The Evil Reach of Government: An Open Letter to Martha Stewart
by Jack Rain
Dear Ms. Stewart,
I am an occasional columnist over here at strike-the-root.com.
Although it seems that you are very close to THE household
name, I must confess that before this insider trading
"scandal," I had only a vague notion of who you were. But it
looks like you have been quite industrious. From what I now
gather, you have TV spots, book deals, big-time licensing
contracts and your own publicly traded company. And while I do
have a vague pre-scandal notion of recognizing your name, my
guess is that you have never heard of Strike The Root, and that
is really too bad.
You see, we here at Strike The Root are always warning about
the dangers of government intrusion into people's lives. In
particular, I often like to note, we are not just having
theoretical discussions here, as the evil reach of government
is very real and can occur at any time. I'm sure you can fully
appreciate my warning on this point now.
Maybe, just maybe, if you had wandered over to this site, you
would have been more careful about how you conducted your
business. Now, please, don't misunderstand me. Even if you did
sell your stock because of an "inside" tip, I don't think you
did anything wrong. There is a strong theoretical argument that
what you did, if you did sell on a tip, is actually an
important way to signal to other investors, through price
action, developments at the company--but more on this later.
Right now, I'm focusing on our daily attacks on the
government's smothering of individual rights and the
government's love of coercion and a good headline at the
expense of productive business people.
What were you thinking? You are a high profile businessperson
and a woman at that! The last enterprising woman of wealth that
the government got in its crosshairs was Leona Helmsley. As a
hotel owner, she used to run ads that were famous in the New
York City area proclaiming herself Queen of the Helmsley
hotels. Of course, every libertarian alive knew she was just
using a figure of speech relating to her belief in spotless,
efficient hotels fit for a king or queen. We knew she had none
of the real power of a reigning king, queen, president or
attorney general. No libertarian and no New Yorker went to
sleep at night, in or out of her hotels, fearing that they were
going to be arrested for insider trading or jaywalking or
anything else for that matter, by "Queen" Leona.
But she had a very high profile, and that's always a big time
target for the government. They charged her with tax evasion.
Something about deducting curtains she actually used at her
home instead of at her hotel. Anyway, as you may know, Leona
got jail time.
The point I am making here is that, as I am sure you are well
aware, like Leona, you are a big time target. Every SEC agent
and prosecutor working on this case will have a story for the
rest of their lives about working on the "Martha Stewart case."
I once met an undercover cop who busted Abbie Hoffman for
drug possession. Decades later, this meatball still tells the
story as the highlight of his life.
Martha, it may be a little too late for you, but there is a
lesson here that I hope you can pass on to your family and
friends, and that we here at Strike The Root need to always
keep in mind: The government wants to rule your life. There are
hordes of laws on the books, and the government is adding new
ones every day. And if they don't have the law on the books,
they will just make something up when it suits their purposes.
All this stuff about protecting the little guy and doing "good"
is a big scam power-grab by the ruling elite. We know that here
at Strike The Root.
We know that the true benefactors of society are people like
you. We know that you gained your wealth by providing goods and
services to people voluntarily. People who willingly paid for
the many goods and services you offered. You aren't running a
Social Security scam, like the government, and forcing people
into this bankrupt Ponzi scheme. People buy things from you
because they like your product. People buy things you license
because they trust your judgment. You don't have to force
people at gunpoint to accept your officially licensed products
in the way the FDA forces all suppliers and consumers to bow to
its demands. No, you simply enter the marketplace, offer your
services and many consumers respond. Ludwig von Mises, one of
the greatest free market economists of all time, wrote a book
decades ago called The Anti-Capitalistic Mentality. In it he
explained the envy the intellectual elite have for those like
yourself who or are successful in a free market economy. As
unfair as it is, you must now bear that cross. The propaganda
machine of the government and the intellectual elite are coming
after you big time. They will leave no stone unturned. If they
can find a maid you might have yelled at once, you can be sure
it will be headline news.
As I said, it's probably much too late for you now, but what
you should have done when you sold your stock is just give the
order to sell without an explanation to your broker. Sadly, in
this age of growing big government, just like in the old Soviet
Union, the fewer who know what you are doing and why, the
better. The government machine is a very powerful tank bearing
down on anyone in its way. It can even flip, as witnesses
against you, many of your closest friends, just like in the old
Soviet Union.
Secondly, when news of the government investigation broke, you
shouldn't have talked to the government or the press about it
at all. You should have basically told the government "F**k
you." In fact, that's what all freedom-loving citizens should
do whenever the government asks any questions. You seem too
polite to use such a harsh phrase, though, and the polite way
to phrase this to the government is to say, "I take the Fifth."
The government has been chipping away at many of our freedoms,
but they haven't quite found the angle yet to get around the
Fifth Amendment, so it makes sense to oblige the government
with this answer whenever you can.
I know in the heat of the moment, it was very tempting to try
an escape from the government's getting their neck around you,
by trying to lie and "obstruct justice." But the government
outrageously tries to take the moral high ground here. You see,
it's okay for them to lie whenever it suits their needs. And
it's okay for them to obstruct justice when it results in the
slaughter of thousands of innocents (see "Revisiting the War on
Yugoslavia"), but for you, in a moment of panic, to attempt to
wring yourself free of government's evil grasp, they are going
to throw the book at you.
As for "insider trading," there is another famous economist who
must be spinning in his grave at this supposed evil. The
economist, Friedrich von Hayek, a Nobel Laureate, taught us
that information in an economy is too vast for any one person
to have all the information and to analyze it all. It is prices
that really teach us what is going on in an economy. By selling
your stock after hearing negative news about the company, if
this is indeed why you sold, then you were actually doing a
heroic thing. By your selling what stock you had and telling
your friends to sell also, you were putting DOWNWARD pressure
on the stock price. If there was negative news coming out in
the future, it is a good thing to put downward pressure on the
stock.
You didn't force anyone to buy the stock. Whoever bought the
stock was most likely going to buy the stock that day, whether
you were a seller or not. You actually helped that person out,
because your selling pressure (along with anyone else you
told), enabled some buyers that day to spend less money than
they otherwise would have! And for some, the downside trading
action in the stock would have signaled for them to stay away
from buying the stock. You did nothing morally wrong here. You
saved people money!
Now the government has this absurd notion that all investors
should have all information at the same time and that you
shouldn't benefit from information you have that others don't.
Of course, if you had not been able to sell your stock at that
time, you wouldn't have called your friend Dr. Waksal, who
appears to have tipped you off. And if you didn't call, you
wouldn't have sold, and you would have lost money. And others
buying that day wouldn't have faced your selling pressure, so
prices would have been higher, costing others more money. This
would have been the government's ideal outcome!
The moral implications of insider trading get a little more
complex for officers of a company and those who are acting as
some type of advisor to the company, but that wasn't your
position. You sought out information to help yourself and your
friends, and in turn, your selling pressure sent an important
signal to the market. For the government to consider this evil
is outrageous. By their action against you, they are snuffing
out others who might seek out, find, and act on "insider
information," thus costing others money and making the markets
less efficient.
I would hate to be in your shoes, but I hope you somehow
triumph. I will support you in any small way I can. The next
time I need towels, if you produce or license those very big,
very thick towels that I like, I will buy the Martha Stewart
brand. But as far as coffee cups and drinking glasses go,
whether it's for wine, water or whiskey, at home, at the office
or for dinner for four, it's Strike The Root mugs for me.
They're cool-looking, they're great conversation pieces, and
every time you buy one, you are in a very direct way helping
Strike The Root fight the battle against government attacks on
the freedom of individuals. You see Martha, every day,
government goes after individuals in a very, very big way.
Good luck, Martha.
Sincerely,
Jack Rain
July 2, 2002