San Bernardino, California Private Enterprise Zone - Follow Up

Detroit is in the news again, and those poor retired folks just took one on the chin, almost certainly getting only $0.16 on the dollar for their “constitutionally guaranteed” pensions.  
 
 
With that being the case, I wanted to revisit a post from awhile back, about an alternative idea to the broken “tax-the-productive” revenue scheme of the bankrupt cities across America.
 
Recall, that Cities raise revenues from taxes on businesses, property, and sales taxes from consumption.  This is in essence a taking from the productive, for redistribution to the government or its favorite groups, whether public union members, or their dependent constituent classes who receive public benefits, welfare, housing subsistence, etc., all of which creates nothing, produces nothing of value, and instead is strictly a user of other’s resources that have been taken by force or the threat of force.  This is not an essay about limited government, or government in general, but is instead a realization that government is here to stay, for the foreseeable future, and that it is best that we realign the incentive structures if we hope to have any chance of normalcy for our future generations.
 
So, this is really about a vision of what should be, based on where we are right now, with a blueprint of exactly how to do it, and why it would work, under the current system, using the current rules, provided there was political courage to implement it.  I can foresee no legal, moral, or other practical impediment standing in the way to at least giving this plan a try.  Maybe I am wrong, and I missed a major point, or failed to consider something which proves fatal from the outset.  Fine, then point it out, and off I go to the drawing board to rethink this whole concept.
 
But for now, I want to revisit it, and try to open up the dialog again, now that current events have brought once again the concept of government ineptness, corruption, lying and deceit to the forefront, all of which proves beyond a doubt that the current system in broken in dire need of total overhaul.  What we need are not band aids anymore.  We need structural reform.  We need new ideas, concepts, radical change from the status quo, but we need to placate all of the piglets at the trough.  Without addressing the stake holders in the status quo, nothing will get fixed.  So, here we go, let’s dig in.
 
 The original post was here:
 
 
I read through all of the comments, noted the many gracious compliments, and some not so gracious ad hominem attacks.  The primary reason I posted the whole idea, was mostly because I firmly believe it to be a radical departure from the conventional thinking; such thinking is precisely what is called for under the circumstances we find ourselves in at the moment (TEOTGKE).  I wanted to elicit all rational, reasonable criticisms that every one of the critical thinkers here could muster, so that I could address the incentive structure of the idea to counteract the anticipated, emotional responses from the electorate as this idea gets rolled out.  Elections are coming in one year, and I would sure like to have this idea vetted by then. My goal is to have this plan, as amended, refined or what not, into the public conversation for San Bernardino in time for the election.  I want to make the election about new ideas, not just which puppet candidate can make the most empty promises.
 
For those that attacked my idea, again, I wanted to express my sincere thanks.  Not only did I want to hear praise at the concept of the PEZ, and for that I am most humbly thankful, I was also  hoping to have all of you brilliant thinkers attack the idea, too, so that I could refine it and incorporate improvements to address the shortfalls.  I have spent literally the better part of a year trying to coalesce my thoughts into a cogent blueprint to address the immediate problem that is San Bernardino governance.  
 
Someone on the past thread suggested criticized me for suggesting that the public officials were corrupt.  This is incorrect, and demonstrates an emotional response from someone who dislikes me personally, as opposed to someone who has found a flaw with my idea.  Nothing personal, but I care not what some anonymous poster thinks of me.  Quite frankly, even if I knew the names of the attackers I would still care not one bit.  Still, I want to put that silly argument to rest.
 
Here is sample demonstrating, beyond dispute, the reality of the corruption problem in San Bernardino, all of which information is readily available to anyone with an internet connection, a browser, and rudimentary intelligence.  Here is the recent stuff:
 
 
 
 
 
Here is more corruption, from pending criminal cases:
 
 
 
 
 
And, the corruption of public officials is not limited to San Bernardino City, but is a feature in and among politics of city and county governance.  In short, corruption is rampant, pervasive, and impossible to stamp out under the current system because the current incentive structure is hopelessly flawed:
 
 
 
 
Corruption in Bell, California:
 
 
 
 
 
 
 
 
I am not the only one who seems to have taken an interest in the problem, and tried to offer solutions.  Here is an expert’s perspective, from this article here:  
 
 
“David O. Friedrichs , a University of Scranton, Pa., professor who has studied corruption, believes local cultures often provide the structure for corruption -- a sense of that's just the way things operate. Similar problems have surfaced in northeastern Pennsylvania, he said, leading to indictments and convictions of political figures, including former National Football League lineman Greg Skrepenak, who was sentenced recently  to up to 41 months in prison on corruption charges.
 
"People often see the answer as a kind of greed and personal lack of integrity, but that's a one-dimensional answer," said Friedrichs. "When it's this pervasive and persistent, you have to look beyond the motivation factor into the factors that in effect create the whole structure, or the culture, that not only encourages this kind of activity but in many cases make it so ingrained that it almost becomes the natural thing."
 
Friedrichs argued that corruption has been part of American culture from the beginning, and that fear of prosecution obviously has not been an effective deterrent. Greater citizen involvement, including formation of oversight committees on such issues as pay levels, could help, he said, by casting more eyes on the process.
 
"It's a very difficult problem to address," Friedrichs said. "It requires active, independent citizens groups that can provide truly independent oversight."
 
So, with this backdrop, and with the above information fully part of the public’s open and apparent collective knowledge, despite some loathsome poster who had misguidedly tried to malign me with ad hominem attacks, I would once again ask for input on the PEZ concept.  Let us try to collectively refine the ideas into a workable solution. 
 
Let’s address this in the comments below, and I will reply tomorrow morning as part of the dialog.  Anyone who posted before, is welcome to repost their comment from before here again, and I will address each one as soon as I can, hopefully in real time to keep the conversation alive and meaningful.  
 
Let’s tighten up this idea.  I will try to get it in front of some people that matter, and who knows?
 
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40 Comments

AlienEyes's picture

First

FIRST  smiley

JY896's picture

Just what I was looking for!

A CaliLaw post to round out the day.

My main concerns were regarding:

- the potential conflict with State and Federal laws that would have to be addressed/waived at those respective levels (which seems a daunting task)

- if PEZ is a success, and proves to be a model that threatens the 'established paradigm' of governance, it will be snuffed out by the existing 'model'. The question is, would they ever allow the seed to even germinate.

All that said, your idea of introducing such an experiment in locales where government has already, objectively and indisputably failed is perfect targeting. Perhaps Turdites in Detroit and other failing cities could try to find local support for such a platform as well.

Howard Roark's picture

Dark

One reads this (and KDenninger´s articles) and can only say: woooww it´s that bad?!

Yep. 

Check ZHedge vid on Europe´s future (by punk economics) and it´s full circle. Damn!

Keep strong,

HR

boatman's picture

when u do not have to make a 'real' profit

to stay in business [the govmint] then u will be corrupt.

until we have a true participatory electorate and a process that not depend on raising BIG amounts of donated money..............we will have poor to corrupt government............but with a very few notable exceptions.

08Gold-Wing's picture

So Cal

Oh how my heart aches, grew up in a little town, just south of LA.  Use to be called the ALL-American town. Wife and I left there around, 2000. We took a cross country motorcycle ride, in 2011 to see our home towns. All I can say is what have we done !!??  What have we let happen to OUR country? What Cal law, talks about is true ! We could not believe our eyes, bars on windows, trash, towns in decline.Roads with giant pot holes So Sad,  Often times we could not read the advertisement signs along the road, because we did't speak the language. God help us,

Prepare, 

  Wing

achmachat's picture

mysteries of the world

I just can't believe that Gary Gensler and Bart Chilton are not seriously scared for their lives.

proformatrillionaire's picture

Cal Lawyer

Thank you so much for the information that you provide to this site. Your posts give me a perspective of what is going on in other parts of the country and what I can expect in my own backyard down the road. I look forward to your posts every week.

sierra skier's picture

Pension Irresponsibility

We can't be surprised at the way our leaders have failed us. While we have spent our lives working away in an attempt to provide for a comfortable retirement by paying into SS, medi-care, pensions. 401Ks, IRAs and savings our leaders have been busy pulling the carpet out from under our plans.

They have been steeling the funds, short funding and spending our retirement and our children's futures to buy votes from the do nothing entitlement crowd. They have failed us miserably.

Detroit is more than likely just a starting example of what is to come on a wide spread basis countrywide.

HappyNow's picture

Since you asked for

Since you asked for it....

I've read through your proposal and I like how you're thinking.   What follows is some critique that is meant in the spirit of making it better!

-------------------------------------------------------------------------------------

What you propose is very much a starting over.

It seems like within the PEZ the enterprise is also the state.  A dictatorship if you will. With the allowance that citizens may leave to rejoin the rest of the USA without the hassle of immigration.   What if they are in prison or otherwise encumbered (eg fines or debts owing) within the PEZ?

On the plus side the design is rich with personal and direct accountability both for the state and the enterprise.  On the minus side those persons will be incredibly burdened with decision-making.  As it scales up delegation is likely to increase and  may become problematic (eg corruption).

At some place the PEZ (Director?) will have to work with California or the Federal Gov’t regarding legal/regulatory issues.  Not sure how you will free the PEZ from some level of outside oversight or insurance concerns  (What if a building collapses?  What if there is an oil spill?  What about damages due to plain old earthquakes?)

Some items need addressing such as pollution which can easily extend and affect areas outside the PEZ or leave in the ground nastiness that remains long after the PEZ is moved or reclaimed.

I note that an individual can only own one license at a time.   What prevents my ‘family’ from owning several licenses?   We might then collude over Christmas dinner.

About currency.  It seems the Director has to pay fees in the currency of the land  (US fiat?) and the value of the license depends on valuing the economic output.   So there must be a relationship between the currencies.  Obviously the city would like a favourable one, which would favour the workers as well I assume.   Somehow I can imagine that the currency is highly valued when fees are due the city, and loses value when workers are exchanging.  Perhaps this is why silver or gold are mentioned, although the city might balk given the way those prices are managed.

It sounds like if you can’t find a job that suits you then you can’t stay unless someone else pays your way.  This will by its nature act as a sieve which leaves non-workers outside as a burden on the State while inside the PEZ there will be radically lower unemployment.  Of course that’s a good thing inside the PEZ however not so good for the state.

I can see some problems with being state within a state.   Do the citizens of PEZ renounce their USA citizenship?  If not how do they participate in Federal or State processes (eg election, social security etc).

--------------------------------------------------------------------------------------------------

CALawyer you've done a really good job of laying out an alternative model.   Accomplishing a reinvention of 'the way things are' using a thought out process is far better than a chaotic makeover.

Mantis's picture

Silver breaking out ?

Silver this time :-p

Have just drawn a few lines on the silver spot chart. Looks like silver is successfully breaking out from this steep downtrend. Has to be a positive sign I'd say. Although as we saw when the price broke free from a lower parallel last year, doesn't mean the downtrend is definately over.

http://afbitcoins.wordpress.com/2013/10/31/silver-breakout/

Gold Dog's picture

Silver?

It appears that they are playing right into our hands!

I have been quite busy of late and wonder if Doc ever hit us with a special?

Your friend,

Dog

The Doc's picture

@Gold Dog : Turd is

@Gold Dog : Turd is announcing the sale in today's post, but here's a preview of a few of the sale items:
 

90 Sale 2-Recovered

Sunshine Mint Rounds(1)  eagles sale 2

-Doc

tyberious's picture

Mass Methane Release Accelerating

Mass methane release appears to be picking up speed by the day in the Arctic as well as countless other locations around the globe.

Dane Wigington
geoengineeringwatch.org

The atmospheric methane graphic below, released yesterday, should be a stark wake up call for any that understand the ramifications.

While CNN shows us 20 minutes at a time of the JonBenét Ramsey murder saga from seventeen years ago, which all the networks have done in recent days, globally game changing events are unfolding at blinding speed with not so much as a word from the media.

The Geoengineers are going for broke in their ever more destructive attempt to hide converging climate catastrophes while making the entire situation exponentially worse in the process. Geoengineering is ripping apart the web of life on our planet. The highly toxic fallout from the spraying is literally poisoning all that lives.

“Epic” methane release in the Laptev Sea and many other areas are cases in point. Even the recent quake off the coast of Fukushima appears to have triggered significant methane release in that region. Main stream media is doing their part to obscure such dire truths from the public till the last possible moment. Unfortunately, a huge percentage of the population is all to willing to ram their heads into the sand and gulp down whatever the corporate media machine feeds them.

In the meantime, skies around the globe are being covered with the toxic brew being spewed out by the geoengineering spray jets. Blocking out the sun is, after all, the expressed goal of the geoengineers and their many patents. Though all the spraying is indeed blotting out the sun and creating a temporary toxic cooling effect in some places, it is also creating unprecedented droughts in regions like the US west, Australia, Africa, etc, and at times catastrophic flooding in other regions. It seems that the climate engineers need only to whip up a few artificially nucleated snow storms from their massive continent covering toxic clouds to convince most that all is well. The unquantifiable damage done by the ongoing global geoengineering to the climate and life on earth goes completely unnoticed by most and certainly completely unreported by main stream media.

http://www.geoengineeringwatch.org/engineered-snow-storms-begin-again/

Global “cooling”? .

Unprecedented Arctic Warming: Average Summer Temperatures in Last 100 Years May Be Warmest in 120,000 Years
http://www.sciencedaily.com/releases/2013/10/131024102243.htm

Monday, October 28, 2013

Methane over Arctic Ocean is increasing

 http://3.bp.blogspot.com/-nUvueJd_FBA/Um8tkvcojII/AAAAAAAALvU/pI9DToKCHo4/s1600/Oct-26-27-2013.jpg

[ click on image to enlarge ]

Above image shows the Northern Hemisphere on October 26 – 27, 2013, a period of just over one day. Methane readings of 1950 ppb and higher show up in yellow. Peak reading on October 27, 2013, was 2369 ppb.

The image below, created by Harold Hensel with methanetracker, shows methane over the Arctic Ocean in three ranges, with the highest readings (1950 ppb and higher) in red.

 http://1.bp.blogspot.com/-AboUPWIU-WU/Um9DBWil3SI/AAAAAAAALvk/Vffbsoi0mIk/s1600/Oct-27-2013.jpg

[ click on image to enlarge ]

Harold adds: “Methane increased again in the Arctic Circle yesterday, 10/27/2013. So what were the headlines in the news? It wasn’t this which is more important than anything the media has to report. This is surreal to me.” - at Facebook

Related

- The Unfolding Methane Catastrophe
http://arctic-news.blogspot.com/2013/10/unfolding-methane-catastrophe.html

- Methane hydrates
http://methane-hydrates.blogspot.com/2013/04/methane-hydrates.html

- Myths about methane hydrates
http://methane-hydrates.blogspot.com/p/myths.html

- High Methane Readings continue over Depth of Arctic Ocean
http://arctic-news.blogspot.com/2013/10/high-methane-readings-continue-over-depth-of-arctic-ocean.html

- Abrupt Climate Change
http://arctic-news.blogspot.com/2013/10/abrupt-climate-change.html

- Just do NOT tell them the monster exists
http://arctic-news.blogspot.com/2013/10/just-do-not-tell-them-the-monster-exists.html

MORE>>

- See more at: http://www.zengardner.com/mass-methane-release-accelerating/#sthash.alAwBNyk.dpuf

Wizard's picture

Interview Touches on a lot of subjects

I found this to be one of the better interviews I have seen lately. Not sure if it was already posted. Just wanted to share it.

Jim Sinclair on Greg Hunter

W

valvend's picture

An Ideal of how to introduce a new paradigm like PEZ

I saw an interesting article on London Real on youtube.com with Max Keiser discussing the idea of Crowdfunding.  Could this perhaps be a source of funds to help get the PEZ idea off the ground?

Mr. Fix's picture

California lawyer, a lot of thought went into this.

Unfortunately, I was not able to read your post during the summer, so I took the time to read it this morning, and I like it, it's the kind of place that I would like to work, and the kind of economy that I would thrive in. It's

here are some of my concerns:

I think you placed more faith in the 10th amendment than it deserves at this point in time. Unless you can address the issue of sovereignty within the continental United States, with more than just 10th amendment protection, it is not likely that the federal government will simply leave this island of free enterprise alone to thrive within its borders, in fact, our current government would probably nuke it  whether it was inside or outside our borders, since no  example of free enterprise can be allowed to exist to show the rest of the world what is possible.

It is entirely possible that your free enterprise zone would be amongst the only places in America where immigration laws were strictly enforced, minimum wage laws, the EPA would have a field day if someone just spit on the ground, in fact, they would even pursue someone for environmental damage if they simply took out the garbage. If this free enterprise on was turned into agricultural land, according to your rules, illicit drugs could be grown freely, and the profit would be enormous this would not be allowed to stand from a federal perspective.

No mention of Obama care? (I'm only kidding, it's too obvious), but you get the point, I'm going under the premise that you actually want to try to create one of these, but you are well within the borders of the Communist empire of California, and Jerry Brown would not approve.

I have no doubts that you would not be able to get the local residents to approve such a plan, since their system has already collapsed, and you would be providing the only tangible hope for an economy that could thrive in the future.

There are some very powerful forces that would be allied against your efforts, they are well armed, and are not interested in the rule  law, and most certainly not interested in free enterprise. 

I think the concept of your free enterprise zone has tremendous potential, if it was ever allowed to be established, in a society that would allow it to exist.

If the federal government, state governments, were ever to collapse, and lose the ability to enforce their hold on power, then your plan could be used as the founding documents  in a new democracy,  or at least a blueprint on how to run a society free of corruption.

These are just my initial reactions, I've got a few chores to take care of today, let me think about it,

but without addressing these primary concerns, I feel it is a nonstarter, at least within our borders.

Right now, it has huge potential elsewhere,

and since I our current system is in a state of collapse, although I know we disagree on the time frame,

at some point  in the near or distant future, your plan needs to be adopted, and given a serious try.

I have no doubt that the results would be spectacular! 

tyberious's picture

PLAYING GOD: Intel Creates

PLAYING GOD: Intel Creates Cyborg Mind Control Chip – And YOU WILL ASK FOR IT

by Sharon Gaudin, Computer World:

By the year 2020, you won’t need a keyboard and mouse to control your computer, say Intel researchers. Instead, users will open documents and surf the web using nothing more than their brain waves.

Scientists at Intel’s research lab in Pittsburgh are working to find ways to read and harness human brain waves so they can be used to operate computers, television sets and cell phones. The brain waves would be harnessed with Intel-developed sensors implanted in people’s brains.

The scientists say the plan is not a scene from a sci-fi movie, Big Brother won’t be planting chips in your brain against your will. Researchers expect that consumers will want the freedom they will gain by using the implant.

Read More @ ComputerWorld.uk

tyberious's picture

A Chip In The Head: Brain

A Chip In The Head: Brain Implants Will Be Connecting People To The Internet By The Year 2020

by Michael Snyder, End of the American Dream:

Would you like to surf the Internet, make a phone call or send a text message using only your brain? Would you like to “download” the content of a 500 page book into your memory in less than a second? Would you like to have extremely advanced nanobots constantly crawling around in your body monitoring it for disease? Would you like to be able to instantly access the collective knowledge base of humanity wherever you are? All of that may sound like science fiction, but these are technologies that some of the most powerful high tech firms in the world actually believe are achievable by the year 2020. However, with all of the potential “benefits” that such technology could bring, there is also the potential for great tyranny. Just think about it. What do you think that the governments of the world could do if almost everyone had a mind reading brain implant that was connected to the Internet? Could those implants be used to control and manipulate us? Those are frightening things to consider.

Read More @ EndoftheAmericanDream.com

California Lawyer's picture

Comments to original thread

Here is my little executive summary from the comments of August 9, 2013:
 
“Remember, my solution is completely spending neutral.  It does not require curtailing of benefits to the downtrodden.  It does not allow for the race-baiting grievance industry to criticize the plan.  It allows for an immediate rebuttal of such, because my solution is designed to increase revenue and decrease corruption, something which is noble and not racist, or anything of the sort.  Who could criticize this plan, except for the corrupt office holders and the kleptocratic acolytes receiving the insider govt contracts and sweetheart deals?  Corruption is the problem, as is the spending based on ever increasing taxes.
 
If the tax model is turned on its head, spending is not the least bit affected.  Corruption derails legitimate businesses from wanting to open shop.  Economic freedom, at a small enough level, is all that is required to allow for unlimited economic growth.  
 
Remember, I made a few assumptions in creating this model.  I started with the premise that society will not collapse suddenly.  Instead, I assumed that the fiat scheme will muddle along, gradually causing quality of life to deteriorate marginally, as the problems created by the "tax the productive to finance municipal government operations" model continue to exacerbate.  
 
In simplistic fashion, the current model is unsustainable.  Anyone who believes otherwise, or is too beholden or otherwise dependent upon maintaining the status quo, is part of the problem.  That is true because the unsustainable system is guaranteed to fail.  Who would advocate for such system but those who, in the short term, stand to gain?  See, analyzing the incentives is critical, because only after correctly concluding that those with a vested interested in maintaining the status quo are part of the problem can one then reason to a solution that is workable, and lasting, albeit over the longer term.
 
So, I made some assumptions, which, until refuted, are what I am operating under. 
 
In that regard, there are two choices:
 
(1) Continue with the status quo, while the economy marginally decreases, causing collapse to approach at an ever increasing rate; or
 
(2) Do something different.
 
My solution is to do something different, which exists within the current paradigm, does not require anything radical, and still allows for the normal political process to take place.  In short, it re-aligns the incentives to produce increased revenues, while reducing the corruption and incentives for corruption.  What is not to like?”
 
Here are the comments posted to the original blog post, and my reply immediately after each one:
 
Submitted by tonyw on August 9, 2013 - 12:33am.
Hat Tip! 3
Great post, it would be interesting to see if this idea has been tried anywhere else in recent times.
 
There are a couple of areas where links to the outside world would be required, e.g. sewerage and power, so would have to conform to those rules and charges.
 
>>>>>>>>>> My reply:  sewerage and power are normal functions of commerce in any event, and none of that would change. The connection between the PEZ and the utility services is a private transaction between the PEZ and the various utilities.  For that matter, there could be a rail spur, a pipeline, whatever infrastructure the PEZ owner elects to construct.  Again, that freedom to interact with existing utilities is at the discretion and sound judgment of the owner of the PEZ.  Any improvements, though, belong to the City.
 
 
Submitted by sierra skier on August 9, 2013 - 6:33am.
Hat Tip! 5
Acquired a large debt through Judgment. Through the infinite wisdom and greed of our Town Leaders a development project was OK'ed at our local airport. This is a project of condos, hotel and commercial that would have never penciled out unless it was booked 24/7/365,,,, and that would never happen as Town is not even booked like that.
 
When the FAA stepped in to indicate that this type of development could not proceed on the airport property the town reneged in the agreement and it went to the courts. The final $42 million settlement in favor of the developer came down our Town applied for court protection through bankruptcy but was turned down.
 
Bottom line is Town now has a $42 million debt to be paid off over a project that would have failed. This was through the stupidity of our leaders and their greed. I am sure there wad back pocket money passed around when the agreement was initiated and when the suit was settled.
 
My belief and many others is there was fraud, corruption, greed and stupidity throughout this process.
 
>>>>>>>>>> My comment: I read about that Mammoth Mountain debacle.  This is exactly the point. Corruption and incompetence are two sides of the same coin.  The solution is to realign the incentives.  There should not be a financial incentive to cheat if one is elected or appointed to a government official position.  There should not be a revolving door between public service and private enterprise.  In your town’s case, the developer should have been made to bear all risks, or forego the development.  A simple indemnity clause–which is a routine part of any contract–could have and would have protected your town.  If the developer refused to bear such risk, and refused to proceed with the development, then fine.  Let the risks be linked to the rewards.  No more socialization of losses while the benefits remain in private hands.
 
 
Submitted by El Gordo on August 9, 2013 - 7:38am.
Hat Tip! 2
I'm somewhat of the opinion that federal regulations have intruded upon businesses almost to the point of making a new venture impossible.  How do you build any type of infrastructure without study after study, court hearings, OSHA directives, EPA directives, and the like to say nothing about the oversight by specialized agencies whose job it is to hassle whatever particular business type may be being undertaken.  Just eliminating local taxes and red tape may not be enough - and the corruption now reaches into the highest offices in the land, so I still have my doubts.  Obviously the only solution is the elimination of government intervention, not more government intervention. 
 
>>>>>>>>>> My comment: I agree and disagree.  Federal regulations that have so intruded upon businesses to the point of making a new venture impossible are almost certainly unconstitutional.  It is high time for a showdown between the sovereign entities, that is the states versus the behemoth federal government.  Between the US Constitution’s commerce clause, the dormant commerce clause, and the spending clause, the states have become beholden to federal largesse.  The solution short of outright secession, is for a negotiated waiver.  Another solution is to copy the Native American model.  All of the Native American tribes enjoy sovereignty upon their US government bestowed land.  Why not create the private enterprise zone on Indian land, if the bureaucratic roadblocks prove insurmountable?  Believe the waiver argument is more likely to succeed, and then the parameters of the waiver can strip away all of the useless federal government oversight. As the states and cities become more desperate for revenue, I am convinced that they will in turn begin to embrace any and all solutions that will lead to enhanced tax revenues. The private enterprise zone concept is one that I’m firmly convinced will prove irresistible to the politicians.  So, like any rule, there will be an exception created, the American way!
 
Submitted by JY896 on August 8, 2013 - 10:43pm.
Hat Tip! 4
 
“An obvious challenge -- how would the city live up to its promise of legal protection against encroachment/override from state and federal 'authorities'?”
 
My reply to that exact question from JY896 was this: “The City, through its elected officials, or better yet, from the appointment of a receiver with libertarianist tendencies, versed in Austrian school economic theory, would FIRST seek waivers from the State/Feds as to enforcement of various laws, etc.  
 
This model has been tried and tested.  Look at the public unions that have secured waivers from Obama care?  See?  By enlisting the support of the parasitic SEIU and its dependent classes, with easy decision-making (spending of tax payer funds upon those govt dependent types will not be affected at all from implementation of PEZ's), the issuance of waivers should not be too terribly difficult.  It is a small portion of land, not otherwise economically productive anyway, so the theory is that since it costs nothing to implement, why not give it a try since those sucking from the govt teat will not be affected except from its success?
 
By aligning the incentives properly, those against the proposal can be ridiculed as being racist, etc., using a typical leftist ploy.”
 
 
Submitted by TJeffson on August 9, 2013 - 11:13am.
Hat Tip! 6
 
I haven't read the whole thing yet... but a few things that caught my eye:
 
1. Eminent domain is a violation of property rights.   It should never be used... the city can make a fair offer for the property. 
 
>>>>>>>>>> My comment: eminent domain is specifically provided for in the United States Constitution. If there is a government taking, the government must pay just compensation.  There is a large body of law and jurisprudence that has developed regarding eminent domain.  As such, the PEZ concept merely uses existing property law, including eminent domain as necessary.
 
2. Public unions need to go away.  There should be no public sector unions and no pension plans.   Everyone that works in govt or for the city should be an "at will" employee that pays for their own health insurance and retirement plans.  Also, govt wages should be in the range of private sector wages...the idea of paying a police chief 500k a year is ridiculous.   Govt work is a civil service afterall.  
 
>>>>>>>>>>> My comments: I tend to wholly agree, but abolishing the public unions is not something that even needs to be discussed.  Some may think I have a personal animosity towards public unions. A correct statement would be between the public employers and the public unions who sit at the bargaining table, both of them decide how much money the taxpayer gets to provide.  As such, there is no real voice for the taxpayer at any of these bargaining sessions, and as a result, the politicians promise increased benefits, while the public unions demand increased benefits, and the ultimate conclusion is that increased benefits get paid to the public union members at the expense of the taxpayers.  This model is corrupt and broken. Increasing taxes upon the productive leads to less revenue.  Detroit is an obvious example, cited above, where the promised pension benefits to all these retirees who have rightfully relied on all those promises for all these years, are now rudely facing dire consequences strictly as a result of the unsustainability of the broken “tax-the-productive” model.  The PEZ concept works even with the presence of the public unions, who should EMBRACE the concept because it would potentially provide revenues to support their public benefits. The alternative is 100% guaranteed to be worse for them.
 
3.  The taxation issue... the only reason taxes are so high is because government keeps expanding and has to pay lifetime pensions.   Get rid of the vast majority of govt and you won't need much revenue.   Eliminate public schools as well... let them be privately owned and run.    It wouldn't take much to fund govt at that point.
 
>>>>>>>>>> My comments: this is a noble goal to reduce the size of government.  Unfortunately, attempting to bite off a project of this size is simply unworkable and unlikely to succeed.  The successful model to bring about real reform, is not the radical overnight sudden and dramatic change.  Rather, the successful model is one employed by the left: marginal change, gradually, slowly, with stakeholders creating grass roots momentum.  The civil rights struggle for blacks did not happen overnight.  Nor did womens’ suffragette, nor have any of the recent socialist / progressive changes occurred suddenly.  Libertarians/limited government adherents and fiscal conservatives should adopt the winning playbook, and stop the useless waste of resources trying for radical, overnight change.  Gradual change at the margins is the key, using aligned incentives which benefit all.
 
4.  The PEZ idea seems overly complicated to me.   Seems like it could be open to monopolistic problems as well. 
 
>>>>>>>>> My comments: PEZ is no more complicated than recognizing the alignment of incentives.  There will always be corruption as this is part of human nature. All of the other human failings have to be honestly accounted for in any system, and the best way in my humble opinion to account for potential corruption is to make sure that everything is open and transparent in real time to everyone, and that there is no incentive to cheat.  Stated differently, we need to instill a system where if someone cheats, the penalty so far outweighs the gain, that any cheating is unlikely to occur.  The realignment of incentives takes out all of the opportunity for gain by both the PEZ owner, and by the politicians, who can gain nothing because there are no contracts to award, or permits to be issued, etc.  To quote a favorite line from a 1970s TV show, “we have the technology, we can rebuild [it].”
 
As far as monopolistic problems, the Sherman Act makes it illegal for there to be contract, combination or conspiracy in restraint of trade.  The PEZ auctions take care of this, because the winner of the auction can do what he or she wants inside the zone.  There is no contract, combination or conspiracy at all.  Plus, there is nothing stopping the public entity from creating multiple zones.  If the other business owners dislike the plan, too bad.  Remember, the premise here is that the current “tax-the-productive” model is unsustainable, and something else must take its place, or else the business climate will continue to erode as business owners, consumers and taxpayers rationally relocate to places where the taxes are lower.  The current crop of politicians and corrupt media can spin this all they want, the simple facts are the productive are already leaving the high tax areas.  Without the onslaught of Fiat currency flooding into certain areas, there already would be massive relocations. 
 
 
Submitted by Subotai on August 9, 2013 - 2:23pm.
Hat Tip! 4
 
CA Lawyer, if the problem were solvable, you might be on to something.  The problem is that not enough people are going to stay in a community that is circling the drain and try to fix it, they will just move away.  It has been proven time and time again, once the allure of a place is gone, people with money leave. The allure of many cities used to be proximity - without cars, a 15 mile commute on a horse was a below-average experience.  Cities offered a compressed environment with nearby jobs, public transportation, and city services lacking outside of town.  Today, none of this applies.  People live in cities for social reasons, to stay close to restaurants, entertainment, and the like.  And this is a relatively new development, and minor in the grand scheme of things.  Most affluent people choose to live in suburbs, especially if they have kids.  That is a massive demographic reality that even a good economic model can't fix.  Even if the model could fix it, you're asking entire communities to change their ideology, which simply isn't realistic.  Sure, they should have learned from the fact that their city cratered, but they won't. 
 
Remember when Obama said the right wingers would "cling to their God and their guns"?  Well, the liberals and the suckers who vote for them will cling to their unions and their big government.  Failure will always be explained away, rather than learned from.
 
>>>>>>>>>> My comments: this is defeatist, and does not address the reality of the present situation. There still are plenty of people that live in and around San Bernardino for example, they have real needs, today, taxpayers are still funding what is left of the city government, and there is still private commerce occurring.  While it is true that the corruption, so rampant and pervasive, may be hard to root out and eradicate, the issue is by which method does it seem most appropriate to attempt to fix the problems.  Are we going to try the same old methods which seem to do nothing to fix the problem? Or are we going to approach the problem with new thinking and new solutions?  Affluent people live in areas they deem desirable. There is nothing desirable about living with rampant crime, lack of services, poor schools, lack of choices regarding shopping restaurants entertainment et cetera.  The liberals and the big government types and their union supporters, have two choices really. Either support the status quo which is unsustainable and has proven to be a failure, such as in Detroit, San Bernardino, and other areas already mentioned, or, embrace change and try to fix the problems.  The PEZ offers the left and the right something to embrace from this radical new thinking so that everyone stands to benefit.
 
 
Submitted by Pining 4 the Fjords on August 9, 2013 - 2:37pm.
Hat Tip! 7
 
OK, after a second go-around, this occurred to me:  Let's say you are Mr. Davis and Mr.Lopez, two property owners in San Bernardino who also are on the City Council.  What would keep Mr. Davis and Mr. Lopez from gaming the system so that the criteria set up for the PEZ zone, or the selection process, just happen to fall upon THIER properties?  In other words, the zone selection process is tailor-made for corruption, and insiders giving themselves and their cronies the benefits of unequal tax and zoning benefits, while making everyone else pay the old rates...  not sure if there is a way around this in the real world.
 
>>>>>>>>>> My comments: posted as a reply to the original: Any land selected for the PEZ is land that is taken by eminent domain.  That process exists right now, there is a body of law with respect to the parameters of such, and there are plenty of safeguards, due process, etc.  It is no different now than before, which is why I suggested it.   For example, say someone owns a parcel of land upon which sits a car dealership.  Directly across the street is another car dealer.  The owner of one of the lots finds out that his lot will be taken by eminent domain.  Will this not create a windfall for the car dealer that does not get his land taken?  Sure.  But that is the political process that is in play now, and has been there since the inception of this country.  We cannot change it all overnight.
 
(By the way, that scenario is the premise of one of my all time favorite movies, Used Cars, starring Kurt Russell.  I have it on DVD and watch it from time to time just to laugh out loud.)
 
Let us also focus upon the auction for the PEZ, and the operation of the PEZ.  Remember, the auction is public, and goes to the high bidder, who must renounce any public pension benefits, and is forever forbidden from holding elected office.  If a crony insider is the high bidder, and gets the rights to operate the PEZ, who cares?  The City gets the annual PEZ payment, plus a percentage of PEZ revenues earned beyond the threshold, which is itself subject to being part of the bidding process.
 
So this insider runs the PEZ.  Let's say the insider even closes down a productive business in order to run the PEZ.  I say, who cares?  The PEZ model is a better model than the "tax the productive until they leave" model.  Remember, if the PEZ model is a success, then more PEZ's will proliferate.  What is wrong with that?
 
Even if the PEZ operator closes down a productive business outside the PEZ to operate the PEZ, think of all the other opportunities that will arise within the PEZ?  So what if a bunch of cronies operate it?  That is the exact point.  Move the corruption out of politics.  Let the PEZ operator do what he or she wants to generate revenue for the citizens of the City.  Let the marketplace sort it out.  If the PEZ is useful, it will flourish.  If not, it will perish, and be transferred to the next highest bidder.  
 
Unlike now, if a govt contract to build, say, a waste-water treatment plant, goes over budget, what happens?  Cost overruns, etc., just get added onto the taxpayer's tab.  There is no system of checks or balances to counteract the public official / public union siphoning away of taxpayer funds through the outrageous promises made to the public union members in exchange for their electoral support, all of which bankrupts the taxpayers.
 
Remember too, that if the PEZ succeeds, the City gains revenues that otherwise would not exist.  If the PEZ fails, the City still gains the minimum payment, AND also the next highest bidder steps up as if nothing happened.  All works of improvement belong to the City.  To the extent that the PEZ generates revenues, the City earns a percentage of that, including on wages paid.
 
Even if it is corrupt, and stuffed to the gills with corruption, the City still benefits.  It is a win all around.  Those that are dependent upon the govt teat will like the plan.  As you say, Pining, even if this plan attracts the corrupt, cronies, they too will like the plan if they sense value.  And why would they not want to take part?  Again, since that is part of the system today, why cannot we use that driving force in a good way, and turn the corruption into a revenue creation scheme that comes NOT at the expense of the taxpayers?
 
This argument is exactly the same as legalizing drugs.  Those who view drug usage and its sale, transport, etc., as transactions upon which to levy taxes, complain bitterly that the state is losing revenue by engaging in eradication rather than allowing regulated use.  Those that oppose legalization do so for non-economic reasons.  These two camps will never agree, as it is a philosophical disagreement rather than a reasoned, economic one. Fine.  Let's just agree to disagree.
 
The benefits, by aligning the incentives properly, and rewarding productive behavior, outweigh all negatives.  
 
Thank you for the question.
 
 
Submitted by Spartacus Rex on August 9, 2013 - 11:56pm.
Hat Tip! 0
 
willing to call out Bull Sh*t! ALL of It! In an attempt to be fair, after the initial reading in the wee hours immediately after posting, I thought perhaps I was just being a hard ass and experiencing a knee jerk reaction, so I re-read same in its entirety not merely once or twice, but three times just to make sure as to weigh and consider what was being presented in a fair and objective light.  Still came to the same conclusion, total failure. One might expect such a naive / un-informed hypothesis from those lacking the benefit of a "higher education", but for crying out loud C.L., your "Pez" proposal leads one to doubt the extent of your knowledge of California's own Constitution, much less Government Code, and for someone presumably hold a J.D. that is totally inexcusable. Oh and btw, maybe I am just a freak of nature, because I believe there is but One Creator, One Planet, ergo One Race, the Human Race, with all of its natural ethnic diversities, however you do not not even grasp that it is not an issue of ethnicity, but rather one of social-economic divides, as those at the lower rungs of economic class, (more likely than not) cannot afford to send their children to private schools and thus must suffer the consequences of submitting their progeny to the cesspool of socialist public (dis) education system with its Socialist agenda & public teachers unions! If it were truly a matter of lacking "Non hispanci whites" then Mexico City would undoubtedly be Hell On Earth! Right? Seriously C.L. did you proof read and give some serious reflection on your work before you posted it?
 
>>>>>>>>>>>>>> My comments: is there anything worth discussing here?
 
Submitted by Island Guy on August 10, 2013 - 4:15am.
Hat Tip! 5
 
Even after acknowledging the level of corruption, it seems to me that CL's analysis cannot be complete.  Corruption is certainly a huge factor in Detroit's demise, but it cannot be the full picture.  Corruption was legendary in old Chicago and old New York, yet they did not have problems on the scale of those in Detroit.  Also, even after corruption became widespread in the city after Mayor Young was elected, even though all parts of the city were subject to the same corrupt government, the city did not collapse uniformly.  It happened one neighborhood and one school district at a time.   So corruption alone cannot account for the city's problems. As such, I an unsure if eliminating (minimizing?) corruption is the sole solution.  Certainly it will be a good start.  It couldn't hurt, and it  might help. 
 
>>>>>>>>>>>>>>> My comments: corruption is part of the problem.  The biggest issue is the model generating revenue, and under the current system, it is broken horribly beyond repair.  
 
The “tax-the-productive” model is broken.  It is obvious to anyone who is honest.  It really stems from fiat currency, itself a complete sham.  Since fiat currency is worthless of itself, the scam must be perpetrated by force.  Same too for the taxes upon the productive.  The productive want to add their value to the community, but there is a strong disincentive to do so, because whatever productive value is added, some portion is taken by force or threat of force by the taxing authority, leaving the productive to either continue to pay the taxes or to leave for a more favorable tax climate.  If a more fair model were to be implemented, such as the PEZ, then in theory, the productive that viewed doing business inside the zone as a useful endeavor, when in fact do business inside the zone, leading to revenues for the government. Ultimately, the government gets the revenue from the PEZ owner, guaranteed, and also gets to earn a percentage of the additional revenues that are generated within the PEZ.  All of the incentives align such that if the PEZ owner creates an inhospitable business climate, for whatever reason, the peasant owner will not recoup enough revenue to pay the yearly tax.  Thus, the PEZ owner has every incentive to make the business climate inside the zone hospitable to those whom the PEZ owner hopes to have doing business within the zone.
 
Submitted by Swift Boat Vet on August 10, 2013 - 6:03pm.
Hat Tip! 3
 
I would have to re-buy everything I have created, nurtured, reinvested in and built every ten years.   Tough cash flow problem for a year or two before bidding opens? ----- outbid by a cash buyer and lose it all.   No thanks.
 
This opinion is from a guy who has built 2 manufacturing businesses from $1000 cash, a good name and a ton of work.   All made impossible to keep because of our government's policies.  Now you propose to remove many, not all of these boneheaded politician and bureaucrat ideas to make it easier for me, just to turn around and make me rebuy it every decade?  What did I miss?
 
Precisely, what businesses do YOU envision occupying these PEZes?   Maybe it's just that I know manufacturing and it's probably a lost option.
 
>>>>>>>>>>> My comments: fantastic point.  Your point of view is exactly what I was hoping to hear.  Unfortunately for you, it sounds like you would never be a bidder to operate a PEZ.  But, others will.  Here’s why.  The owner of the PEZ is really, a king of a fiefdom.  The king does not build and operate factories, the King creates the environment for factory owners to build and operate their factories.  As a prospective factory owner would approach the PEZ owner with a proposition, useful to you. Instead of you having to incur the capital expenditures to build manufacturing facilities, you entice the PEZ owner to build the facilities for you, with your promise to create products such that the peasant owner earns substantial revenue from your efforts.  Think this is crazy?  Well look at the NFL and all the team owners.  What is their business model?  Right.  The team owners forced the cities to build them massive stadiums, under the threat that the team owner takes its team to a different city, thereby costing the city substantial revenue in the form of ticket sales concessions etc. The big money is not made from the construction of the capital improvement; rather, the big money is made from the viable business entity that uses the capital structure that generates the revenues for the city.  It is a natural partnership, and it works.  Just let government get out of the way, and let private enterprise do its magic.  Want another example: look at the Staples Center in Los Angeles, and the utter transformation that took place in downtown Los Angeles in the span of less than ten years.  Do you think the property owners in the vicinity of the Staples Center are bitter that private enterprise is flourishing in and amongst themselves?  Get out of the old mindset and embrace a changed model.  Other business ventures will work, too, like office buildings, light manufacturing, etc.
 
 
Submitted by El Gordo on August 11, 2013 - 9:03am.
Hat Tip! 4
 
...what would be the basis for trying to resurrect dead cities in the first place?  Just like the ghost towns of the old west, the mining towns, old equipment, and the like, it would seem to me that they have become obsolete and longer serve any productive purpose; becoming financial black holes supplied but never filled by the largess of the productive.  Leave them alone, let them go through their processes, and allow them to seek their own levels without outside interference.  Isn't that what we promote here often enough when we suggest limited government?  Keep just enough money available to demolish the dilapidated structure and return the land  to native grasses.  When the time is right, the right people will show up, clear the property, and start the building again - or the will not.
 
>>>>>>>>>>>> My comments: the basis for trying to resurrect dead cities is because there are plenty of human beings that live there, and they deserve something better than the current broken system.  San Bernardino at one point was a crown jewel, yet it deteriorated under its own corruption and now look at it? Could it be revived? Of course, but not under the current broken model. Should it be razed?  Certainly not.  With proper economic incentives, San Bernardino could once again be a thriving economic area.  Don’t believe me?  Look around, the example from Staples Center and downtown Los Angeles are shining examples.
 
Submitted by Spartacus Rex on August 13, 2013 - 2:42am.
Hat Tip! 0
 
You are entitled to your opinion regardless of how uniformed such is. However any presumably Officer of the Court / Bar Member willing to publicly make unsubstantiated wholesale blanket accusations of corruption against City Officials of San Berdoo, not only risks losing One's License to Practice , but makes oneself liable for Libel, and perhaps even Turd himself as the owner /publisher of this website!!! Simply Brilliant Einstein! You Comprehend NOW Karankawa? Gee, Terrific! Apparently Even Complete Idiots can bag a J.D. these days! Anyone still wondering WHY the Rule of Law is completely breaking down?
>>>>>>>>>> My comments: funny thing, the lack of hat tips, I wonder why . . .  Perhaps one should perhaps try to post from a reason intelligent position rather than spewing such ill-informed tripe.
 
Submitted by Spartacus Rex on September 18, 2013 - 11:32pm.
Hat Tip! 0
So where is that defense of your thesis / "bulletproof rebuttal"?
 
@Spartacus Rex
Submitted by California Lawyer on August 17, 2013 - 2:42pm. C.L. : "As for your other comments, based on the Private Enterprise Zones, I will go back and look over your comments, organize a concise reply, and we can continue that discussion on that page." O.K., I for one am pretty certain that this thread is far enough off of Main Street's radar by now that the risk of any potential embarrassment on your part is extremely minimal at best.  BTW, just curious if in the interim, perhaps you may have had a chance to refresh and/or bone up w/ the Ca. Constitution & Gov't Code?
 
>>>>>>>>> My comments: here it is. Go for it.
Dagney Taggart's picture

CL

Great post. It's so nice to get a hard look at my southern neighbor through a microscope.

I think it's becoming more clear that the EE is destroying countries and people infiltrating their legal system, then destroying/diluting their laws and the meaning of words. We get it back by using their words and laws against them.

84% haircut for Detroit? Ouch.

Urban Roman's picture

CL, about the PEZ idea

... I think that one of the most important aspects of politics/economics in this age is the tension between centralized/authoritarian management, and distributed/local management. And of course, your PEZ is a departure from the notion that an area must be controlled remotely by someone ...

Obviously, the massive corruption which is now showing up is a direct product of this misguided centralization. The centralization trend has been going for some time, and really picked up steam in the second half of the last century. We have seen one story after another in the news ... I just have a feeling that no localized enterprise, or zone, of any sort will be able to survive and thrive, until after the centralized parasites have all disappeared. And I doubt that they will go of their own accord.

If, on the other hand, a PEZ is merely a local unit of a larger hierarchy, then it is likely to only work if that larger hierarchy wishes it to work. E.G., Solyndra -- the cynical view is that the larger hierarchy did not want it to work, and merely wanted to launder some of the public's money over into a campaign war chest. Come to think of it, that actually worked! As Lily Tomlin used to say, no matter how cynical I get, I just can't keep up.

California Lawyer's picture

More Comments

Submitted by HappyNow on October 31, 2013 - 6:12am.
Hat Tip! 1
Since you asked for it....

I've read through your proposal and I like how you're thinking. What follows is some critique that is meant in the spirit of making it better!

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What you propose is very much a starting over.

It seems like within the PEZ the enterprise is also the state. A dictatorship if you will. With the allowance that citizens may leave to rejoin the rest of the USA without the hassle of immigration. What if they are in prison or otherwise encumbered (eg fines or debts owing) within the PEZ?

>>>>>>>>> My comment: the concept of the PEZ is that it is tantamount to a sovereign business zone. The PEZ owner certainly can be viewed as having plenary authority, a dictatorship if you will, but nothing of the sort which can trump the basic constitutional safeguards of due process, etc. The way to properly frame the issue, is that conduct occurring within the PEZ is NOT state action. Therefore, the participants within the PEZ are welcome to create their own relationships on whatever terms they best deem suited for their particular needs. No one has to go into the PEZ, no one has to do business within the PEZ, and in fact the PEZ owner can go out of business if the climate is unwelcoming. Again, the concept is born of freedom, rather than coercion. My whole premise is based on the notion that letting people freely chose what is in their own best interest is a better model for revenue creation than forced, state action with layers of bureaucratic incompetency and corruption. Remember, if the PEZ owner creates a bad climate, there will be insufficient revenue, and the PEZ owner will then have no incentive to keep making payments to the City. Thus, the NEXT highest bidder will take over, just like that. If no one wants to take it over, then the concept of PEZ is a dismal failure. So be it. But, for now, there is NO such thing like it anywhere. Should we reject this solution out of hand, or should we consider it, and try to implement it?

“On the plus side the design is rich with personal and direct accountability both for the state and the enterprise. On the minus side those persons will be incredibly burdened with decision-making. As it scales up delegation is likely to increase and may become problematic (eg corruption).

>>>>>>>>> My comment: yes, there is the requirement of decisionmaking replete with consequences. Great! Is what I say. As decision making scales up, how can it become problematic? The PEZ owner is ultimately responsible. A single, human being. There is no one else to blame, or to take credit. All of the human emotions are right there for the viewing. Again, any corruption within the PEZ is likely to cause businesses and customers inside the PEZ to not want to do business there. This is the ultimate verdict. That is exactly what is happening now, and which is why there must be a new model.

“At some place the PEZ (Director?) will have to work with California or the Federal Gov’t regarding legal/regulatory issues. Not sure how you will free the PEZ from some level of outside oversight or insurance concerns (What if a building collapses? What if there is an oil spill? What about damages due to plain old earthquakes?)

>>>>>>>>> My comments: great points. There is no getting around the fact that there will have to be interaction between the governing sovereigns such as the state of California and the federal government. The idea here is that the city will operate the zones using whatever waivers can be extracted from the various government entities. If creation of the PEZ upon city-owned land proves too cumbersome and burdensome, there are other sovereign lands that these private enterprise zones can be built upon, such as the Native American reservations. This concept is the same as a football team owner telling the city that the football team will move to another city unless the current city build a new stadium. Why can’t that successful model be employed here?

As for your comments regarding insurance building collapses oil spills earthquakes etc., these are all dealt with by existing law already in place. Let’s examine a hypothetical scenario. Let’s say the PEZ owner wants to build a four-story office building to house legal professionals. Rational economic actors such as law firms etc., are not going to want to move there business inside a substandard building, so they would of course demand traditional structures before they would ever agree to sign any sort of leases to rent the space. Similarly, whoever constructs the building would not want to get sued for shoddy construction, death, or injury, and would of course want to build the structure in a safe manner. Owner the building would of course want the structured to last sufficient amount of time and be energy efficient, etc., so all of those design considerations would be used in the decision as to how to best construct the building. Finally, since it would be such a huge capital outlay, that it would be foolish not to ensure such a structure against calamity under a traditional CGL insurance policy. In this regard, no insurance carrier would agree to write a policy for such structure unless it complied with existing safety standards. Thus, the entire project of completing the building is to be done using a traditional methods, but missing the corrupt permitting process endemic to the system. If there is a catastrophic loss, such as an oil spill or something of that nature, and of course the PEZ owner bears responsibility. When in doubt, go back to the original premise: the PEZ owner is ultimately responsible for what goes on within the PEZ. Private risk, private reward.

“Some items need addressing such as pollution which can easily extend and affect areas outside the PEZ or leave in the ground nastiness that remains long after the PEZ is moved or reclaimed.”

>>>>>>>>>>> My comments: the PEZ owner is ultimately responsible for what goes on within the PEZ. Private risk, private reward.

“I note that an individual can only own one license at a time. What prevents my ‘family’ from owning several licenses? We might then collude over Christmas dinner.

>>>>>>>>>>>> My comments: so what? If you fail to generate revenue, you still must pay the minimum tax. If you want to collude, go ahead. You only have a ten year window. Ten years is not eternity.

“About currency. It seems the Director has to pay fees in the currency of the land (US fiat?) and the value of the license depends on valuing the economic output. So there must be a relationship between the currencies. Obviously the city would like a favourable one, which would favour the workers as well I assume. Somehow I can imagine that the currency is highly valued when fees are due the city, and loses value when workers are exchanging. Perhaps this is why silver or gold are mentioned, although the city might balk given the way those prices are managed.

>>>>>>>>>>>> My comments: I like the use of real money. Nothing will change that. Fiat is a problem, it is a corrupt concept. The form of payment of tax to the City by the PEZ owner is subject to negotiation, naturally.

“It sounds like if you can’t find a job that suits you then you can’t stay unless someone else pays your way. This will by its nature act as a sieve which leaves non-workers outside as a burden on the State while inside the PEZ there will be radically lower unemployment. Of course that’s a good thing inside the PEZ however not so good for the state.

>>>>>>>>>> My comments: that is exactly how the system works right now. The productive leave the state (a sovereign), and go to another state (a sovereign), leaving the former sovereign having to pay the bills for the unproductive. This whole charade is just a fiat devaluation scheme on a grand scale. Is it better to be the best horse at the glue factory? Or is it better to create a workable revenue model that encourages economic activity that increases revenue from which the downtrodden can by provided for? My PEZ concept increases revenue, and the unproductive should embrace the concept because it means that the state will still be paying all those government benefits.

“I can see some problems with being state within a state. Do the citizens of PEZ renounce their USA citizenship? If not how do they participate in Federal or State processes (eg election, social security etc).

>>>>>>>>>>> My comments: no one renounces anything. It is a private enterprise zone, not a country.

Submitted by Mr. Fix on October 31, 2013 - 8:45am.
Hat Tip! 2

I think you placed more faith in the 10th amendment than it deserves at this point in time. Unless you can address the issue of sovereignty within the continental United States, with more than just 10th amendment protection, it is not likely that the federal government will simply leave this island of free enterprise alone to thrive within its borders, in fact, our current government would probably nuke it whether it was inside or outside our borders, since no example of free enterprise can be allowed to exist to show the rest of the world what is possible.

>>>>>>>>>>> My comments: waivers are the immediate way to go. If Prez. Obomber can grant waivers from Obummercare, then the feds can grant waivers for operations within the PEZ. What kind of waivers are we talking about anyway? My basic waivers I would like to see are any and all federal wage and hour laws, or employment laws of any kind, and any sort of social engineering type laws of any kind. Safety laws, I like those, but those can be negotiated and dealt with in the enabling legislation for the PEZ itself. The basic premise, is that economic freedom means just that. If someone wants to have a knife throwing show, then let the participants voluntarily agree. If no one does so, then it is not a viable economic model, right?

“It is entirely possible that your free enterprise zone would be amongst the only places in America where immigration laws were strictly enforced, minimum wage laws, the EPA would have a field day if someone just spit on the ground, in fact, they would even pursue someone for environmental damage if they simply took out the garbage. If this free enterprise on was turned into agricultural land, according to your rules, illicit drugs could be grown freely, and the profit would be enormous this would not be allowed to stand from a federal perspective.

>>>>>>>>>>>> My comments: your point here is that the federal sovereign would squelch any sort of reforms. That may be the case indeed. But cannot we at least try to get something up and running? Seeking waivers is not unheard of, and seems to be the way to go barring secession or some sort of 10th amendment challenge on sovereignty grounds.

No mention of Obama care? (I'm only kidding, it's too obvious), but you get the point, I'm going under the premise that you actually want to try to create one of these, but you are well within the borders of the Communist empire of California, and Jerry Brown would not approve.

>>>>>>>>>> My comments: I mention Obombyacare as respects waiver.

“I have no doubts that you would not be able to get the local residents to approve such a plan, since their system has already collapsed, and you would be providing the only tangible hope for an economy that could thrive in the future.

>>>>>>>>>>> My comments: hardly. Less than 1/4 of the populace controls the outcome of any election at all. A grass roots approach, funded with Public Union supporters, a smattering of businesses, and voila! A whole new model is born.

“There are some very powerful forces that would be allied against your efforts, they are well armed, and are not interested in the rule law, and most certainly not interested in free enterprise.

>>>>>>>>>> My comments: I know, I know . . . But, I refuse to surrender and bend my knee. I will keep trying so long as I can.

“I think the concept of your free enterprise zone has tremendous potential, if it was ever allowed to be established, in a society that would allow it to exist.

>>>>>>>>> My comments: I know. I am totally committed to the concept. If just ONE can be created, survive, and thrive, it is a whole new landscape, for sure.

“If the federal government, state governments, were ever to collapse, and lose the ability to enforce their hold on power, then your plan could be used as the founding documents in a new democracy, or at least a blueprint on how to run a society free of corruption.

>>>>>>>>>>> My comments: I knew you would eventually catch on . . .

“These are just my initial reactions, I've got a few chores to take care of today, let me think about it, but without addressing these primary concerns, I feel it is a nonstarter, at least within our borders.

>>>>>>>>>>>>>>>> My comments: I am hoping from the recent bankruptcies, both in San Bernardino Detroit and elsewhere, that this PEZ idea has a chance of taking off.

California Lawyer's picture

@Urban Roman

The whole PEZ concept derives exactly and precisely from the failures of central planning. By definition, central planning does not equal individual freedom. So, to stated very sickly, the issue economically is whether we are free or not? I have no delusions that we operate in a free society. We operate at the whims of our masters who control us. Look at my profession. The lawyers that wrote the rules allowing them to become lawyers, also wrote the rules that made it harder for others from different states to become lawyers in California. This is blatant restraint of trade, since why is it fair that a lawyer in Arizona who may be a great learning Arizona, cannot be a lawyer for a California client in California right across the Colorado River? It’s about protectionism, cronyism, and using the system for one’s benefit at the expense of the others.

While somewhat pessimistic, I do tend to agree with your premise that “no localized enterprise or zone of any sort will be able to survive and thrive until after the centralized parasites have all disappeared.” That was well stated. The reason I created the written document setting forth my thoughts about the PEZ, is because I firmly believe the fiat currency system is disintegrating in front of us, some may argue that it is occurring much more slowly than they anticipated, others not so much, but because the fiat currency system is disintegrating, we can either await the chaos, or plan for an alternative system. I say let’s throw some ideas out there regarding alternative systems, so that we can perhaps choose among the various ideas if and when the collapse occurs, or better yet, before the collapse occurs so that we can avoid the collapse altogether by sensible economic policy. Is any of this a pipe dream? Sure. But since when is thinking creatively a bad thing?

Nana's picture

Statesmen v Politicians

The states must start enforcing their 9th and 10th Amendment rights, to lock the feds back in their chains as the founding fathers had originally intended. With that being said, it will take statesmen to stand up and enforce it.

The states do not need politicians, they need statesmen that will do what is honest, right, moral and constitutional.

The feds are full of politicians as most of them care not about the Constitution, the country or the people. Politicians are a whole different breed, who feeds upon the people for financial gains, power and control and will sell out anyone including their own mother to advance their agenda.

It's time for men to be men and women to be women again. It's time to tell the feds, NO, YOU canNOT.

If the states would simply ignore the feds, then arrest/sue/convict all fed(s) for unconstitutional encroachments they try to enforce in their state that is outside the scope of their 18 enumerated powers.

People seem to have forgotten that they are the ones who gave power to the states that gave power to the feds. The fed cannot exist without the states and the state cannot exist without the people. It's so simple to fix, it's elementary to demand, enforce and take back what belongs to we the people. The fix is simple, the solution will be hard but isn't it worth it?

In proper order:

People- FIRST

State- SECOND

Feds- LAST 

California Lawyer's picture

@ Nana - Great Idea, BUT, Impossible Until Fiat is Destroyed

There are too many members of the Free Shit Army, dependent upon the state, and they will under no circumstances under the current system, act against their own interests in any collective fashion.  The solution you suggest is theoretical.  It is a good solution, but not practical at all, UNTIL the current fiat system collapses or dies, whatever comes first, and assuming no dictatorship arises in the interim.

My suggestion is to propose alternative ideas that diminish power of the elected officials, restore decision-making to local levels, while minimizing corruption, while at the same time empowering regular folks to become disengaged from the fiat system through sound money practices and barter.

At some point, the decision will be made as to the characteristics of the next system.  We can either choose to create one we want, or have it forced upon us.

I would prefer to have some semblance of a system in place, that works and is practical, and once that happens, then the goal is to accelerate the fiat system's demise by encouraging the FSA to take more and more.  Eventually, they will break it and reap what they sow.  In that chaotic time period, we can retake the control from a sound money position.

So, to summarize, I say let's do what we do to prepare, while encouraging the FSA to do what they do.  Eventually, it WILL come to a head, and when it does, the golden rule will apply.

silverstool's picture

Photos of Detroit

Shocking to think that this City had a pension surplus only 10 years ago. Some tragically beautiful photos here;

http://www.flickr.com/photos/treycampbell/sets/72157624911059374/

abguy4's picture

@ silverstool

Thanks

Absolutely shattering

Yet, we apparently have found an excess Trillion dollars a year for the last ten years, to bomb brown people wherever we find 'em.

God Bless amerika

Cleburne61's picture

Why I've never Trusted Jim Sinclair

And I've said so on here many times.

If you don't like silver, you're either ignorant, or a compromised bankster agent.

So, which is he?  

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