Regulatory Extortion

"To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it."

--Thomas Jefferson, letter to Joseph Milligan,
April 6, 1816

Thomas Jefferson was most certainly not born with the gift of prophecy. I’m fairly sure he did not consult an ancient seer residing in some cave far up in the Blue Ridge mountains. He did not read tea leaves, depend on Tarot cards, or employ an astrologer to assist him in day to day decisions.

Jefferson was born with the gift of forward thinking based on personal experience and more importantly, the historical significance derived from the decisions and policies of our predecessors. He may have been referring to what had already transpired during the young and brief history of our nation.

Alexander Hamilton feared anarchy, and as a result took a very liberal view of the U.S. Constitution, most notably granting broad powers to the Federal government. Jefferson, on the other hand, felt that the Constitution’s 10th Amendment was very clear, granting powers not specified to the states. This disagreement led to the formation of the two-party system which we know so well today. Hamilton, Adams, John Jay, et el, were “loose constructionists”. There political philosophy dictated more power to the central government for the “Greater Good”; hence the party was called the Federalists.

Jefferson couldn’t have disagreed more with this thinking. The U.S. Constitution was written with the express purpose of granting the central government with a very limited roll in governing, while allowing each sovereign state to decide what would be more advantageous for them. Jefferson’s party was called the Democratic Republicans.


Jefferson could see very clearly what would and could happen if the Feds were granted expansive powers to usurp the rights of each sovereign state. Fast forward to modern America, and we have the Feds doing exactly what Jefferson feared. For example, The Uniform Drinking Age Act (1984) gave each state a five year window to change their laws to the minimum age of 21. If not, interstate highway funding would be cut off. Another example is to pay off states with a highway slush fund that lowered the legal alcohol blood limit to .08.




How about the “Tobacco Settlement”? The Feds blackmailed the tobacco companies through regulatory extortion by “allowing” them to stay in business if they paid a few hundred million dollars to lawyers, plaintiffs, federal, state and local governments.



The Mother of All Shakedowns may be the Community Reinvestment Act, in which the Feds mandated private banks to loan mortgage money to those who had no intention of repaying it. For those banks who declined to participate, the Feds would regulate them out of business. The CRA has brought us to this point in history where we all face an uncertain future, largely because of our leaders in Washington using political muscle and employing figurative leg breakers to apply pressure to those in private industry who really didn’t want to play the game. Did I mention Microsoft?


There are many more examples of Federal Blackmail, but I think you get the point. Jefferson saw this as a possibility 200 years ago, when Hamilton wanted to start a national bank. Since then, the two party system has morphed into essentially one enormous political machine where right is wrong and wrong is right. We live in a country where 65% of the citizenry believe our current administration is on the right track. We live in a society that would allow for the redistribution of wealth, “because it’s the right thing to do”, where the clever and industrious are punished, where those who go to work everyday to provide for family are penalized. Complacency is the rule, so long as we are “provided for”.

"It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds." – Samuel Adams