The idiot’s guide to capturing the state

Most of us start cooking by the book, but experienced chefs don’t need a recipe to bake a cake. They make the best cakes because they stray, just a little bit, with this ingredient or that texture or temperature. Once their tricks are known they write a book or host a show. We all want the taste!

So it shouldn’t surprise us when the first “State Capture 101” template is released as a book. I expect the book launch could be before the next state of the nation address.

The show is already out — just watch a selection of our live reporting TV channels for the next episode. We already have a well-developed route from rags to riches for the consciencefree unscrupulous among us. Easy-peasy, it goes like this ... For starters, you need to find a pot of gold. This will not be found within the state. Established and abundant capital resides (not surprisingly and for good reason) in the private sector, where value creation is common cause.

So you have to contract with private sector capital, creating a flow of funds across the fiscal divide, with some juicy leaks built into the pipeline.

In designing the economics of the contract, the one thing to be avoided at all cost is fair market value. When a willing buyer and willing seller agree a price there is just enough in it for both sides to make a living and keep the competition honest. (Oops! Honesty should also be avoided, so as not to create confusion).

If you trade above fair market value the buyer will not be able to run a successful business because the excessive input costs will make the output product neither competitive nor commercially viable.

The seller, however, will make an untold fortune. You need to be really, really close to the seller — sharing is caring.

All of this nonsense can only continue among fools and thieves, and only for as long as the buyer (the state) has an enforceable source of income to keep funding the losses of this skewed economic model.

The source of funding is taxes and the capital instrument used to fund the recurring economic mishap is called a bailout. The trouble with this vicious circle is that it gets found out. You simply can’t take money out of a balanced economic equation and not expect it to topple over.

In the case of state capture it is even worse. The very people you take the money from are the same people who expect to benefit from the state services they fund. When they don’t get the services they paid for, they stop paying. At some point this simple refusal moves to become a vote. It becomes clear to these taxpaying and servicedeprived voters that they’ve given their money to the wrong people to look after. They vote them out. It’s that simple and it’s going to happen, even if it requires a fight.

To manifest this transfer of value from the many to the few, you need to control the channel. Endless regulatory hurdles, governance practices and even laws are put in place to prevent undue control and abuse of this channel. Such hurdles need to be steadfastly ignored by the aspirant state capturer, safe in the knowledge that the rule writers are on your side. Again, sharing is caring.

Implementation of this sordid state of affairs is simple and can be executed with impunity. Appoint a friendly board, remove (by whatever means) those tedious executives who insist on doing things right, rewrite the supply contracts, feed on the spillage (but share, OK?).

We must bring an abrupt end to this filthy mess before there is nothing left to eat on the carcass but the scraps vultures and jackals will fight over.

If we don’t, it is they who will rule the food chain.