Things Nevada newcomer Adam Laxalt would like to do if elected governor include but are not limited to:
- Make Nevada even more of a haven for sketchy shell companies;
- Allow financial service “innovators” to prey on consumers in new and innovative ways;
- Let interior decorators decorate interiors without a license.
Laxalt floats several other propositions in what he’s calling an “economic development” plan. No new taxes. “Teach entrepreneurship.” Give released prisoners one (1) free Uber ride. Coddle real estate developers, and make cities and counties coddle them, too.
His plan is the result of consultation with “Nevadans who have achieved success in our state … including entrepreneurs, big- and small-business owners, industry leaders, policymakers, analysts and more.”
Big- and small-business owners. That’s inclusion, Laxalt style.
On the whole, Laxalt’s plan echoes the conventional economic “common sense” lodged within both political parties for decades: Government’s role in the economy is first and foremost to help business.
His plan’s baseline assumptions eschew evidence demonstrating how the economy serves or fails most average working Nevadans, relying instead on ideology: Growth is good and the benefits thereof will trickle down to everyone sooner or later because that’s what Reagan said.
For all that, he does float a few specific notions. They can’t really be called economic policies. They’re more like love notes to targeted sub-sectors of the financial and real estate industries.
And they are squirrelly.
Laxalt calls for a “regulatory sandbox” allowing financial “innovators” to operate outside normal financial regulations. “This innovative concept is based on the explicit recognition that financial regulators cannot develop new regulations as quickly as new financial instruments are developed,” Laxalt says.
A few months ago, Arizona became the first U.S. state sporting a “sandbox” (Laxalt doesn’t want Nevada to be like California, but evidently Quartzite intrigues him mightily), over the objection of critics worried it empowers predatory lenders to exploit consumers in new — and unregulated — ways.
The UK, Australia and Canada are among nations that have already created looser regulatory structures for financial technology products. Those nations’ programs are much more strictly limited and monitored than Arizona’s — a not unimportant point in Nevada. Before Laxalt lets a new herd of predatory lenders loose on Nevada’s financial services landscape, his handlers should tell him that Nevada can’t monitor the predatory lenders we’ve already got.
The federal Consumer Finance Protection Bureau (CFPB), currently led by Mick Mulvaney, who has strong feelings about consumer finance protection (he’s against it), has launched a sandbox plan. And the Treasury Department, led by former second-generation Goldman Sachs insider Steven Mnuchin, aka the “foreclosure king,” also supports letting financial technology products play in a sandbox.
Treasury’s endorsement prompted New York’s chief financial regulator to declare, “Toddlers play in sandboxes. Adults play by the rules.”
But that is something a regulator from New York would say, isn’t it?
Meanwhile, back in real America, where Laxalt pretends to come from, if there’s one thing that the working men and women of Nevada have been demanding, it is that people who make money selling money finally and at long last be unshackled from their regulatory chains, so that low-income working mothers will get ripped off in new and innovative ways. Laxalt promises to deliver.
Laxalt also promises to make life even easier for money launderers, drug cartels, sex traffickers, terrorists, and tax dodgers the world over who, thanks to Nevada’s famous/infamous incorporation laws, can use Nevada to hide, move and scrub money through shell companies.
Nevada’s incorporation fees, from Laxalt’s point of view, have been allowed to get too darned high.
“Since a business can be incorporated in any state, regardless of where it is physically located, these fee hikes have made Nevada a less desirable choice compared to much lower-cost jurisdictions, such as Wyoming,” Laxalt says. So he wants to lower the fees.
I looked at the shell company issue last year, and found that in 2016, Nevada’s general fund made $177 million from incorporation fees. As many as eight out of ten business filings in Nevada are from out of state, according to an estimate from the Nevada Registered Agents Association.
Also from that piece:
“Terrorists, organized crime groups, and pariah states need access to the international banking system,” Dennis Lormel, a former chief of the FBI’s Terrorist Financing Operations Section told Vice in a story about how easy it is to set up shell firms in Delaware and Nevada. “Shell firms are how they get it.”
Shell firms also provide cover for venality and corruption of a more banal, albeit not less harmful, variety, as when a pair of Texas attorneys set up sham Nevada companies to bilk senior citizens around the world out of $127 million in an investment scam.
Out-of-state companies incorporating in Nevada rarely if ever hire any local employees. They do have to hire local registered agents to handle their paperwork, some of whom make very handsome incomes (I’m going to go out on a limb here and suggest their fees are higher than the state’s). Presumably those registered agents are the “Nevadans who have achieved success in our state” upon whom Laxalt relied to craft this part of his “economic plan.”
Nevada law provides secrecy to people who need shell companies, and those people are willing to pay negligible fees to keep their identities protected. In keeping with the state’s ethos, official Nevada doesn’t care where the money comes from, so long as it comes. Earnings for the registered agent industry aside, the largest contribution shell companies make to Nevada, inasmuch as they make one, is the incorporation fees they pay to the state. Laxalt promises to cut those.
Mistaking gimmicks for economics
Cribbing from a pet passion of area libertarians, Laxalt’s economic plan goes on at laughable length about the need to relax licensing requirements for interior decorators. Other occupations that are, in Laxalt’s view, unnecessarily licensed include but are not limited to: animal trainer, sign-language interpreter, and high school athletic coach.
The merit of licensing or not licensing those and other particular professions notwithstanding, it seems reasonable to assume that over the years certain professions have hired certain lobbyists to legislatively shield themselves from certain competitors. What Laxalt dramatically refers to as Nevada’s “burdensome occupational licensing regime” may be ripe for reform. Most things are.
But that’s not meaningful economic policy. It’s statutory housekeeping.
Statistics are not readily at hand for the number of people who would become interior decorators, animal trainers or sign-language interpreters if only Nevada’s “licensing regime” wasn’t such an oppressive infringement on liberty.
We can confidently say their numbers are dwarfed by the hundreds of thousands of working Nevadans who currently hold low-paying jobs in the state’s largest employment sectors, such as accommodations and food service, and retail. Those are not only the most common jobs today, but, along with low-paying, precarious jobs in the home personal aide industry, are projected to continue to be the state’s most common jobs well beyond Laxalt’s hypothetical term as governor, even if he wins two of them.
While Laxalt valiantly champions the plight of a relative handful of aspiring interior decorators, he ignores Nevadans who comprise the largest and most economically crucial part of the state’s workforce.
Adjusted for inflation, Nevada household incomes are more than 10 percent smaller now than they were at the start of the century. Wealth is more concentrated at the top, and income is more unequal between the top and everyone else in only three other states.
Laxalt’s “economic plan” commits a common mistake politicians make when they talk about the economy: They think economics and business are the same thing. Economic policy, as spouted by politicians, paints a rosy picture of some imaginary economy of the future. That’s a lot easier, and more politically convenient, than doing anything to help people in the economy we’ve already got.
And so instead of a program to address urgent, real-world barriers that make life harder than it needs to be — low wages, abusive labor conditions including a lack of paid sick leave, rent that is too damned high (and no, Laxalt’s proposal to lower fees on developers is not a solution for that) — Laxalt promises to give Nevada more shell companies, the liberty to select and place sectional furniture without a license, and a sandbox.
Laxalt doesn’t have an honest agenda to address Nevada’s economic failings. He’s got a few gimmicks wrapped in a zombie ideology. Laxalt hasn’t offered a plan. Laxalt has offered a farce, as authentic as the man himself.