Tag: Dodd-Frank

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crime and punishment general freedom too much government

The Right to Ignore Leviathan

Ignore Leviathan

Charles Murray, author of Losing Ground and other controversial books, has a suggestion. For business people. Pillars of the community. Fine, upstanding citizens.

Civil disobedience.

He’s suggesting, says John Stossel, that we ignore the parts of government that don’t make any sense, all the nonsense in the big books of the regulatory state.

Murray’s done this in his latest, intriguingly titled book, By the People: Rebuilding Liberty Without Permission. Stossel discusses it on reason​.com:

Murray says, correctly, that no ordinary human being — not even a team of lawyers — can ever be sure how to obey the 810 pages of the Sarbanes-​Oxley Act, 1,024 pages of the Affordable Care Act or 2,300 pages of Dodd-Frank. 

What if we all stopped trying? The government can’t put everyone in jail.

This is a provocative idea, even if not new.

Henry David Thoreau spent a night in jail for not paying the poll tax, a tax that helped pay for the Mexican war he so despised (and was right to despise). Thoreau eloquently argued for civil disobedience in such cases; Herbert Spencer did something similar, in his 1851 Social Statics, with the chapter “The Right to Ignore the State.”

It is a risky tactic, of course. Thoreau was, after all, incarcerated for that night. You could wind up spending more time in the hoosegow.

Still, it could be worth it. Civil disobedience has good effects. Stossel cites “historian Thaddeus Russell [who] reminds us that many freedoms we take for granted exist not because the government graciously granted liberties to us but because of lawbreakers.”

It’s another path for citizen-​initiated reform.

And it’s Common Sense. I’m Paul Jacob.

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Ignore Leviathan

 

Categories
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.

Categories
folly free trade & free markets national politics & policies too much government

Wide-​Eyed Wackiness

Where to begin? How about the very first sentence of the New York Times article hailing passage of the Dodd-​Frank financial bill? According to the illustrious fishwrap, “sweeping expansion of federal financial regulation” reflects “a renewed mistrust of financial markets after decades in which Washington stood back from Wall Street with wide-​eyed admiration.”

We’ve seen some liberalization of financial dealings over the years. It was once illegal to own gold. Travelers can be glad of the rise of interstate banking after governments began to permit it in the 1980s.

But have politicians really offered nothing but “wide-​eyed admiration” for “Wall Street” for “decades”? Has the federal government really been hands-​off till now?

Take Senators Dodd and Frank. They were out front pushing home ownership on people who could not afford homes, with multiple programs and legislative packages. This bubble-​making process was further inflated (quite literally) by the Federal Reserve’s cheap credit policies. Many lenders, encouraged by government-​provided (but perverse) incentives, jumped onto the Irresponsibility Bandwagon in the run-​up to collapse. 

So how can the “solution” be additional bailout authority … which will further encourage bankers and others to invest unwisely? 

And the new regulations — these, too, are supposed to help? We don’t even know what they are yet, because bureaucrats have yet to write them, as specified (vaguely) by Congress. In addition to their burden, they will allow pols to shake down Wall Street for years to come. 

This is Common Sense. I’m Paul Jacob.