Quote of the Day, Debbie Wasserman Schultz Downplays Worries That Her Base Is Revolting edition.
Debbie Wasserman Schultz is a great DNC chair! If you’re a Republican.Read More »
Last week, Gibson Guitar made the news as armed agents of the Department of Fish and Wildlife raided its factories in Tennessee. The gist of the federal complaint is that Gibson may have violated the laws of Madagascar and India by importing only partially finished guitar components and then further processing the materials with US labor. The ‘may’ qualifier refers to the fact that the multi-year investigation has yielded no charges whatsoever against Gibson. Whatever the specious merits of the government’s investigation, the broader lesson is that federal regulatory authority is so expansive and vague, it enables corrupt bureaucrats to intimidate and punish nearly any honest business that falls under Washington’s crosshairs.
It’s worth mentioning that Gibson is a successful domestic manufacturer that employs hundreds of people that would normally work overseas. Musical instruments are a labor intensive product, and Gibson could easily reduce its costs by moving its operations to Asia. Like a few iconic brands like Harley Davidson, Gibson trades on its reputation for quality by maintaining US operations. To many professional musicians, Gibson is synonymous with guitars, the USA, and quality. While the US is losing its manufacturing base, especially where labor is a dominant component, Gibson has found a way to prosper, and provide employment to Americans.
Rather than thanking Gibson for its entrepreneurial spirit and being an ambassador for the US everywhere guitars are played, the Obama Administration has used a book of dirty tricks to stymie Gibson. Gibson’s factories were raided two years ago, when government agents seized valuable inventory, yet the government never brought charges and refused to explain why it was still keeping Gibson’s property. When Gibson sued the Federal Government for its right to private property, the Obama Administration responded with last week’s new raid. One theory posits that Gibson is being targeted for retribution after it moved its factories from union friendly Michigan to right-to-work Tennessee – just as Boeing is being sued for opening a factory in South Carolina.
The government’s motivation to punish a US manufacturer for using small amounts of rare woods is open only to speculation, but its tactics are textbook. Unlike any other litigant, the government has enormous advantages when it sets it sights on a victim. The government can confiscate any property it wishes without probable cause, as Gibson has learned. Such victims must sue to prove their innocence, which can take years. Meanwhile, the government’s victim may not be able to continue to earn the profits required to defend itself. The government may time its action to inflict the most damage, as it did with Boeing by suing the airplane manufacturer only after it had invested $750mm in a new factory. Worst of all, the government frequently sidesteps or simply ignores court orders to cease its abuses.
The Gibson story is not a unique case of the government’s capricious attitude toward the rights of businesses. There are so many laws and regulations that any company can become entangled in the web of a crafty bureaucrat. The Gibson abuses call for serious regulatory reform, and Shout Bits has a few ideas to start the process:
Of course real Washington reform can only come from denying rogue agencies the free-time to concoct novel prosecutorial theories such as Gibson’s reworking of fret-board wood as a violation of Indian law, or Crocs claim that its shoes are anti-microbial as a violation of pesticide laws. A Congressman needs to ask these would-be Napoleons ‘by how much do we need to cut your budget for these abuses to stop?’