

    In fact, if you want to get ridiculous, you could say that monkeys, squirrels, and various other creatures have their own "economies".

    http://www.bakersfield.com/ap/.....2499e.html

  • gaoxiaen||

    Fuck it. Why work? Just vote for the guy who promises higher welfare payments. And sell crack and heroin in your free time, which is all the time.

  • Longtobefree||

    May I suggest a small modification: the three new states should be Los Angeles, San Francisco, and the rest of (current) California. For Balance, split Texas up into Austin, and any two other bits. Since this will increase federal costs due to additional senators, we can remove New York and Massachusetts, and reduce the staff of all others by 50%.

  • Elias Fakaname||

    Can we round up all proggies nationwide and ship them to those places? Then put them under martial law.

  • LDRider||

    Oh hell no, don't send them to Texas. Not even Austin. Just send them on to MA. NY. I supposed IL would be cruel and unusual punishment.

  • jelabarre||

    Since this will increase federal costs due to additional senators, we can remove New York and Massachusetts, and reduce the staff of all others by 50%.

    Nah, we want to do the same thing with New York. Splot NYC off into it's own independent cesspool, and the rest of the state should be fine (might have to hand them Westchester if it can't be sufficiently cleaned up). If Buffalo causes a fuss, hand them over to Canada.

  • SQRLSY One||

    No, but my neighbor would like to donate his brain! How much for that?!?!?

  • Don't look at me.||

    Is this a new twist on the whole looking for sex thing the other guy was posting?

  • ||

    EMAIL: drmichealvarghes@ gmail.com

    Misspelled first name and one character saved from last name? I'm not sure if I want the good doctor taking out my kidney, even if he pays $450K to my estate.

  • Elias Fakaname||

    No, but I'll donate both of Tony's, PB's, Hihn's, amd AmSoc's for a 95% comission. None of them are doing anything important with them.

  • LDRider||

    You can't spell it, you can't get it.

  • ||

    Well, this is new.

  • NotAnotherSkippy||

    Of course, Becerra and Galgiani were not purposely echoing these things
    It seeks to crack down on the underground economy because it "results in significant uncollected revenues that are desperately needed to fund basic government services," said Galgiani. In other words, if you engage in unapproved economic activity, you are stealing from the state. Wow.

    Are you really sure it was unintentional?

  • Cynical Asshole||

    California's War on 'Economic Crimes' Sounds Like Something From Soviet Russia

    FTFY

  • Headache||

    Democrats' tendencies are similar to that of the Soviet Union.

  • retiredfire||

    The demoncraps' ultimate goal is a Soviet Amerika.
    Everybody's wages go to government, who decides how it should be distributed. The only ones with any wealth and power are in government, and advancement in that is based on party loyalty.
    They just won't admit it.

  • Cynical Asshole||

    Of course, Becerra and Galgiani were not purposely echoing these things any more than President George W. Bush was purposely channeling authoritarian societies when he chose the unfortunate term "homeland security" as the moniker for a federal agency.

    Are you sure about that?

  • MargeBouvier||

    "Homeland" Security always makes me think, What, Motherland and Fatherland were already taken?

  • Paul E||

    "and every taxpayer deserves to see their hard-earned money used to fund vital services," - Shows you the mind of Cali Progressives. You don't deserve to keep your hard earned money, you deserve to see it sent to the state.

  • WillPaine||

    Mr. Greenhut; nicely said, hear, hear!

  • mikekrohde||

    Shades of Joe Stalin. Enforcing current licensing laws is not a Soviet specialty to control the citizenry. It usually protects consumers from amateurs trying to skirt regulations and providing cut rate services. It also helps enforce minimum wage laws. Of course the example of shampooing hair is the law used to expose this Stalinist technique in the Golden State.

    There is no doubt that bureaucrats can get carried away in executing their duties and actually impair commerce and keep honest people from making a fair living. They also protect us from charlatans trying to separate us from our money. So we need to balance the 2 to make sure they work for us rather than against us. Wow, what a concept. Maybe we should start a new movement. Let's do away with unnecessary regulations. Who woulda thunk?

  • buybuydandavis||

    "California's War on 'Economic Crimes' Sounds Like Something From Soviet Russia"

    How many Marxists does CA have in their universities, media, and state government?

  • retiredfire||

    The real question is: How many, in those institutions, aren't Marxists?

  • buybuydandavis||

    . The "economic criminal" lingo often was code language for "Jews."

    We're all Kulaks now.

  • Tionico||

    It seeks to crack down on the underground economy because it "results in significant uncollected revenues that are desperately needed to fund basic government services,"

    Becerra the Beast is Lying. Because well above the half of all revenues collected in that sorry state do NOT get spent to "fund basic government services". And most of what DOES get spent on such services gets wasted on fluff, padding, sandbagging, work to rule, union pension padding, government agencies to steal work from the private sector......

    How's about the Beast turn to cleaning up some of the graft, waste, inside buddy good ol boy stuff (which would by definition include some 85% of all state licensing requirements).......

    No wonder that state are going broke.

  • Deplorable Victor||

    Build the WALL! Between Freakifornia and the United States...

  • Peter||

    "Heavily regulated California is not in the same league as the long-dead Soviet regime."
    Not yet, but give them time/

  • prediksi singapore||

    Cosnaíonn sé de ghnáth tomhaltóirí ó amateurs ag iarraidh rialacháin sciorta agus seirbhísí rátaí gearra a sholáthar. Cuidíonn sé freisin le dlíthe íosphá a fhorfheidhmiú. Ar ndóigh, is é an sampla de shampooing hair an dlí a úsáidtear chun an teicníc Stalinist seo a nochtadh sa Golden State.

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