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Opinion
Sep. 21, 2008
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VIN SUPRYNOWICZ: Toward less freedom, more bureaucratic control?

VIN SUPRYNOWICZ
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Huge financial institutions long screened from normal investor skepticism by the assurance that "They can't fail, they're federally regulated!" are dropping like dinosaurs in the snow.

In this crisis of consumer confidence, the unreconstructed statists of academia and the Left Coast press finally see their main chance to advance socialism in America by another two or three giant strides.

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    • The brazenly rip their shirts and wail that all the fine regulatory agencies built up under Roosevelt, Wilson, the other Roosevelt, and Saint Lyndon of the Pedernales have been secretly disbanded and sold for scrap since Reagan's ascendancy in 1980, referring to "the structural changes of the past 28 years that have made all this possible -- the waves of deregulation," in the words of Thomas Frank, The Wall Street Journal's token Trotskyite.

    Why, "Thanks to the party of Romney and McCain, federal work is today so financially unattractive to top talent that it might as well be charity work," Mr. Frank laments.

    Really? Lots of those high-paid posts now going begging? Which federal regulatory agencies have been closed and boarded up, precisely?

    In fact, the regulatory maze has only gotten vastly bigger and more intrusive over those past 28 years, as you can easily confirm by going down to the bank tomorrow and trying to open an account without giving a Social Security number.

    Yet the Talking Points Chorus now join their jackass voices in cacophonous song to declare "markets don't work" thanks to "greedy speculators" who are driving up the price of everything.

    Never mind the man behind the Federal Reserve curtain, printing up greenbacks to "loan" to his banker friends by the billions till the stuff degrades to the value of Play Money. In fact, gasoline is considerably cheaper now than it was in 1958 or in 1928, if in each case you ask how much you can get for a $10 gold piece.

    It's only when you price it in the pieces of green funny money which the Fed now calls "dollars" that you feel like you're trying to buy the stuff with Cheerios boxtops.

    I went to a yard sale a few weekends ago. The kids were selling lemonade under a big umbrella in the hot driveway for 50 cents a cup. I bought one.

    Would either the kids or I have been better off if we'd both been protected from the merciless, dog-eat-dog free market by a requirement that the kids acquire a government permit for this activity, subject to inspection of the cleanliness of the kitchen where they poured their lemonade into the pitcher, as well as a certificate that the prices being charged had been OK'd by some government agency? What if that agency had decided the maximum they should charge is 17 cents, and the kids had just given up the whole thing? What if the inspector ruled the minimum price should be $1.25, in which case I probably would have just gone without?

    Who says the kids and I needed any help -- which is what you're saying, if you declare you're now convinced "the free market doesn't work"?

    Imagine you've got two old beaters in the garage, with Blue Book values of $1,500. You run into a collector who wants one -- a rare model he figures he can fix up and re-sell for plenty. He gladly pays you $5,000 for the heap, which then allows you to give the second junker to your nephew for 10 bucks; everybody's happy.

    But if we allow government regulators to replace the "free market," how will they earn their pay? They'll dictate you must sell each car for $1,250 to $1,750 (since that's what's "fair"), pay $180 sales tax on each, and on top of that pay an additional $180 "permit application fee" per car to compensate the huge new federal "Office of Auto Price Equity" for the time they'll spend "regulating" and "certifying" your transaction.

    Instead of $5,000 you now have to settle for $3,000, out of which you pay $720 in fees and taxes -- or probably half those totals, since your nephew can't afford the car at $1,250, anyway.

    Some will say, 'That's silly, Vin, the government isn't interested in regulating that kind of small-time transaction!" Really? Go back to 1943 and you'll find a huge federal Office of Price Administration, combined with an Emergency Stabilization Act that froze wages but allowed employers to woo scarce workers by offering free fringe benefits, which is how we got our current dysfunctional system of health insurance tied to employment.

    The OPA regulated not only the price but also the amount of sugar, coffee, gasoline, and virtually every other commodity Americans were "allowed" to buy.

    That's what regulators do. When they regulate one thing, they find people shifting their capital to unregulated sectors of the economy, so they have to go regulate those, too. Pawnbrokers now have to report fair-sized gold or jewelry transactions. When the new rules came down, regulators sent the pawnbrokers the same forms used by banks to report "suspiciously large" cash transactions. This was all about blocking the "financing of terrorism," we were told -- nothing to do with the IRS.

    Once started, regulatory schemes have to multiply, because they never work for long. Banning speed encourages home chemists to brew it from pseudoephedrine, so pretty soon you have to get them to stop putting that in cold pills. Black markets spring up to provide folks with what they need, creating new crimes, new networks of criminals who thereby raise the capital to get into lots of other great activities like numbers-running, protection rackets, extortion.

    Many will say America's isn't a perfectly free market, right now. Of course it's not. So why not work to make it more free, by removing expensive, dysfunctional and/or counterproductive regulations that encourage tax-dollar bailouts while duping investors into thinking, "This must be a safe place to put my money -- why, it's government regulated!"

    Why move the other way -- toward less freedom and more bureaucratic control? Because we think the trial runs in Italy, Germany, and the Soviet Union in the early 20th century turned out so well?

     

    Vin Suprynowicz is assistant editorial page editor of the Review-Journal and author of "The Black Arrow." See www.vinsuprynowicz.com/.



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    vee wrote on October 18, 2008 01:11 AM: makes you wonder how many of the 70 felony trials he served over was really ,real ,and how many was innocent ,nevada ,keeper of the prisons ,they want more so they gotta keep them filled ,with the imoral people that is hired to keep justice, i dont think they will be short of crimes even if they have to commit them in order to convict ,,,,,,


    Paolo wrote on September 26, 2008 07:04 PM: Vin is right. A few additional observations:

    Capitalism is being blamed, as always, for the crises created by government meddling. If any crisis were ever "made in Washington," it is the current financial mess.

    Lenders made loans to clearly unqualified applicants, on the correct belief that they could then sell the loans to Fannie Mae or Freddy Mac, who could then turn around and fleece the taxpayers when those loans turned up--inevitably--to be bad.

    Of course, that's just a small part of the crisis. The biggest part is the Federal Reserve, which creates money and credit out of thin air. No human being or group of human beings can be entrusted with such an inherently dishonest power.

    All our stupid foreign adventures, all our insane lending practices, all our financial bubbles, are created by the Fed. Ron Paul is right; we need to go back to sound money based on precious metals.

    The best way to do this is to simply repeal all "legal tender" laws that make it illegal to create sound money in competition with the government's worthless scrap paper.

    The Federal Reserve should first be abolished, then investigated, then its heads brought up on corruption charges that land them all in jail.


    Bill Smith wrote on September 24, 2008 08:39 AM: This would be funny if it were not so sad. Vin is 100% correct, yet we have imbeciles (or closet Hitler fans) like Brian and snackler who offer nothing but the typical ad hominem attacks. The is no such thing as a free market in Amerika, yet the fools still keep clinging to the myth that “deregulation” causes all problems.


    Mutineer wrote on September 22, 2008 12:41 PM: Anyone who claims deregulation caused this, or that massive regulation is needed in the future shows their ignorance on the entire matter.

    One major sin caused this whole mess; it was the same cause of the lesser implosion of the 1980's and 90's.

    L. William Seidman, "Lessons of the Eighties: What Does the Evidence Show?":
    "...the banking problems of the 80s and 90s came primarily, but not exclusively, from unsound real estate lending."

    Do we need excessive legislation to resolve this? No. Our enlightened leaders, now that the cow is out of the barn and in a Chicago bar having a beer, close the barn doors by requiring proof of income when applying for a loan.

    Now that we have that single requirement, it prevents certain people that make $8.25 an hour mowing lawns from buying a half million dollar track house in the center of Los Angeles. I guess apartment living...sniff...will have to do.


    Susan wrote on September 22, 2008 09:27 AM: Vote for Ron Paul. It's that simple.


    Toward Less Freedom, More Enlightened, Unregulated, Corporate Control? wrote on September 21, 2008 10:34 PM: Toward Less Freedom, More Enlightened, Unregulated, Corporate Control?

    Don't worry, the "invisible hand" of the free market works. Except when it doesn't.


    snackler wrote on September 21, 2008 10:03 PM: The $89 billion withdrawn from money market funds was for one day. For a one week period it was $224 billion. For those of you who think everything is peachy and believe Vuns spiel, read this.

    biz.yahoo.com/ap/080921/financial_meltdown_markets.html

    Start getting your info from financial sources and not from hack journalists or bloggers. On finance.yahoo.com you can access around 2 dozen financial websites. Click on "View more top stories" in the "Top Stories" box to access these sites. Google also has access to many financial websites. www.bloomberg.com is another good site.


    neuvo americano wrote on September 21, 2008 09:28 PM: This guy didn't drink lemonade, he drank the kool aid. Let's continue to trust everyone --it does not work. Even God gave us the ten original regulations because he knew we could not be trusted.


    As your President wrote on September 21, 2008 07:58 PM: As your President, I will:

    1. Limit welfare to truly disabled.
    2. Limit sec. 8 to apartments and for 1 year.
    3. Repeal the Community Reinvestment Act
    4. Ban the Congressional Black Caucus
    5. Ban Affirmative Action (anti-white) Programs
    6. Deport illegal aliens
    7. Require parents to pay $500-1,000/yr for child's H.S. education.
    8. Give annual reparation checks to White Men (born after 1960).

    *I regretably would have to bailout the banks on their bad debts that were required under Community Reinvestment


    snackler wrote on September 21, 2008 07:36 PM: What Vun and those who agree with him should do is spend a few thousand hours, not seconds, studying what Wall Street and their fellow travelers really do. Wall Street engages in the no holds barred effort to create the biggest fortunes for themselves. The financial sector is twice the size of manufacturing and these guys all work for big bucks. Pushing paper. Mortgage and credit crisis? Wall Street. High gas and food prices? Wall Street. The only thing Wall Street considers illegal is getting caught.

    Huge money can be made when a market crashes if you bet the right way. We have many money men trying to crash the markets to get those big bucks. The same guys that are crashing the market and crying "let'em fail" are the same ones who hope to pick up assets on the cheap after the crash and make billions.
    Wall Street and their "financial products" along with their winner take all greed have brought the world financial system to the brink of disaster. It is not about a goverment takeover to socialize the system, it is making sure we do not have another depression. The financial system is out of control and to say the government is meddling with the free market is just plain ignorant.

    Money market funds rarely lose money and are not government insured. When word got out last week that some funds were losing money, depositors withdrew $89 billion in a couple of days. Some people took their cash and buried it in their back yard. In the money fund universe $89 billion is not a lot. But can you imagine if the government had not stepped in late last week and guaranteed those funds how much money would have been withdrawn or the consequences of those withdrawls? 1930's anyone.


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