We Have A Republic, But Can We Keep It?

Posted On: 10/2/2019

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Tim Sanford

We often have observed here that effective trade associations have been an integral part of this industry since its infancy. These generally were organized by a few operators pioneering a new kind of business with which governments were not familiar. That unfamiliarity led to many attempts, often at the local level, to impose unwarranted fees and licensing requirements. The operators would call a meeting, hire an attorney and form a trade association to help organize resistance to this unjust treatment. They recognized that public familiarity with the new industry was essential to getting government’s attention.

It’s worth remembering that, while the National Automatic Merchandising Association helped coordinate many of those state and local advocacy campaigns, its initial purpose – back in 1936 – was to work to create a positive image for the industry, which still was very small and widely misunderstood. The initial object was to explain and describe the business of selling merchandise through coin-operated equipment, and that not all coin machines were gambling devices.

This reporter went to work for Vending Times in 1967, just after the peak of the first full-line vending wave, and spoke with many operators who were taking part in the formation of this new way of selling coffee, soft drinks, candy, gum and cigarettes. The majority of them were fiercely proud of the business they were in, and were eager to talk about it. Working at the local level, through civic organizations and schools, they familiarized the public with the idea and value of robotic retailing.

The leaders of the association were very careful with vending’s image. For decades. NAMA would not hold a convention in Las Vegas, to avoid our being tarred with the gambling brush. And they fended off accusations that vending machines were being used for “money laundering,” a challenge that the independent deployers of today’s automated teller machines understand very well.

The recurrent need for new industries  to work hard for public goodwill probably is inherent in a democracy. If the public regards vending machines as unreliable devices that keep your money and don’t deliver a product, it will not be sympathetic to operators when a tax or licensing challenge arises. NAMA’s long and consistent emphasis on public relations stems from this recognition, and it has borne fruit.

When elected officials recognize the vending company as a productive and valuable contributor to community wellbeing, managed by their constituents, they will be  disposed to listen to those constituents when laws are enacted. This aspect of democracy sets the United States apart from most other free countries. In many of these, a permanent administrative cadre is responsible for studying and enacting rules and regulations; the elected popular assembly cannot readily intervene.

This country is different, which is why the government has listened to industry representatives explaining the consequences of a particular initiative, like changing the physical properties of the currency. NAMA, and many of its members, have been very effective in softening the blow of rule changes in areas ranging from food labeling to currency design.

But this system can break down, and when it does, the effects are long-lasting. The evil legacy of “Operation Choke Point” is an illustration of breakdown at its worst. The topic receives extensive treatment elsewhere in this issue, and anyone looking for details is encouraged to read the articles by Norbert Michel in Forbes (November 5, 2018)1 and Dennis Shaul in American Banker (November 28, 2018)2. Very briefly, a few senior appointed officials responsible for banking regulations simply disliked “payday lenders” (who were running legal businesses) and set out to frighten the banks into refusing to open or maintain predominantly cash accounts. We don’t know what effect this had on those lenders, but it has done considerable harm to street vending operators, independent ATM service organizations and other small businesses whose sales and purchases are largely made in cash.

This happened because Congress was not aware that it was happening, which points to a failure in oversight. The ability of opinionated or overzealous subordinates to twist policy in accordance with their personal hobby-horses is, in our opinion, a greater danger than the much-lamented impact of money on politics.

The story is told that Benjamin Franklin, who had just taken part in signing the new U.S. Constitution, encountered a woman in the street who asked him: “Well, Doctor, what have we got:: a republic or a monarchy?” And he replied: “We have given you a republic – if you can keep it.”

It’s time to remind Congress that it is the branch that makes the laws, and it must not fob off its responsibilities on unelected administrators. Ours is a government of the people, not bureaucrats. It’s not enough to pass a law; it’s essential for the body that wrote and enacted it to keep track of what is being done with its power. Ours also is a government of laws, not men.

 

1 https://www.americanbanker.com/opinion/theres-no-downplaying-the-impact-of-operation-choke-point

2 https://www.forbes.com/sites/norbertmichel/2018/11/05/newly-unsealed-documents-show-top-fdic-officials-running-operation-choke-point/