The real scandal in Virginia (and everywhere else)

Published 10:09 am Wednesday, February 5, 2014

“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
Warren Buffett

Around 380 B.C., Plato, in “The Republic,” his great work of political philosophy, gave us this simple insight: “Any city, however small, is in fact divided into two, one the city of the poor, the other of the rich; these are at war with one another; and in either there are many smaller divisions, and you would be altogether beside the mark if you treated them all as a single State.”

In 1776, Adam Smith, in “The Wealth of Nations,” the highly revered founding treatise on free market economics, put it this way: “All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind… It cannot be very difficult to determine who have been the contrivers of this whole mercantile system; not the consumers, we may believe, whose interest has been entirely neglected; but the producers, whose interest… has been most peculiarly attended to.”

This peculiar attention has been glorified in our time as supply-side, or trickle-down economics, and has been bi-partisan policy, despite occasional Democratic rhetoric to the contrary, for well over 30 years. It started in the 70s; was enshrined by Reagan in the 80s; and has been dutifully continued by all presidents, including Clinton and Obama, ever since. The results speak for themselves: stagnant wages, high unemployment, booms and busts, and ever-increasing profits for the “masters of mankind,” resulting in the most extreme inequality since before the Great Depression.

Here in Virginia, the governor’s Opportunity Fund, is a nice example of this bi-partisan policy. The fund is a multimillion-dollar corporate handout, doled out at the sole discretion of the Governor. It was set up by Democratic Governor Douglas Wilder in 1992. In 2009, Democratic gubernatorial candidate Creigh Deeds used Republican candidate Bob McDonnell’s previous votes to reduce the fund as one of his main talking points against McDonnell. Both candidates campaigned to double the fund to $20 million. (Without national legislation to prevent it, states and localities are admittedly in a tough position. Pay subsidies or another state or locality will. This coercion creates a race to the bottom that benefits big business at an ever-increasing expense to the public.)

McDonnell won the election and, just as he said he would, used the Opportunity Fund to distribute millions to big business, along with signing legislation for tens of millions in other subsidies, while simultaneously cutting funds for vital needs, such as pensions, education, public safety and healthcare. A New York Times analysis in 2012 found that Virginia “spends at least $1.29 billion per year on incentive programs.” So far so good. But then, in March of last year, a scandal erupted.

It turns out that some of the governor’s political favors might have been in exchange for gifts. Oh no! Star Scientific CEO Jonnie R. Williams Sr., at the request of the financially troubled governor and his wife, lavished the couple with gifts and loans, totaling more than $165,000, in, allegedly, expectation of receiving state promotion and grants for his struggling business. Some of the gifts were “a $15,000 New York shopping trip for the first lady, $25,000 in cash wedding gifts plus air tickets to a bachelorette party for her daughters in Savannah, Ga., and $7,500 in golf outings for the former governor and his sons at one of Richmond’s top country clubs.” (Is this the fiscal conservatism the governor was always talking about? Or perhaps this is the “entitlement  society” I’ve heard so much of?)

The couple has now been federally indicted and are facing the possibility of significant jail time. But what exactly did they do wrong? Corporate handouts are great. We encourage and celebrate this. Receiving extravagant gifts is fine too. As one of McDonnell’s lawyers correctly said, it’s “routine political conduct.” You’re just not supposed to give the handout, or favorable policy, in exchange for the gifts. That just won’t do. Both are fine, they just must be kept separate.

That’s rather insane, but that’s where we are right now. The ruling class is expected to look out for each other, but it’s supposed to be general solidarity, not specific favors. Perhaps it’s time to not only oppose specific bribes, but to oppose the systemic bribe that is currently called trickle-down economics, but is nothing more than the same old class warfare recognized by Plato nearly 2,400 years ago.

STEPHEN WARREN is a resident of Waverly and can be contacted at