The Long and Frustrating Arm of Government Intervention
“I want to encourage you to get in the game,” the president told CEOs assembled at the US Chamber of Commerce across the street from the White House earlier this week. “Today, American companies have nearly $2 trillion sitting on their balance sheets… My message is now is the time to invest in America.”
Ah, if only it were so simple. We find ourselves in a pickle this morning. Somehow, we’ve veered off the track of providing you with incisive investment recommendations into the quagmire of presidential puffery…we apologize.
In an effort to extricate ourselves, we’ve contrived an experiment…with the hopes that we can be done with this debate and get back to opportunity ASAP.
What follows is, more or less, a conversation consisting of a speech given by the president asserting that the United States must be the best place on Earth to do business. And the response by an entrepreneur faced with the reality of doing business in today’s post-crisis regulatory environment.
The setting: The administration’s own Small Business Administration issued a study last year that says businesses with fewer than 20 employees are stuck with regulatory costs 42% higher than firms of 20-499 employees.
And when it comes to environmental regulations, the cost to small business is 364% higher. Tax compliance? 206% higher.
“These findings should anger us all,” wrote Gary Shapiro, president of the Consumer Electronics Association. “Over the past decade, small businesses created 70% of jobs in this country, and we are looking to them again to help lead us out of the current economic downturn.”
“America’s success didn’t happen overnight,” the president stated in one of the ‘duh’ moments of his Chamber speech, “and it didn’t happen by accident. It happened because [of] the freedom that has allowed good ideas to flourish, that has allowed capitalism to thrive; it happened because of the conviction that in this country hard work should be rewarded and that opportunity should be there for anybody who’s willing to reach for it.”
“Yes, Mr. President!” replies our friend Greg Stemm, CEO of Odyssey Marine. “We did ‘get in the game,’ hired lots of people, innovated and created a new industry out of wasted resources lost for centuries at the bottom of the ocean and abided by all applicable laws – and, I am sorry to report, the US Government is ‘encouraging’ us by trying to hand over the fruits of our labor to another government.”
We’ve recounted the sordid tale many times, but for reference. The WikiLeaks cables revealed back in December that both the Bush and Obama administrations sought to lend a hand in turning over Odyssey’s Black Swan find (some $500 million in coins) to the government of Spain, in exchange for a painting in Madrid claimed by the estate of a US citizen.
“Your administration,” Greg continues, “is trying to change long-standing US government policy and is ‘reinterpreting laws’ midstream to appease a foreign government, at the cost of hundreds of millions of dollars to US investors – hundreds of millions from our ‘balance sheets’ that we could unleash to create new jobs.
“It even appears that our own government was offering to ‘assist’ a foreign government in our courts to literally steal hundreds of millions of dollars from the ‘balance sheet’ of the US shareholders who earned it. The US government is helping to ‘return’ property that the foreign government never owned or had any legal or ethical claim to.”
“We know what it will take for America to win the future,” continued the president as he courted the Chamber leaders. “We need to out-innovate, we need to out-educate, we need to out-build our competitors. We need an economy that’s based not on what we consume and borrow from other nations, but what we make and what we sell around the world. We need to make America the best place on Earth to do business.”
“It’s one thing when bureaucrats are beating you down,” Greg replies. “You learn after a while that this is just politics and business – and sometimes you happen to be in the wrong place at the wrong time.
“It’s quite another thing when the president asks you to ‘get in the game’ while the people under him go to great lengths to create problems for your company.”
We’ve been following Greg’s trials and tribulations with the US government in a documentary film we’ve just submitted to the Tribeca Film Festival. With any luck, we’ll get in and finish the project by the end of April.
For us, Odyssey serves as a proxy for the situation many entrepreneurs across all industries face. The details of their specific challenge may be unique. But their effort to create and grow a business in an increasingly hostile environment does not appear to be so.
We’ve published the complete response Greg wrote to the president below. And thank you for letting us get this off our chest.
“I guess he’s speaking to me as a CEO of an American company,” says Odyssey Marine CEO Greg Stemm, “so I’d like to respond in an open letter to President Obama:
Yes, Mr. President!
I’m with you on this. We’ve been trying – but it feels like our efforts are being sabotaged by our own government. We need your help – and all we are asking for is an honest and level playing field.
We did “get in the game,” hired lots of people, innovated and created a new industry out of wasted resources lost for centuries at the bottom of the ocean and abided by all applicable laws – and I am sorry to report that the US Government is “encouraging” us by trying to hand over the fruits of our labor to another government.
Your administration is trying to change long-standing US Government policy and is “reinterpreting laws” midstream to appease a foreign government at the cost of hundreds of millions of dollars to US investors – hundreds of millions from our “balance sheets” that we could unleash to create new jobs.
It even appears that our own government was offering to “assist” a foreign government in our courts to literally steal hundreds of millions of dollars from the “balance sheet” of the US shareholders who earned it. The US government is helping to “return” property that the foreign government never owned or had any legal or ethical claim to.
How do I really feel about this?
It’s one thing when bureaucrats are beating you down – you learn after awhile that this is just politics and business – and sometimes you happen to be in the wrong place at the wrong time. When you run a business, you learn to take the knocks that come from anti-business bureaucrats – people who have never had to make payroll, never had to hire someone, never had to let someone go – never created a job, and many who wouldn’t know how to begin to do these things.
We build our companies in spite of these obstacles and pray that we aren’t destroyed by a government employee who can inadvertently wipe out our business with the swipe of his or her pen.
That’s something we’ve learned to live with… reluctantly.
It’s quite another thing when the president asks you to “get in the game” while the people under him go to great lengths to create problems for your company. I hope you can understand how frustrating that can be.
Mr. President, if you really want to encourage us to “get in the game,” please send a message to the US State Department and the Justice Department to encourage them to be absolutely honest with the courts about the actual intent and meaning of the laws that have recently twisted to serve foreign interests.
Please encourage them to allow former US government employees, who drafted and understand the intent of these laws, to explain that intent to the courts.
Respond to the members of Congress who are calling for the State Department to allow the courts to do their work uninfluenced by politics and to back down from an anti-American business policy that is costing American jobs and hundreds of millions of dollars to US investors.
Please just tell the people who serve under you to be honest and do the right thing.
If you can do that, we’re hopeful that justice will be served in the US courts. When we are confident that the fruits of the labor of all our employees can go to our “balance sheets,” instead of being stolen from our shareholders, we are ready to unleash that capital to help accelerate the economic recovery.
Odyssey Marine Exploration
Chief Executive Officer