The Finance Reform Bill

Removing the 18 billion dollar tax is a smokescreem to get Republican, but any Republican who still votes for it is cowardly opportunist. With or without the tax, it's an anti-business bill that goes against free market principles. This is a prime example of government intervention becoming a means to control private enterprise, and an example of more government regulation to "fix" prior regulation. This is bill is an excuse to expand power.

We're moving so far from free market principles no one knows what principles are being violated -- congress pretends they're fixing flaws in the free market, but they know better -- they know there's no free market and hasn't been for a long long time. The country should be ashamed.

Our Pogo moment in the gulf

We hear a lot of blame placed on BP, and how warning signs were ignored. So what happened to regulation? If BP was moving ahead with unsafe practices, why was this allowed? The promise of regulation is to oversee operations to ensure safety and to protect the environment. Regulatory agencies responsible for offshore drilling have been created since the 50s, until now there are a sufficient number of agencies responsible to ensure safety and prevent neglect. If regulation worked as advertised, BP would have been shut down if they failed to follow guidelines.

If anyone is to blame it's the regulatory agencies, yet I don't hear much about this except that Bush allowed the agencies to become lax. What has Obama been doing for a year and a half? Plus, BP has a poor record when it comes to oil spills -- why did they get the contract to begin with? Why didn't our regulatory agencies have a say about finding the most reputable company with the best record to be able to drill? Why didn't the regulatory agencies have a plan to deal with such a spill? If regulatory agencies are designed to oversee private companies to ensure the public is protected, why didn't they use their power to avoid this catastrophe? It appears the regulatory agencies attracted the most politically powerful, anti-capitalist, oil company with the most connections and overlooked BP's poor record and violations.

Obama recently said he spoke with experts to find the ass he needs to kick. Well, if the experts have done their job, when they return with the findings, in the spirit of Pogo, they should say -- Mr. President, we've found the ass -- it is us.

Regulation madness

http://firedoglake.com/2010/05/28/the-new-disasters/

If the Repubicans were in power and making flawed arguments like this, while still continuing to make the same mistakes the Democrats make, I'd be excoriating their justifications, so, this isn't a partisan reaction to what has become a common theme on the left. I'm not a  Republican. A few days ago I commented on a blog post by Conor Friedersdorf regarding his claim that the right is intentionally making misleading accusations of hypocrisy against the ACLU, thus confirming the tendency on the right to be a closed system of thought untethered from reality, blocking out facts which contradict their views. My comment attempted to show that closed systems of thought have more to do with partisan bias and groupthink than some unique situation with the right.

I've been presenting examples of how the left is just as "closed", and, in many ways, I believe they are more closed because there's the assumption that modern liberal views are mainstream and commonly accepted as true -- so, arrogance and humbris complicate matters. At least the right know that their views are anathema to academia and most of the media. Whether this oil spill becomes Obama's "Katrina" remains to be seen, but the above article doesn't refute the proposition, it merely uses mental gymnastics to frame the oil spill as a lack of proper regulation with an implication that the Bush Administraion set it all up. There's a weak attempt to shed some doubt on whether Obama will regulate better, but the article distracts the reader from fundamental causes, and this reveals the left's guilt in the issue of partisan bias and groupthink.

Saying Katrina was a natural disaster overlooks the government's responsibility maintaining the levees. The fact of government neglect regarding the levees turned a natural incident of a hurricane into a tragedy. The gulf coast oil spill can also be led back to government actions or inactions, in that regulations have forced drilling into risky deepwater areas. We can also consider the company itself, British Petroleum, as more a government arm than a truly private company in a free market. Another consideration is that without government caps on compensation for damages caused by the company, better precautions would have been in place for such a malfunction -- if a private company understands it is at risk of going out business due to something this oil spill, they would've prepared for accidents with much more care. 

The claim that better regulation is required, intentionally overlooks all the damage caused by regulation and government intervention in the free market. This is not to say that private companies should be allowed to do anything they wish to do, regardless of the harm they cause -- on the contrary, it's a call for rational laws and limitations which prevent fraud and cronyism and severely punish neglect which harms others. Those on the left who are calling for better regulation openly admit that regulatory capture is a serious problem, yet they want us to believe that what's needed is more regulation. This is not ignorance, it's partisan bias and groupthink which continue to support statism no matter how twisted the logic becomes or how many facts have to be ignored.

Financial regulation in the dark

http://www.npr.org/blogs/thetwo-way/2010/04/financial_overhaul_details_stu.html

I'm far from confident that lawmakers understand what the are regulating, how they are regulating and what consequences will arise from this bill being considered. Again, politicians are rushing through on a knee-jerk reaction, politically motivated from popular anger at Big Banks and Wall Street crooks.

This is just another example of government intervention trying to fix problems stemming from government intervention which were caused by earier government interventon. I have a suspicion that this will create even more consolidation and small bank closures until the government, through the Fed, is controlling the financial industry from top to bottom.

It will likely increase unemployment and harm business activity in general, except government-favored businesses, as credit tightens from over-the-shoulder oversight and political pressures. Also, it will likely cause confusion, in-fighting and inefficiencies among government agencies protecting fiefdoms.

Creating instability by efforts to stabilize

One of the most pernicious effects of government intervention, especially the type of hyper-active intervention going on now, is that it destabilizes business, causing investors to wait until the manic activity subsides and they know the new rules of the game.

Ostensibly, the stimulus efforts and new regulations were meant to stabilize an economy in free-fall, but all these efforts have a de-stabilizing effect. If the rules of the game are not stable, then people with money to invest will not risk that money if they think changes are on the way in a minute or two which might negatively affect their investments.

A better course, even if government was bound and determined to do something, would have been to do something and then say, this is the new set-up -- now, go for it. But, then, investors would've had to trust that was all of the intervention -- and that might be asking too much of people preparing to risk billions (the new millions).

On a smaller investment level, I talk with home-buyers all the time who are waiting to "see what happens". Government has set up an expectation that if things get worse, they, politicians, will likely create more incentives to spur activity -- the rational buyer is going to wait, if they don't have to buy now, to see if the deals are sweetened.

So all the incentives so far only create the possibility of further incentives, or changes that will affect their decision if they make one now. When people know that things are what they are and government is not going to change anything, then they will act, but there is no end in sight to the interventions. Both the stimulus efforts and regulations are engineering efforts from a central command with no idea how to manipulate people as intended. All these efforts are creating instability and they work counter to creating economic activity. The stimulus might create some short-term jobs, as many observers have pointed out, but people aren't stupid and they aren't going to buy high-dollar items, or make investments, based on a temporary paycheck.