November 26, 2011

ProCAP and How Yours Truly Went For An Unexpected Ride on the Government's Pass-The-Buck Merry-Go-Round

Monique Chartier

Two developments yesterday at ProCAP: the Executive Director has been fired suspended, followed in short order by [edit] the firing of the organization's COO and attorney.

On Wednesday, what we knew was that ProCAP vendors were not being paid, personal loans had been made to the director and some staff members, hundreds of thousands of tax dollars were unaccounted for and that the organization's Executive Director and the COO had held a shredding party behind locked doors on Tuesday.

Alarmed in particular by that last item, which appeared to be an attempt to destroy evidence of wrong-doing, and not yet having the benefit of the highly reassuring explanation subsequently provided by ProCAP's COO - "We shred all the time" - I decided to make some calls to the people responsible for funding ProCAP with our tax dollars.

My questions were pretty straight-forward.

1.) In light of the document shredding, what had been done to secure ProCAP's computer hard drives?

2.) What was happening to ProCAP's checking account(s)? Had the signatories been changed so that the questionable expenditures could not continue?

3.) What was being done to protect taxpayer dollars in light of the revelations of questionable expenditures and unpaid vendors?

- I started at Mayor Taveras' office, leaving a message with one of his press people requesting that someone call me about the ProCAP situation. (No one had called me back as of the end of the day Wednesday.)

- Next was a call to the Governor's office, where a press person named Lindsey (sp?) didn't even let me get through all of my questions before saying that she would ask someone who was familiar with the situation to call me.

- Someone from the Governor's office called me back fairly quickly and directed me to the state's Energy Resource office - apparently, the arm of government which is responsible for actually disbursing tax dollars to ProCAP and other organizations.

- When I called the Energy Resource office, I got voice mail and left a message. In short order, a woman from that office called me back and informed me that my questions had to be directed to the Director of Administration.

- On, telephonically, to the office of the Director of Administration, where I spoke to someone named Janice. Janice directed me away from the state and to the city, advising me that I needed to speak to Michael Solomon, President of the Providence City Council and ProCAP's Chairman. (Wheee! It's a good thing this ride has straps!)

- After leaving a message, I received a call in due course from Michael Solomon's Chief of Staff, who cheerfully offered to talk to me off the record. I declined, which is where both the conversation and the ride came to an abrupt halt for now. (Regrettably, I cannot furnish the name of Mr. Solomon's Chief of Staff for this post. I asked for it but he refused to provide it after it became clear that "off the record" would not be a pre-condition to a discussion about the expenditure of tax dollars.)

Now, the answer to my first question came a day later via a Turn to Ten report

Bentley says the U.S. attorney has taken materials from ProCAP's offices, including his computer's hard drive.

... which simultaneously provided the good news that the US Attorney has now taken an interest in the situation. My second question - what's happening with the ProCAP checking accounts? - so far remains unanswered.

The larger point, however, is this. What procedures are in place to protect tax dollars when it becomes clear that financial mismanagement or worse might be occurring at an organization partially or wholly sponsored by tax payers?

Judging from this case, if there are any, they aren't terribly impressive. Rather than reacting with hands-on concern, the various government agencies which funnel tax dollars to such an organization treated the whole thing like a hot potato. So much of government spending is on autopilot. It appears that procedures need to be implemented to disengage the governor (this kind, not that one) so that the flow of tax dollars to a questionable situation can be quickly choked off.

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"the organization's Executive Director and the COO had held a shredding party behind locked doors on Tuesday"

I remember a few of those from the "S&L Crisis" of the early 90's. Then, as now, banks know when the "seizures" are coming. Bankers were warned to "clean out their desks" in anticipation of a coming seizure. I guess it is a standard "security measure"

Posted by: Warrington Faust at November 26, 2011 8:05 PM

I completely agree that the flow of tax dollars to a questionable situation should be able to be quickly choked off. I also agree that the loopholes which choke off the influx of tax dollars to state and federal coffers should likewise be “quickly choked off”

Why do you only look with one eye?

OldTimeLefty

Posted by: OldTimeLefty at November 27, 2011 3:40 PM

"I completely agree that the flow of tax dollars to a questionable situation should be able to be quickly choked off. I also agree that the loopholes which choke off the influx of tax dollars to state and federal coffers should likewise be “quickly choked off”

Why do you only look with one eye?

OldTimeLefty"

OTL, the answer to your query is both simple and obvious. "It was our money before it was theirs". There seems to be a tendency among Liberals to regard that part of our income as a sort of Droit du seigneur favoring the various taxing authorities.

You seem to misunderstand "loopholes". In the main, they were not "oversights", they were "created" with the intention of altering economic behavior. . If you alter your activities to take advantage of a "loophole", that is perfectly legal. It may even be the purpose for which the "loophole" was created. A few examples; the "mortgage deduction" which favors homeowners over renters, the "dependency deduction" which favors parents over non-parents. How about the "accelerated depreciation" for "light trucks" which heavily favored the Cadillac Escalade? It is possible, but rare, that these "loopholes" come about unintentionally.


Posted by: Warrington Faust at November 27, 2011 8:07 PM

Warrington,
When is a tax not a tax; when it's a loophole. The government prints the money and protects the citizenry. The money flows from the general treasury unevenly, some people work hard for little. Some people work little for much. Some people work not at all and inherit fortunes to which they made no particular contribution. The government makes it happen. No government. No money. So, it really wasn't yours before it was ours. We the people consists of rich, poor, middle class and destitute. Without the government you have worthless pieces of paper, so the government can impose taxes, monies to be used for the general welfare. I don't really expect you to understand much of this so I'll try to simplify it greatly. Loopholes are made by a--holes with no social conscience for a--holes who have no social conscience. Try to find yours and you might see what I'm saying here.
OldTimeLefty

Posted by: OldTimeLefty at November 27, 2011 9:13 PM

OTL, there is no doubt that our money is "fiat currency" which depends on the government for acceptance. But, it is not the only alternative, nor was it always so. Remember the "Gold Standard"? There was a time when the government issued currency which was not "fiat currency" and had a value of its own.

Economists define money as a "store of value". If we could not "store the value" in currency, we would find somewhere else, and always have. People "invest" in gold, diamonds, art to "store value". We use currency only because it is convenient.

The government did not invent "money" and we do not owe them any of it. We have managed commerce where the government did not provide money. Just my "two bits" (look up "two bits" from a time when we didn't have currency)

PS, OTL "fiat" is Latin for "let it be" as a command, a better translation might be "make it so". Our currency no longer has backing. It is accepted as "money" by governmental fiat.

Posted by: Warrington Faust at November 27, 2011 10:37 PM

"A loophole is an ambiguity in a system, such as a law or security, which can be used to circumvent or otherwise avoid the intent, implied or explicitly stated, of the system."
Wikipedia

Nothing ambiguous about credits and deductions. They are written into the tax code. I'll keep it simple for you OTL, the real problem is that some want people to keep what they earn and some want people to give what they earn to others. The latter is what's bankrupting the country.

Posted by: Max D at November 28, 2011 1:27 AM

Max D
You assert a belief and think it's a fact. Such hauteur is beyond argument.
OTL

Posted by: OldTimeLefty at November 28, 2011 7:57 AM

Nax D,

"Hauter" is not to be taken lightly. I am mindful of my sister's long recovery from charisma.

Posted by: Warrington Faust at November 28, 2011 8:31 AM

Warrington,
No government, no money. It's inescapable. You are standing on your head trying to ignore this very simple fact.

Regarding storing money, I like Lycurgas' plan. He made cheap iron Sparta's only currency. It was extremely difficult to carry much around and undue displays of wealth were considered vulgar; to be avoided. Sparta lasted 500 years.
OTL

Posted by: OldTimeLefty at November 28, 2011 8:53 AM

OTL - Research Bitcoin. The silver-backed "Ron Paul dollars" also continue to maintain their value and be used as currency. Your argument that money stems from government is historically bogus and shows a fundamental lack of understanding about what money is in economic terms.

Posted by: Dan at November 28, 2011 9:16 AM

Dan
How many people do you know who actually trade in "Ron Paul" dollars? Do you seriously think that they can sustain the economy of the United States? If so, how?

This is why you are the doctrinaire man. Your feet never touch the ground.

Here's a bit of bitcoin reality:
In June 2011, Symantec warned about the possibility of botnets engaging in covert "mining" of bitcoins (unauthorized use of computer resources to generate bitcoins),consuming computing cycles, using extra electricity and possibly increasing the temperature of the computer. Later that month, an employee of the Australian Broadcasting Corporation was caught after using the company's servers to generate bitcoins without permission. Some malware also uses the parallel processing capabilities of the GPUs built into many modern-day video cards. In mid August 2011, bitcoin miner botnets were found; trojans infecting Mac OS X have also been uncovered.
OldTimeLefty

Posted by: OldTimeLefty at November 28, 2011 10:23 AM

OTL - The point, which you are so good at missing, is not in the details of these individual currencies but rather they are illustrative of the well-established economic principle that currency does not derive from government but by the values and arrangements of the parties themselves. 100's or even 1000's of companies accept bitcoins and Liberty dollars - I'm not saying it's a huge number, but it proves that it can be done. I could give numerous historical examples of currencies developed by regions, cultures, or employers without government involvement. The central reason why this is not more common in the United States is because it is illegal to compete with U.S. currency and you can receive a lengthy jail sentence for doing so, but this certainly need not be the case with any currency.

"Here's a bit of bitcoin reality:"

There have been counterfeiting problems with every currency. Microsoft and many other companies use online currencies successfully - ask anyone who owns an XBox. Also, some of the problems you list aren't problems with the Bitcoin itself but are rather issues with company resources being misused by employees without permission to generate income. This could equally well happen with any "hard" currency.

Still waiting to hear from you which "doctrine" I am supposedly following.

Posted by: Dan at November 28, 2011 11:38 AM

"You assert a belief and think it's a fact. Such hauteur is beyond argument.

...because you have no argument. Even your lefty friends are finally realizing that this country's entitlement programs are unsustainable at any tax level. Then again you are OTL.

Posted by: Max D at November 28, 2011 11:53 AM

Dan
What you claim as proving your point actually proves mine. What you point out is a two-bit exception. If we look at the real world we will find government and currency intertwined. There is really no intrinsic value to gold or silver or purple clam shells. Value is arbitrarily declared and maintained through government programs and arms.

The philosophy you follow is selfish self interest. Want a name for it, call it Solipsism. You share this with people like Marie Antoinette. It's so obvious that you should be ashamed to have it pointed it out to you. You are so doctrinaire that you think that Me, Me,Me, Me Me, Mine, Mine, Mine, Mine, Mine somehow create the common good.
OldTimeLefty

Posted by: OldTimeLefty at November 28, 2011 12:22 PM

Max D,
You wrote, "the real problem is that some want people to keep what they earn and some want people to give what they earn to others. The latter is what's bankrupting the country."
Your conclusion, "The latter is what's bankrupting the country." does not follow logically from the previous statement. You have made no connection between them. This is what is referred to as an unfounded statement. Make the connection, then we can have an argument, otherwise, "What you freely assert, I just as freely deny."
OldTimeLefty

Posted by: OldTimeLefty at November 28, 2011 12:30 PM

"If we look at the real world we will find government and currency intertwined."

I understsand that formal logic is constant challenge for you, but this is not evidence of anything other than that governments are good at seizing control over things. Make your original statements to any numismatic collector and you will be quickly embarrassed by how little you know about the history of currencies even in the United States. Many private companies and groups have established their own forms of currency without government entanglement. I can link you to specific ebay auctions currently in progress if owning examples of these hard currencies would make that reality more "real" to you.

"The philosophy you follow is selfish self interest. Want a name for it, call it Solipsism. You share this with people like Marie Antoinette. It's so obvious that you should be ashamed to have it pointed it out to you. You are so doctrinaire that you think that Me, Me,Me, Me Me, Mine, Mine, Mine, Mine, Mine somehow create the common good."

This is total nonsense and Marxist blather - you are the one who should be ashamed at such a display of ignorance. Selfishness is neither the means nor the end goal of the market economy, and you have glossed over literally centuries of important economic insights into efficiency, relative scarcity of resources, division of labor, and price theory. People have all sorts of motivations for engaging in commerce, some selfish, some altruistic. The important component is that microtransactions send signals through prices to which other actors can quickly and transparently respond, leading to an overall quick and efficient allocation of resources. The Marxist utopia you envision cannot exist as a practical matter because it lacks such a vast and efficient information network and there is no way for the central planners to gather such dispersed knowledge in the timeframes necessary to meet the needs of the population. None of this has anything to do with your concept "selfishness," of mine. Your argument that currency has no inherent value would make any economist laugh - nothing has "inherent value" by that logic. In the only meaningful economic sense, things are worth what people are willing and able to exchange for them.

Posted by: Dan at November 28, 2011 12:58 PM

Posted by Dan
"Many private companies and groups have established their own forms of currency without government entanglement."

I can't recall the date exactly, but what Dan describes is precisely how the U.S. operated after independance. The date this stopped approximates 1830. Individual banks printed their own currency, or "bank notes". These could be redeemed in gold at the bank. In the usual sense, these were "money". In truth there were many cases where this did not work out well. Many of the issuers were "wildcat banks", located at inaccessible locations that a wildcat couldn't reach. Redemption was therefore impossible. On the other hand, for many it worked out fine.

Posted by OTL
"You share this with people like Marie Antoinette."

I believe she actually said "let then eat merde". This has been cleaned up as "let them eat cake". She was probably a "Progressive". Perhaps she just believed in extreme "recycling".

A side note on government currency, "legal tender for all debts, public and private". I have had experiences where government agencis have refused to accept it.

BTW, OTL, banks regularly "create money", it is not a government monopoly. The government monopoly is in the printing.


Posted by: Warrington Faust at November 28, 2011 6:13 PM

Dan,

"In the only meaningful economic sense, things are worth what people are willing and able to exchange for them." True as far as it goes, people are willing to exchange goods and services for what the government says is currency. printed and coined by the government and backed by the government. No government, no currency.

Have you spent any numismatics as currency at your local grocery store? At Walmart or Target? Paid your stock broker in stamps lately? Let us know about it.

Do you work for stamps or U.S. currency?

"microtransactions send signals through prices to which other actors can quickly and transparently respond" and they respond in paper backed by a promise by .....the government.

Have money in the bank? It is insured by .... the government.

Ever try to spend a Confederate dollar? It's worthless because .... there is no government behind it.

I can go on, but it is spreading pearls before swine.
OldTimeLefty

P.S. I do agree that nothing has an inherent value. Money is a game played by the government.

Posted by: OldTimeLefty at November 28, 2011 6:23 PM

OTL - Your point that U.S. currency "happens" to dominate U.S. transactions is meaningless because the United States government forbids competing currencies and punishes those who attempt it with jailtime. This was the fate of the "Ron Paul dollars guy" after Norfed became so popular he couldn't ship them out fast enough. He had a warehouse with millions of dollars worth of silver confiscated by the Federal government a couple of years ago.

I own several pieces of Confederate paper currency in my collection. Would you be surprised to learn that they are worth more than U.S. currency? Speculate as to why that is and perhaps you'll learn something about how markets work.

I'm not arguing that having many competing currencies is necessarily a wonderful thing. I'm countering your historically and economically inaccurate argument that currency cannot exist without a government to assign it value. This is simply wrong and any economist will tell you so. You can make a last ditch attempt to save it by arguing that government protects the currency through police and property rights, but that's already getting pretty weak.

Posted by: Dan at November 28, 2011 8:21 PM

Dan
That the United States government forbids competing currencies and punishes those who attempt it with jailtime is exactly my point. The government issues the money and protects and guarantees its value.

Confederate dollars are valuable only in that they can be used to purchase government backed currency.

Haven't heard you answer who it is that guarantees your bank savings.

No more argument from me on this point. It is already belaboring the obvious.

You may have the last words.
OldTimeLefty

Posted by: OldTimeLefty at November 28, 2011 8:44 PM

Since OTL has declared an end, I would like to point out where he goes wrong. He confuses "currency" with "money", they are not the same. Try to think of even a medium since transaction which is handled in "currency", but "money" is paid.

Posted by: Warrington Faust at November 29, 2011 11:12 AM
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