Article IV, Part Third, Section 14 of the maine State Constitution

Article IV, Part Third, Section 14 of the Maine State Constitution says:

Corporations shall be formed under general laws, and shall not be created by special Acts of the Legislature, except for municipal purposes, and in cases where the objects of the corporation cannot otherwise be attained, and, however formed , they shall forever be subject of the general laws of the state ( emphasis mine)

Quote from the legislative Charter for Brunswick Landing Maine's Center for Innovation : The Midcoast Regional Redevelopment Authority is established as a body corporate and politic and a public instrumentality of the State to carry out the purposes of this article. The authority is entrusted with acquiring and managing the properties within the geographic boundaries of Brunswick Naval Air Station. [2009, c. 641,
§1 (AMD).]
1. Powers. The authority is a public municipal corporation and may:D. Exercise the power of eminent domain; [2005, c. 599, §1 (NEW).]


Monday, March 15, 2010

Mackenzie is a new contributor at Augusta Insider

As of yesterday I am a new contributor at Augusta Insider. The Augusta Insider is a forum that attempts to represent a cross section of Maine politics and culture.

I have invited Senator Trahan to respond to my Open Letter withing that forum.

Saturday, March 13, 2010

A personal story about an encounter between the private economy and the government/non-profit sector

I don't usually publish articles so soon in succession, and I had reservations about going public with my personal story, but learning about the new legislation recently passed, I am on fire- and, Oh well, what the heck!

This posts follows the post Who Benefits and Who Pays for Maine's Big Government, where I have explained my objections to LD166 in more detail

Dear Senator Trahan,

Regarding the “tax credit” being offered to tax exempt organizations that “invest” in Maine businesses. Maine is a state in which government jobs are growing at faster rate than the private sector, understandably since the private sector's self generated profits, which also function as it’s “roll-over capitalization” are being extracted to fund big government and all those to whom big government is distributing special favors, including the non-profit sector, as it excludes the micro-economy.

A few years ago, I became acutely aware of the function that non-profit organization play in wealth redistribution and why our state government maintains such a close bond with the tax-exempt sector of our economy. This was when I was invited to a “networking “ meeting by the non-profit ceramic workshop, Watershed. Watershed is located just off the Boothbay peninsula and is situated in close proximity to the “cluster industry” of ceramic studio productions that have sprouted up in the Boothbay Region since my parents first pioneered the concept in the mid-century. My father had long expressed the idea that the ceramic studios should form a network that is mutually supportive, and so upon receiving the invitation, we took it to be coming from such a place, sub-consciously ignoring the other message, which was that the meeting was a “celebration” of Watershed’s project, called something on the order of the “mudfest”. This is not quite right but the name incorporated the word “mud”, which I later found to be quite apropos.

Upon attending the meeting I learned that this was a project funded by a matching fund from Governor Baldacci. The grant was for teaching people to make ceramic mud pies, about which I kid you not and am not exaggerating in any way. The small dish that Watershed was teaching people to make looked exactly like an ordinary attempt by a three year old to make a ceramic dish. It had no grace, style or idea beyond that. In plain language, it was ugly and unimaginative.

I suspect that the content of what Watershed was teaching had no import to our governor. He recognized that with the governor's agreement for a matching fund, that Watershed would easily find others to invest in their project of teaching the public to make ceramic mud pies. This became clear to me as if a light had suddenly been turned on. Non-profits are instrumental for attracting capital into the state. It matters not the quality of what they are doing, only their non-profit status matters because this allows then to accept donations- and this also enlightens LD166 and it’s inclusion of non-profits in the tax credit, which for that purpose, only, they will be treated as taxpayers. This is incentive for non-profits to procure money to invest in the government-favored sector of the economy.

The speakers at Watershed said they had a plan for expanding the teaching of mud pie making, hoping to involve all who were in attendance. I seemed to be the only representative of the private economy. I asked why would we have special classes when we already train people on the job. The response was that since Andersen Design is already well known, we do not need any publicity. I was astounded but I continued to try to listen. However I could no longer hold my tongue when the discussion turned to how much they could charge the public for the mud pies. The only criteria were what they might expect the public would pay.

There was a young woman, who looked no older than twenty, I will call her Jane. Jane had received a grant of five hundred dollars to give workshops in mud pie making. She had come up with a brilliant marketing concept. Instead of charging for the mud pie, she would charge for the event and give the mud pies away as part of the event. She clearly perceived the true value of the mud pies.

Finally I could no longer hold my tongue and I spoke about how, if one were in business one would have to calculate the price by cost and that one would also be in competition with imported goods made in countries with low labor costs and practically no environmental regulations. I saw in the eyes of the young people that they were very interested in what I was saying but when I finished, one of the older women associated with Watershed, told me that they are not interested in what I had to say, they are interested in what Jane has to say. At that point I had had enough of this madness and left the meeting.

I come from a family that started an influential and globally recognized ceramic art, design and slip-cast production business, over half a century ago but, in the eyes of Watershed, what I had to say was of no value in comparison to a twenty-year-old novice. This attitude that is consistent with my interactions with the non-profit-government community since "the creative economy" movement was initiated by Governor Baldacci.

I learned that it is common practice for Watershed to charge students for classes, permit them to keep a couple of the pieces that they make, and then have a benefit for Watershed where by they sell off the rest of the work. So while the private economy's, slip-cast, “cluster industry”, has been providing training in genuine ceramic skills, at our own expense; non-profits have been receiving grants to give classes. Some of these non-profits may be giving classes in valuable skills, but I saw no level of skill required in the Maine state government-funded project of Watershed. So while the private economy has to pay into the system that covers workers rights, Watershed does not, and while the private economy has to pay it’s employees as part of our production over head, Watershed actually charges students to make work that Watershed then sells for it’s own benefit.

I thought at first that the purpose of the classes was to train people in skills that they might use to develop a livelihood, but in that I was mistaken. Jane was required to give the profits she made to a charity. She chose a soup kitchen. The profit she made equaled the amount of the grant she received. I never learned who covered the cost of the overhead for firing the pieces. The non-profit, Watershed, believes it is doing “public good” by providing charity for the poor. As a representative of the private economy sector, I believe that we do “public good” by providing jobs.

This story is just one of many that I could tell about my encounters with the government-nonprofit community. I have tried to keep an open mind but I have found that the attitudes expressed here in are typical of the attitude that the government-nonprofit sector has toward the private (micro) economy sector, which provides the underlying funding for the government-nonprofit sector. To use a popular word. This is “unsustainable” economics.

FYI, there will be an article on Andersen Studio in the upcoming Maine Boats and Harbors, written by my nephew, the author and journalist, Colin Woodard. We will also be featured in the next issue of Atomic Ranch, a quarterly magazine from Oregon on mid-century design.

Who Benefits and Who Pays for Maine's Big Government Management of Our Economy?

An Open Letter to Senator Trahan,

Dear Senator Trahan,

I wrote to you in the past about The Small Enterprise Growth Fund, an investment corporation created by the Maine State legislature for the purpose of attracting high growth venture capitalists to Maine.

At the time I suggested that “the Fund” should “roll over” to invest in the micro-economy, which you thought was a good idea. I am now writing to say that I think it is a terrible idea. It is redundant and wasteful, as it requires an expensive government bureaucracy to select which small businesses in the micro economy will be the beneficiaries. Given Maine’s deficit, it would make more sense to eliminate the taxpayer investment in the Small Enterprise Growth Fund, allowing the micro economy to retain more of their self-generated profits, which is the primary source of capitalization within the micro-economy.

You said the Small Enterprise Growth Fund is one government program that is working quite well. I have heard this before. I read such statements in the Small Enterprise Growth Fund’s email updates, but those statements leave me wanting for more information. Information about The Small Enterprise Growth Fund is difficult to uncover because the legislation that created it states that the SEGF will report to the legislature, bypassing the general public.

I am on the mailing list for the Small Enterprise Growth Fund and The Office of Innovation, The email newsletters read like advertisements and political slogans. I use them as a starting point to uncover the real facts. However I have yet to find the annual report of the Small Enterprise Growth Fund. It may be publicly available, but if so, it is certainly not well publicized- and so fundamental facts such as the identity of the private investors with whom the Maine state taxpayer is in partnership, through the SEGF, remains a mystery. Since the taxpayer portion of the profits always “rolls over to re-invest in the fund, while the private investor demands an “exit strategy” (selling the business), I submit that the tax payer contribution to the Small Enterprise Growth Fund is functioning as a bribe to attract the “high growth” private investor. A “roll over investment” has no “exit strategy”. It just keeps rolling over to reinvest in” the Fund”. The private investor requires an “exit strategy” in order to realize a profit.

Why would the legislation call this partnership “the Fund”? The answer may lie in the Maine State Constitution, Article IV, which describes legislative powers. Section 14 of Article! V states:

“ Section 14. Corporations, formed under general laws. Corporations shall be formed under general laws, and shall not be created by special Acts of the Legislature, except for municipal purposes, and in cases where the objects of the corporation cannot otherwise be attained; and, however formed, they shall forever be subject to the general laws of the State.”

I submit that the formation of The Small Enterprise Growth Fund through an act of legislation, is unconstitutional, - short of the argument that is premised on the belief that the State of Maine cannot attract high growth investors without bribing them. To that end I submit that the recently passed LD1666 is yet another bribe to attract “high growth” capitalization to Maine. This legislation, combined with LD1, provides “tax credits” for investments in Maine businesses that are approved by FAME. Who does it allot these tax credit to? First to government employees who get a credit of 80 % of their investment, and then, a tax credit of 60% of the investment, to private entrepreneurs, who, as stated in the legislation need not be Maine residents paying Maine taxes in order to qualify for a Maine state tax credit. The LD1666 legislation also states that the same 60% tax credit is available to non-profit organizations, which for the purpose of the tax credit will be treated as taxpayers. The reason this needed to be stated is obvious.

The legislation also identifies who is not eligible for this tax credit, and that would be primarily small business owners of the micro-economy who not only invest their “roll over capital funds” created by their self-generated profits, but also their time and energy and soul in their businesses. Also excluded are any persons related to the owner of the business. It is a long standing tradition that one of the primary sources of micro-economy investment are friends and family, and so this legislation, by offering a carrot for investment in businesses favored by our government, thus stacks the deck against the micro-economy, whose resources are already being taxed to fund the sector which our government has pompously designated as “the creative economy”.

LD1666 was submitted by the president of the Senate and Gubernatorial candidate, Libby Mitchell. I am hoping that gubernatorial candidates will emerge that will campaign on reducing the size of our indebted state government by getting the government out of the business of managing our economy and picking and choosing who gets the benefits and who gets taxed to pay for those benefits. I see no guarantee that investments that are lured to Maine through bribes and which demand ‘exit strategies” are actually here for the long term. “High growth” investors have their personal profits in mind when the business is sold, as is the meaning of the “exit strategy”. A high growth investor will sell to the highest bidder. To my knowledge the 10% taxpayer investor has little say about the “exit strategy”, any more then they have easy accsess to the annual report or the identities of the other investors.

I believe that Maine is capable of attracting investors without bribing them and taxing those lower down on the economic scale to pay for it. Can we bring back honor into our system?

I pay attention to the grass roots political movement, which is against big government and to that end, the focus, is on welfare reform. The legislation that created the SEGF is designed to insure that it’s business takes place behind close doors away from the view of the general public. Every one knows about the welfare system but the general public, by design, is left unaware of the goings on in our Maine State governmental business management system.I hope that in the up-coming election season. This will change.