Recent instances of wrongdoing involving previously respected members of society (such as, for example, the criminal convictions arising from the financial irregularities related to Robert Mueller's investigations) provide an opportunity to explore some of the conceptual frameworks currently being used to explain (1) how the economy works, and (2) whether government can or should effectively interact with economic activity on behalf of the public interest. 

     In an age of competing alternate realities operating in silos of segregated communication, we need to take a step back to see what these revelations—these verified facts—tell us about how governmental policy can both abet and restrain abuses perpetrated by the private sector behavior.  We can begin with some first principles.


     The Declaration of Independence asserted "self-evident" truths about equality among humans who were also "endowed by their creator with certain unalienable rights; that among these, are life, liberty, and the pursuit of happiness."  It further asserted that governments were established to secure these rights. If they failed to do so, they were subject to abolishment and reconstitution in line with such principles and powers as seemed most likely to secure safety and happiness. 

     The new constitution established in 1787 provided the principled framework to secure these ends.  According to Thomas West of the conservative Heritage Foundation, the purpose of government for the Founders was to "protect the private sphere," including "self-interested private associations," but it had to be limited because "it was dangerous if it got too powerful" (West). In this fundamentally conservative view, government should restrict itself to preserving life and liberty against the violence of others (as distinct from, say, marketplace malpractice) by "vigorous prosecution of crime against person and property or through civil suits for recovery of damages […]" (West).  Rules and regulations were established to achieve these limited governmental ends concerning individual behavior; these rules defined the circumstances in which, the Declaration's language of "unalienable" rights notwithstanding, the state could deprive persons of life, liberty, or property, through due process of law.  The evils of government overreach were to be checked by both limited grants of authority and separation of powers at the national level, and by a federal division of power between national and state levels.  

     The contemporary conservative mantra of "small government, low taxes, and personal responsibility" is based upon these constitutional elements, and it has helped elect many Republicans over the past several decades. Once this slogan becomes a controlling factor in the governing process, however, its generality might obstruct the creation of policies that could better achieve the constitutional goals set out in the Preamble and elsewhere: providing laws that are necessary and proper, that protect the Bill of Rights, that help in forming a more perfect union, and that promote the general welfare.

     An even more restrictive view of government has been developed among libertarians and the more ardent champions of the free market.  The expression of this idea in the Sharon Statement of 1960 (the founding document for Young Americans for Freedom) has often been repeated in the sixty years since: "when government interferes with the work of the market economy, it tends to reduce the moral and physical strength of the nation […]" (Sharon Statement). This position defines economic liberty in near absolute terms, recruiting the "unalienable rights" language of the Declaration to trump the due process language of the Constitution concerning the liberty of property rights. 

     The Sharon Statement foreshadowed the libertarian ideal of "ordered anarchy" that has been advanced more recently in commentary on the statement in Federalist Paper 51 that "If men were angels, no government would be necessary."   Although this ideal concedes that some government rules are necessary, "More politics (rules) means fewer angels, or at least fewer opportunities for people to act like angels" (Buchanan). In this bit of libertarian logic, highly negative expectations about the usefulness of government policy are matched with highly optimistic views about human nature in the marketplace. As a basis of policy, this logic circumvents the endowment we received from our Creator concurrently with the liberty or right to make choices in the private sector: our unlimited capacity for evil.  Such dogmatic circumventing assertions, along with the conservative ideological language about expanding restraints on government, provide a conceptual framework that ill serves the need, first, to understand and explain our shared reality, and second, to develop rational strategies to move towards a sustainable and just American future.   
        

     Recent psychological research suggests that several negative personality traits—among them narcissism, spitefulness, and moral disengagement along with harmful behaviors associated with each—share a common "Dark Factor of Personality" core or "D."  "'D' denotes the degree to which people single-mindedly focus on achieving their goals while callously disregarding the harm they cause to those around them" (Leary). These behavioral characteristics can stand as functional equivalents for the dangerous human tendencies the Founders sought to guard against with the checks and balances of the new Constitution.  The Founders did not have the advantage, as we do, of being able to consult psychological research, but they were careful observers of human nature, and they seem to have known about "D." Moreover, most of them came from a religious tradition that had carefully considered the human capacity for evil.

     The web accessible Baker's Evangelical Dictionary of Biblical Theology is helpful in providing specificity for the weighty but broad term "evil."  This dictionary defines evil as resulting from a state of disharmony with what was ordained by God, but distinguishes between physical evil, such as natural disasters, and moral evil.  Our focus will be on the moral evil that results from human choices that can negatively impact our political, economic, or social well-being. (1)

     We are familiar with the Founders' idea, expressed in the Declaration of Independence, that we are endowed by our Creator with rights: life, liberty, pursuit of happiness. The biblical authors kept in mind that we are also endowed, for reasons we struggle to understand, with a capacity for evil.  This endowment should not be ignored or circumvented, as the Founders appeared to do by asserting in the Declaration that the right to liberty is unalienable, a phrase that for free market advocates justifies a minimum, if not an absence, of regulation for private economic transactions.  So long as humans are capable of evil, though, we cannot afford absolute, unqualified liberty.  In addition to routine small-scale evils in marketplace transactions, private actions have had national and global evil consequences and will continue to have them unless subjected to public scrutiny, social action, and attempts at legal remedy. We also need safeguards against the capacity for evil in our governors, since access to governmental authority and instruments of coercion creates potential for harm on a broad scale and, therefore, requires limitation by constitutional law, democratic procedure, and transparency of action.

     The historical knowledge and religious tradition that informed the Founders of the dangers of unchecked and absolute power should also inform the reader while pondering the historical and recent situations presented in the following sections.     
 

     The legalities of the Constitution and subsequent policy initiatives shaped the institution of slavery, which operated very profitably in the private economic sector, slave owners even claiming a biblical sanction for enjoying this liberty.  If we amend slave owner Patrick Henry's famous exclamation to make explicit what was only implicit—"Give me liberty (to own slaves) or give me death"—we can grasp one evil possibility, among several, that is embedded with this founding principle of the Constitution. In the Civil War, one could say, the Northern interpretation of slavery as an evil practice, backed by greater industrial capacity, overcame by force of arms the Southern interpretation that it was evil to interfere with the liberty of slave ownership. But the human capacity for evil adapted to new circumstances, as it often does. The subsequent 100 years of legally sanctioned Jim Crow segregation, enforced violently by private vigilante practices, was an evil pattern that generated long lasting remnants of racist negativity that still create difficulties in achieving justice, full equality, and enjoyment of constitutional liberties for all (the final phrase in the Pledge of Allegiance notwithstanding).

     The negative impact and compounding of private settlement practices by the Pilgrims and their westward expansion, subsequently backed by government policy and action, produced the various evils associated with the dispossession, disposal, and disposition of Native Americans within the expanding territory of the United States.  These actions, encompassing legal, illegal, and private activities, were openly undertaken and justified with language of a civilizing mission and a later 19th century affirmation of "manifest destiny" to expand the nation to the Pacific. Throughout this growth, the US maintained a narrow definition of "all men" who might be equal or endowed with unalienable rights.  The inclusiveness of these understandings has gradually expanded, but unease remains as traditional rights are asserted in protests and court cases, while demands for respect are unevenly granted (Trahant).

     Less obvious evils than slavery and dispossession are the many private business practices that may cause harm, but are easier to conceal as economic trade patterns have grown from local to national in scope, and purchases are made from unknown sellers who are able to maximize profits through the leverage that exploits the ignorance and necessity of remote buyers.  The exposure of this kind of evil at the turn of the 20th century with publication of The Jungle by Upton Sinclair (about malpractice at the Chicago stockyards and meat packing plants) and by the findings of Department of Agriculture chemist Dr. Harvey Washington Wiley (concerning the dangers of unlabeled and mislabeled food products) led to initial steps at regulation with the passage of the 1906 Pure Food and Drug Act (Blum).

     Under the guidance of Dr. Wiley, volunteers recruited for a "Poison Squad" would sample food products and make a record of any adverse reactions.  Among the products on the market at that time were milk preserved with formaldehyde; "brown sugar" that included some lice who had survived the grinding process, leading to a side effect called "grocer's itch"; industrial-sized cans of salvaged and cracked eggs in a 2 percent solution of boracic acid sold to commercial bakeries; synthetic food dyes made from coal tar, the residual remains of coal processing; candy containing lead and other added minerals; and products with chalk or plaster of Paris added for whitening.  Industry efforts to weaken the new regulations gained a number of successes, some of which were reversed in 1938 with the passage of the Pure Food and Drug Act after more than 100 people, mostly children, were poisoned and killed by cough syrup sweetened with antifreeze.  Status quo advocates then and now have resisted regulation by arguing that market transactions are simply free exchanges between buyer and seller, and that profits are thereby made by better serving others in a "pure," regulation-free market environment.

     Issues with food, water, and product safety continue into the present time.  Water systems across the country are still confronting issues of contamination from lead, arsenic, and more than 90 other contaminants that are regulated by the Environmental Protection Agency, among a hundred more that are tracked but so far unregulated.  Perhaps the most prevalent water contaminant results from the human-made perfluoroalkyl chemical class known as PFAS, which do not degrade easily. Widely used, from non-stick pans and raincoats to firefighting foam, PFAS have been linked, even at low levels, to cancer of the kidneys and testicles, thyroid and liver disease, lower fertility in women, and birth defects.  And they have been found in the bodies 98 percent of Americans (Sum).

     More than half of adults in the country report taking dietary supplements, but with an estimated 85,000 products on the market, the Food and Drug Administration cannot possibly test them all.  Given that the law allows advertising supplements as good for one's health even if there is no evidence in human testing that they are, it is no surprise that, for example, a 2013 report showed 20 percent of liver injuries that year were caused by supplements (Cunningham). Reports also indicate that from 2007 to 2016 only 360 of 776 supplements were recalled after being flagged by the FDA as tainted with potentially harmful pharmaceuticals.  Since the FDA can only make public suggestions or warnings in such matters, it is left to the private sector firms to make the final decision on a recall.  If enough people become sick or die from consumption of an unregulated product (thereby serving as a contemporary, but involuntary, Poison Squad) the resulting negative publicity may result in remedial action by private sector action or by FDA intervention after the fact of public harm rather than before.

     This situation brings into sharp focus the basic issue involved with public regulation policy.  Not all regulation is perfectly done, but our very lives depend on food, water, and medicine. Should the final decisions about food, water, and medicine rest with a public servant or agency that is under scrutiny to meet the ethical obligations of public service—or should they rest with the private business owner operating in confidentiality and pledged to maximize profit on behalf of shareholders?  Entrusting the decision to someone who stands to profit may create an opportunity "for people to act like angels," but shouldn't the public wellbeing have an accountable public guardian?  The democratic election process, skewed by campaign donations as it may be, still attempts to bring public values and transparency to bear upon the drawing of the line between liberty and regulation and, therefore, on how much iniquity will be tolerated while waiting for angelic behavior to manifest itself.  


     Most people can relate to someone in the median income range of $50,000 having to make a judgment call for an itemized tax deduction involving a garbage bag filled with used clothing and donated to the local charity.  The bag might contain 30 or so items showing signs of use but still wearable.  A reasonable person might value them at $3 per item or about $100 for the bag.  A person motivated to worry about saving every tax dollar possible for the family might value them at $5 each or $150 for the bag.  A third might take a chance that the overburdened IRS will not audit the return and claim a $300 value. That person, we may say, is exercising the capacity for evil with which we were endowed by our Creator. 

     These judgment calls and their attending temptations to fudge the numbers become more numerous as income and wealth increase. Even if we assume that the poor and the rich yield to evil temptations at the same rate, say 10% of the time, the overall evil increases with income, because the number and scale of opportunities increases; yielding 100 times out of 1000 temptations versus one time out of 10 temptations will do that. It would be easy and correct to visualize that with each doubling of income there would be at least a quadrupling of opportunities to make tax attorney-assisted judgment calls for asset valuations and tax avoidance options (Lowder). Temptations would also abound for clever tax evasions that contribute to the net annual Federal income tax gap of 18 percent of revenue, while finding a place in the positive correlation distribution showing that the tax evasion rate increases with income (Gale). And if there are business income and operational decisions involved, there would be a host of additional evil temptations in the corner-cutting choices to be made in the fiduciary pursuit of profit maximization.  That is why business audits and tax return reviews are needed on a regular basis: to assure that limits on chicanery are not exceeded unreasonably, as determined by the prevailing conceptual framework for acceptable levels of evil in business practices. Ideally, the Internal Revenue Service and the Attorney General offices at the state and federal levels will have funds sufficient to finance these necessary regular audits and reviews.

     By these standards, as highlighted in the belated prosecution of Paul Manafort in 2018-19 (guilty of illegal annual transfers of millions of dollars to the United States from a Russian controlled Cyprus bank from 2006-2012) and his featherlight sentencing  (the sentencing judge commented about his otherwise blameless career), much of American business enterprise enjoys great latitude for free-wheeling and corner-cutting judgment calls, with financial reviews that are often a wink and a nod (Foer). Led by Republican policy negotiation efforts, aggressive budget cuts for the Internal Revenue Service from 2010 on have led to reduction in staff size by a third, and the facilitation of evil with 675,000 fewer audits in 2017 than in 2010 and scant time to do thorough audits when they are able to be done at all (Kiel).   (2)

     The financial manipulations of Paul Manafort, Michael Cohen, and Deutsche Bank have disclosed a tiny tip of an iceberg of secretive and lightly audited financial transactions by the rich and powerful. A larger area of that iceberg had already become visible in the sanctions imposed following revelations contained in the "Panama Papers" (Wikipedia); more recently, there have been the penalties imposed on the Israeli bank Hapoalim (Kostyak). It is likely that exceedingly few private businesses firms would escape the need for correction of tax forms or modification of select business practices if subjected to a thorough investigation by a well-funded special prosecutor having the full cooperation of the firm's Chief Financial Officer. If lack of regulation creates opportunities for people to act like angels, a good many of them are passing up those opportunities.


     The above examples all suggest that along with the inalienable right to liberty, humans were endowed by their Creator with a considerable capacity for evil, especially in marketplace and financial transactions.  Governmental regulation or intervention can help to contain various evils if properly administered, and proper administration will not be achieved without (1) the public scrutiny that helps to identify instances of regulatory capture and other abuses that curtail effectiveness and (2) the necessary course corrections produced by court rulings that result from legal challenges.
 
     Governmental regulations are often criticized for being too lengthy and complex. It has been noted, however, that the Amazon terms and conditions are lengthy and detailed enough that reading them aloud would take about nine hours and still not allow much in the way of informed consent to protect privacy ("How Silicon Valley Puts the 'Con' In Consent"). If a document regulating conditions of use primarily by individuals requires that degree of detail, how much more is required to achieve effectiveness by a government regulation or tax code?  Each regulation or tax provision will immediately be subjected to word by word scrutiny by highly paid teams of lawyers and accountants to discover interpretive opportunities for court challenges, rule avoidance, and. if tempting enough, clever evasion that eludes lax enforcement. 

     The lure of such temptations and the folly of self-regulation in general were revealed yet again when the public learned that the Federal Aviation Administration allowed Boeing to "self-certify" that the automated flight system of the 737 Max met safety requirements (Wise). Any well-run republic needs enforceable, democratically devised rules and regulations and "effective governmental organizations staffed by talented, dedicated public servants" (Volcker 2) This is not the situation now (Levitz; Khardori). And it is getting worse as the current administration is on a "deregulatory crusade" to carry out a "deconstruction of the administrative state" that is attempting to reverse decades of improvements for the environment, workers' rights, and public health (Atkin). (3)

          These anti-regulation tactics do not only circumvent the necessary detailed confrontation with the trade-off costs of potential evil consequences from unchecked marketplace activity. They also imply an affirmative answer to the biblical question in Romans 6:1: "Shall we continue in sin, that grace may abound?" Believers will know that the supply of grace is limitless. But while libertarians wait for an outburst of angelic behavior in lieu of effective regulatory policy, those suffering from consequences judged to be abounding evil will pray for a reduction on the demand side of the equation such that the quantity of needed divine grace would be less proximate to infinity.   

Atkin, Emily.  "Trump Is Undoing Much More Than Obama's Legacy."  The New Republic, December 17, 2018.

Baker's Evangelical Dictionary of Biblical Theology.  Accessed at
  www.biblestudytools.com

Barstow, David, et. al.  "Trump engaged in Suspect Tax Schemes as He Reaped Riches From His Father."  The New York Times, October 2, 2018.

Blum, Deborah.  The Poison Squad: One Chemist's Single-Minded Crusade for Food Safety at the Turn of the Twentieth Century.  New York: Penguin Press, 2018.

Buchanan, James M. "Madison's Angels."  The Washington Times, July 5, 2002.  Accessed: www.cato.org 

Cunningham, Aimee.  "Tainted supplements flood the market."  Science News, November 10, 2018.
 
Fischetti, Mark. "Silencing Science: A tracker reveals more than 300 government attempts to suppress knowledge."  Scientific American, May, 2019.

Foer, Franklin.  "We're Losing the War on Corruption."  The Atlantic, March 13, 2019.

Gale, William, et. al.  "How big is the problem of tax evasion." www.brookings.edu  April 9, 2019.

"How Silicon Valley Puts the 'Con' In Consent."  The New York Times, February 2, 2019.

Johnston, David Cay.  The Making of Donald Trump.  Brooklyn: Melville House Publishing, 2017.

Kiel, Paul.  "The Golden Age of Rich People Not Paying Their Taxes."
 Accessed at www.theatlantic.com December 11, 2018.

Khardori, Ankush. "There's Never Been a Better Time to Be a White-Collar Criminal." New Republic, July 23, 2020.
https://newrepublic.com/authors/ankush-khardori

Kostyak, Ben. "Israeli Bank Hit with Massive Penalty for Tax Evasion." Whistleblower News Network.
https://whistleblowersblog.org/2020/05/articles/
whistleblower-news/i
sraeli-bank-hit-with-massive-penalty-for-tax-evasion/

Leary, Mark.  "The Root of All Evil? One unifying factor may underlie several harmful personality traits."  Psychology Today, March/April, 2020.

Levitz, Eric.  "Boeing Crashes Highlight the High Costs of Cheap Government." www.nymag.com March 31, 2019.

Lowder, J. Bryon.  "The Double Irish and the Dutch Sandwich: The Explainer's field guide to exotic tax dodges."  www.slate.com  April 15, 2011.

MacDougall, Ian.  "Trump's Dark Deregulation."  Accessed www.propublica.org  Dec. 19, 2017.

Mufson, Steven, et. al.  "Citing an economic emergency, Trump directs agencies across government to waive federal regulations."  Washington Post, June 5, 2020.

Protess, Ben, et. al.  "Trump Administration Spares Corporate Wrongdoers Billions in Penalties." Accessed www.nytimes.com  November 3, 2018.

The Sharon Statement accessed at www.heritage.org

Sum, Rhea.  "A Wake-Up Call on Water Quality."  National Geographic, March, 2019.

Trahant, Mark.  "Our World, But Not Our World View."  National Geographic, December, 2018.

Unger, Craig.  House of Trump, House of Putin: The Untold Story of Donald Trump and the Russian Mafia.  New York: Dutton, 2018.

Volcker, Paul A.  Keeping at It: The Quest for Sound Money and Good Government.  New York: Public Affairs, 2018.

West. Thomas G., et. al.  "The Progressive Movement and the Transformation of American Politics."  First Principles Series (No. 12) The Heritage Foundation, July 18, 2007.

Wikipedia. "Panama Papers."
https://en.wikipedia.org/wiki/Panama_Papers

Wise, Jeff.  "When the Rules Disappear: How the American fervor for deregulation contributed to the 737 Max crashes."  www.slate.com  March 21, 2019.   



    Roland F. Moy earned the Ph.D. in political science from The Ohio State University.  After teaching for 30 years, primarily in the field of international studies, he retired from Appalachian State University in 1998.

     A life-long singer, he continues this family tradition with quartet and chorus singing, now within the confines of COVID-19 limitations.  He was active over a 38-year period with the local Arts Council, organizing and producing musical shows to raise funds for music scholarships, and producing 15 annual summer community chorus events.

     Since joining the Torch Club in Boone, NC in 2007, Moy has developed several papers which apply a core political science concern about abuse of power to the related field of economics at the political-economy nexus.  This paper continues this line of inquiry.  It was delivered at the High Country Torch Club on May 13, 2019.

     He may be reached at moyrf@appstate.edu.



(1)  Hebrew Bible words that are translated "evil" have meanings denoting moral lapses, dishonesty in trade and business practices, usury, and partiality in judgment.  There are also words used as antonyms for the personal attributes of faithfulness and honesty, and for the general conditions of proper administration, rightness, and justice. The New Testament Greek has words for evil denoting violations of social norms, lawlessness, and what is harmful, as well words reminding us about the general evil nature of human beings.  The warnings by Christian authors about evil behavior can be a guide to observational evaluation and do not, therefore, require a formal belief in Original Sin. The biblical authors did not limit their understanding of evil primarily to actions and policies of government, but also found them in all aspects of human life.

(2)  The multi-generational Trump real estate empire in New York City and elsewhere has long been a beneficiary of lax tax enforcement.  Staff of The New York Times spent months reviewing more than 100,000 pages of evidence that included (1) documents from public sources including "mortgages and deeds, probate records, financial disclosure reports, regulatory records and civil court files;" (2) confidential records including "bank statements, financial audits, accounting ledgers, cash disbursement reports, invoices and cancelled checks;" and (3) more than 200 tax returns from Fred Trump (Barstow). This examination revealed the use of "sham corporations to disguise millions of dollars in gifts" to Fred's children, the taking of "improper tax deductions worth millions more," and sharply reducing tax obligations by using a "strategy to undervalue (Fred's) real estate holdings by hundreds of millions of dollars," all of which "met with little resistance from the Internal Revenue Service" and is now beyond rectification because of the statute of limitations (Barstow). Prosecution would still be an option for the financial practices explored in two book length examinations and other recent reporting surrounding subpoenas issued for Deutsche Bank records. (Johnston, Unger).

(3)  Much of this crusade will be done without legislation or the usual opportunity for public comment, and it may accelerate as COVID-19 provides an excuse for emergency action. (Mufson). In addition to the appointment of agency heads who appear to be opposed to the functions of their agency (among others, consider Rick Perry as Secretary of Energy), the strategies in use are (1) "The Data Dump" that imperils data collection needed for policy making (see also Fischetti); (2) "The Enforcement Strike" which reduces the numbers and extent of enforcement actions; (3) "The Budget Squeeze" which caps or reduces operational funding; (4) "The Slowdown" of postponed action and enforcement; and (5) "The Expanding Exemptions" that result from enlarged interpretations of who or what is exempt from regulation (MacDougall). And a comparison of the first 20 months of the Trump administration with the final 20 months of the Obama administration shows a "sharp decline in financial penalties against banks and big companies accused of malfeasance" (Protess).