Category: too much government

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free trade & free markets too much government

Bye-Bye, Community Banks

The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010 by President Barack Obama. Its supporters said that would increase financial stability and transparency, prevent bailouts, and protect consumers from “abusive practices.”

I’m dubious the new regulatory regime will accomplish any of these goals.  What has really happened since passage? An extreme consolidation of financial institutions.

Marshall Lux and Robert Greene, in a new study, show that the long-term trend in which community banks have diminished in number and importance has doubled in severity since Dodd-Frank.

You don’t have to be a “small-is-beautiful” fetishist to worry about this. The bigger banks remaining are just all that much bigger in the “too big to fail” department.

Greene and Lux explain the mechanisms at play under Dodd-Frank. The regulations are not geared to the size of the regulated institutions, so economies of scale in regulatory compliance arise, bigger than ever.

Todd Zywicki, writing in the Washington Post, makes it clear how these “regulatory costs tend to fall proportionally heavier on smaller banks.” Leading to consolidation.

Just as Zywicki had predicted.

Zywicki, Lux, and Greene are demonstrating an old principle. Economist Ludwig von Mises explained it decades and decades ago. Mises dubbed regulations into market operations “interventionism,” and identified the pattern of such activity as almost an archetype. Interventionists

  1. see a “problem”;
  2. propose a “fix”;
  3. the fix puts us in a worse fix, as unintended consequences multiply;
  4. politicians and bureaucrats scramble to add an additional fix to the mix.

That is why laws keep piling up. Leading ultimately to calls for more laws.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets general freedom too much government

The Two Americas

Dear Reader: This “BEST of Common Sense” comment originally aired on July 4, 2007. A longer version published at Townhall.com was picked up by Rush Limbaugh and read on his radio show. —PJ

Could Democratic presidential candidate John Edwards actually be right about something? Not where to go to get a haircut, mind you, I mean about there being two Americas.

There is the vibrant America . . . and the stagnant one.

There is the America of ever-increasing wealth, innovation, creativity, new products and services. Choices galore.

And there is the politician’s America: The regulated America, the subsidized America, the earmarked America. The failing America.

In one America, it is what you produce that gets you ahead. In the other, it’s who you know.

In one America, to earmark some money means setting aside funds (into savings) for a purchase — a car, house, college.

In the other America, to earmark is to grab from taxpayers to give to cronies. It is the highest rite of career politicians: Buying their votes with other people’s money. Oh, there have been reforms, sure. But a recent bill in the House had 32,000 earmark requests.

In one America, we decide what we pay for. We choose constantly about little things and big. We call the shots. Or we walk down the street and associate with someone else. So we have some faith in those we work with.

In the other America, we vote. But we rarely get what we vote for.

Maybe that’s why the new Democratic Congress just registered the lowest approval rating in poll history.

It surely isn’t because folks love the Republicans.

This is Common Sense. I’m Paul Jacob.

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too much government

Diverse Drivers’ Data

The idea of a “Surveillance State,” where government watches and records our every move, is usually billed to us as a matter of protection.

That’s sure a good way to sell us tyranny.

True, we do sometimes receive protection from governments that keep tabs on us about what we do, where we go, who we see. But if this sort of thing doesn’t also give you the creeps, I am at a loss.

I hear from friends in the Libertarian Party of Virginia, where I live, that bills pending in the State House and Senate would limit the length of time state and local governments may keep data on citizens’ driving habits.

Right now, governments collect a lot of information via license-plate reading cameras, and there are no legal limits on how long the information can be kept; some jurisdictions do keep data indefinitely. AAA Mid-Atlantic, an automobile service organization, is backing the legislation, pushing for a legal limit. “AAA believes that the retention period should be limited to the time necessary to compare it with local and national crime data banks,” a press release states, adding that the limit should reflect the rather short amount of time required, which is “a matter of hours or days, not months or years.”

We don’t advocate limits on this kind of data to protect criminals, but to reduce temptation to those folks in government who might abuse their positions for personal gain or bureaucratic mission creep.

Governments tracking and recording our every move just isn’t safe — even if our safety is the professed goal.

This is Common Sense. I’m Paul Jacob.

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general freedom ideological culture media and media people too much government

Herd Immunity

Hillary Clinton and Barack Obama gave cautious support for the anti-vaxxer cause a few years ago. No scandal.

But only now that Republican politicians Chris Christie and Rand Paul have talked about the risks of (as well as of parental rights and responsibility regarding) childhood vaccination has the issue of mandatory vaccination finally hit big.

Ronald Bailey offers a more modest proposal. “Vaccination is arguably the greatest public health triumph of the past century,” he  begins.  But he argues not for mandating vaccines, but for social pressure: “person-to-person shaming and shunning.”

That is one traditional (and less politically extreme) way to solve such problems.

But what is that problem, at base? Those who fear a negative personal effect from vaccination (and there are some, though the “autism” charge appears to be bogus) become “free riders,” as economists like to put it. They gain a de facto immunity without having to pay — either in money or in the small risk that vaccination does demonstrate.

This particular free rider benefit depends on the concept of “herd immunity.” That’s the conjectured level of protection for individuals who lack biological immunity by the overwhelming presence of vaccinated people in a population who are immune. (The disease can’t spread because it hits too many dead ends in healthy hosts.)

As has been often noted the last few days, though the anti-vaxxer trend has mainly tended to “infect” (as a “meme”) urban populations of left-leaning folks — epitomized by Hollywooders Jenny McCarthy and Jim Carrey — the new backlash against anti-vaxxer rights has come strongest from the left-leaning media.

The Republican “offenders” provide cover?

Apparently, those of the Democratic herd think they have immunity . . . to criticism.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets general freedom too much government

Against Enabling Segregation

Rosa Parks, born February 4, 1913, became a symbol of the Civil Rights Movement for her actions on December 1, 1955. Ordered to move from the first row of the “colored” section after seats reserved for white passengers had filled up, Parks refused.

“When that white driver stepped back toward us, when he waved his hand and ordered us up and out of our seats, I felt a determination cover my body like a quilt on a winter night.”

Economist Thomas Sowell believes that the conflict might never have even come up as an issue, had the bus been privately run.

“Why was there racially segregated seating on public transportation in the first place?” he asked on the occasion of her death in 2005. “[T]here was certainly plenty of racism in the South, going back for centuries. But racially segregated seating” did not have the same unbroken history. Sowell pointed out that no matter what their own views, owners of the private transit lines of the 19th and early 20th century lacked motive to enforce segregation and thereby alienate many of their passengers.

When markets aren’t overrun by politics, both buyers and sellers must focus on the value they want from trade — a good product or competent service. Participants are penalized if they routinely set aside those benefits in order to indulge an animus.

In the 20th century, the trend towards taxpayer-funded mass transit displaced economic incentives with political ones.

Only governments can force entire industries to routinely act on an irrational prejudice.

This is Common Sense. I’m Paul Jacob.

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crime and punishment too much government

Baby Steps in Reform

Bounkham “Bou Bou” Phonesavanh was in the wrong place at the wrong time.

His crib.

The Georgia toddler was badly burned by a flash grenade during a drug raid gone wrong. A remorseful sheriff’s department claims they could not have known what would happen.

But such botches are not rare.

The War on Drugs is habitually conducted via late-night, no-knock, violent intrusions into homes. That’s now a main part of the standard modus operandi.

OverkillThe raids are often based on scanty and unconfirmed information. They proceed even if no dangerously violent criminal is known to be inside. The drug warriors’ primary concern, they say, is to stop suspects from flushing contraband down the toilet, not to avoid needlessly jeopardizing the lives of known and unknown occupants.

A couple of Georgia lawmakers have offered legislation to reduce the chances of such collateral damage. One would slightly restrict the circumstances in which no-knock warrants could be issued. Another would require most no-knock raids to be conducted between 6 a.m. and 10 p.m.

Though modest steps, they may help save some lives.

But the fundamental problem? The persistence of the War on Drugs.

Waging that war permits endless “botched raids” like the one that almost killed Bou Bou. So long as such invasions remain a standard means of trying to catch dealers with their stash — indeed, so long as the War on Drugs is being waged at all — innocent persons will always be needlessly at risk from the persons charged with protecting them.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Experience Denied

Jan Ellison is grateful for the low-wage jobs she had as a kid.

“The difference from the way my own children are being raised is that I was acutely aware of the financial burden of these [educational and other] pursuits. . . . I made money of my own from age 11 onward. I had a paper route. I cleaned houses and swimming pools. I took clerical temp jobs. . . . I can’t say that any of this was important work, but the act of doing it mattered.”

She learned to “work for the ticket” that would take her to better things.

That minimum wage laws make it harder to gain such experience is a problem raised not by Ellison but by a Cafe Hayek reader, Mike Wilson, who calls her memoir “as powerful a case against raising the minimum wage as I have encountered.” (Strictly speaking, against establishing or enforcing any wage-rate floor.)

Wilson’s sensible point is that when you’re just starting out in the work force, you must develop the habits and skills needed to do a job well and to then go beyond it. These include punctuality, mastering procedures, accepting corrections with grace, being civil, staying productive and careful when you’re tired, and more.

What you can bring immediately to a job is willingness to learn what’s necessary. But the higher your pay must be before you’ve made yourself worth that pay, the harder for employers to give you the chance to make yourself worth it.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Death by Metro

“Metro has a reputation for shoddy service and a history of not learning from its mistakes,” Aaron Wiener admitted in a column for The Washington Post. But this extremist zealot’s basic argument for government-run, taxpayer-subsidized mass transit might best be understood by its headline: “Metro’s a mess. All the more reason to ride it.”

A woman died last week riding the city’s subway system. She was overcome when train cars became stuck in a tunnel filling with smoke. Another 84 riders were hospitalized, two in critical condition.

DC Fire was so woefully slow in response — victims say more than 30 minutes — that afterwards no public official was willing to say precisely how slow. Not the new mayor; not the Chairman of Washington’s Metro board. The latter provided an excuse, claiming he “cannot speak to it” because of the investigation by the National Transportation Safety Administration.

Upon arrival, the rescuers’ radios didn’t work. “[D]espite hundreds of millions of dollars in upgrades and new training and safety protocols at the transit agency,” The Washington Post reported, “a critical piece of infrastructure — emergency communications — remains a significant problem.”

This isn’t Metro’s first accident, either. Six years ago, nine people died when two Metro trains collided.

Without profits, and run “politically” as a public entity, there just isn’t the same incentive to make the necessary investment in infrastructure required to run the subways safely. A private company with Metro’s record of accidents and failure in addressing safety concerns would likely be shut down.

Sadly, Metro faces no such threat.

But the transit agency faces a different one: ridership has fallen to the lowest point in a decade. People are voting with their feet.

This is Common Sense. I’m Paul Jacob.

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meme too much government

Tom Paine and “The Crisis”

Tom Paine

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general freedom too much government

More Civilization

Civilization is a choice, a habit, a line in the . . . sand.

For modern, prosperous society to progress, to grow more healthy and wealthy and wise, most of us have to agree on a small set of principles. Mostly, we must agree not to rush to violence at the merest provocation.

There has to be a lot of negotiation to get anything done. At least, in a free and open civilized society.

Terrorism is the repudiation of this principle.

The main perpetrators of terrorism these days hail from Muslim peoples. But there are non-Muslim terrorists, too. Many of the “school shootings” and similar violent acts in America and even in Europe rarely get listed as terrorism, though they certainly look terroristic. And most don’t have anything to do with Islam.

Even when Muslims are the ones committing the terrorism, their victims are often also Muslim.

Some folks estimate that as many as 95 out of a hundred terrorist victims are Muslim. Why? Because so much of this violence goes on in countries like Iraq, Pakistan, and Afghanistan.

While this estimate is probably too high, the fact that Muslims themselves are the most common victims of Muslim violence suggests that the underlying problem is the lack of institutions in those lands that hold to the choice — the habit — of civilization.

So, yes: tyranny is at the root of the problem.

Americans, if we want fewer terrorists, might want to restrain our governments from propping up or closely allying ourselves to “Muslim” dictatorships, then.

This is something we can control.

This is Common Sense. I’m Paul Jacob.