Big Apple mayor blasts Obama bank rules

It’s a pity that so many believe that a lack of regulation was responsible for the financial crisis…and an even bigger shame that so many conservatives fall for the same baloney.

America is anything but a laissez-faire country. The Federal Register contains over 70,000 pages of regulations. The eighties, which are commonly characterized as being the decade of deregulation, saw an increase in the register of an additional 10,000 pages.

The knee jerk reaction to the financial crisis, even among many conservatives, was to blame “greed” and a lack of government control. What such people are saying is that freedom is to blame. You can say “ah, but yes, but…” until you’re blue in the face, but if you’re pro-regulation then you’re anti-freedom. It’s as simple as that, it really is.

Take the crash. Did anyone part with their money with a gun to their head? Did anyone break a legal contract? No? Well then, nobody did anything worth expanding government control for.

Bankers, traders, investors – everyone’s greedy in the financial world. I guess if they weren’t, they wouldn’t be in finance. Greed – the desire for more – is what makes the financial world tick. Hell, it’s what makes civilization tick. Without greed, man would have been content to live in mud huts and suck termites out of the ground with a straw. The same goes for risk.

Of course, greed and risk can cause catastrophe. But given that rational (i.e. Westernized) humans are generally predisposed to avoid catastrophe wherever possible, we can assume that nobody involved in the financial meltdown did it on purpose. They took risks, motivated by greed, that turned out to be miscalculated.

Since “risk motivated by greed” is also the driving force behind human progress, it seems a little stupid to throw the baby out with the bathwater. Surely there must be some way of harnessing the good risk while protecting against the bad.

There is: leave people be to trade freely. That also means, of course, allowing them to suffer the consequences when they make bad decisions. Government interference distorts everything. First of all, the Fed distorts the economic information from which people make supposedly “reasoned” decisions. It does this by screwing with the money supply and interest rates. In a free market in which these things are decided by the accumulated choices of free individuals, they provide essential information which help people make good financial decisions and determine the most efficient flow of capital. When the Fed manipulates this information artificially and creates a false illusion of prosperity, then people – motivated by self interest in keeping with their nature – will make bad decisions and take misinformed risks. As much as I think Ron Paul is an outright Loony Tunes for his deranged stance on national defense, he’s right about the Fed. It’s been the root cause of every financial crisis since – and including – the 1929 crash and it’s about time it was seen for what it really is: a fascistic institution which is harming America and the rest of the world and should be abolished.

Of course the state also screws the natural state of things when it offers to bail out those who have made bad decisions. They won’t feel so inclined to calculate their risks more conservatively in the future when they know that the state considers them too big to fail.

Of course this doesn’t even touch on the rest of it…the state’s interference in the housing market, forcing banks to underwrite bad loans to people who should have never taken out a mortgage in a million years, etc etc.

The government is the problem, folks. Always has been and always will be until people realize that its only proper role is to protect us from outside attack, make sure that nobody abrogates anyone’s rights and to ensure that contracts between humans are honored. The real power of America is in the hands of its free citizens. Allowing the government to force more regulation on the banks does not solve the problem, it just papers over a problem which is caused by the government in the first place. And once that bogus “fix” leads to more problems, the statists among us will declare that more government control is the solution…and so forth. The only logical conclusion is Marxism or fascism and indeed that’s where the statists of the left are steering us right now. It’s just a shame that so many conservatives are aiding and abetting this atrocity just because they have the same knee-jerk tendency to blame greed and declare that the state must “do something” to regulate it.

Sharke on January 22, 2010 at 11:19 PM