Category Archives: regulation

Negotiating?

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The Progressives in our Federal government insist, with a straight face, that the Republicans have put forward no concrete proposals in the present budget…negotiations.  They carefully ignore the fact that the Republicans already have put forward three concrete proposals: two House-passed budgets (for 2011 and 2012, which contained explicit spending, taxing, and entitlement reform steps), and the proposal on which they campaigned last fall.

Oh, wait—the Progressives studiously ignored those, too—in the Senate, where they refused even to permit debate on the budgets and ever since, with their pretense that the spending, tax, and entitlement reforms of the campaign don’t exist.

The Progressives’ current position?  As The Wall Street Journal reports,

[M]any Democrats have ruled out any changes to Social Security during the current fiscal talks.

And

A senior administration official said the White House would make no new offers until Republicans changed their opposition to raising top tax rates.

Throughout this entire shabby charade, President Barack Obama has been accusing the Republicans of holding middle-class America hostage against their refusal to agree to tax rate hikes on his hated Americans.  Yet the Republicans and Progressives already agree on making permanent current tax rates on 98% of Americans.  It’s Obama who is threatening to blow up our economy on his ego trip of demanding 100% of a tax deal for which he already has 98%.

It’s Obama who’s threatening to blow up our economy by refusing to discuss spending cuts and entitlement reform at all—after agreeing that they should be on the table shortly after the election.

It’s Obama who’s threatening to blow up our economy with his insult of demanding sole debt ceiling authority in utter disregard of the Constitutional role of Congress—and not the President—in setting spending.

Update: Speaker John Boehner (R, OH) and a number fellow members of the Republican leadership made a counterproposal Tuesday that included much of Obama’s precious tax revenue increases–not as rate increases–to the tune of $800 billion, and $1.2 trillion in spending cuts.  Obama blew this off within the hour.  So much for negotiating.

Ex-Senator Rick Santorum, last night on Greta van Susteren’s On the Record,  said that Obama’s fallback–his Plan A–of Sequestration and tax rate increases across the board makes him entirely willing to take our economy over the cliff: Obama gets his tax rate increases, and he gets the Progressives’ decades-long fought-for cut in defense spending, a $500 billion reduction.  Obama sees this as a heads, I win; tails, you lose situation.

I think Santorum is right.

Community Banks, Big Banks, and Government Regulation

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First, the value of community banks, as illustrated by this anecdote from an Iowa bank’s President:

We have a good story to tell. According to the latest annual report from the Iowa Bankers Association, Iowa’s banks helped keep the state’s economy humming by, among other things, safeguarding $56 billion in deposits and using those funds to lend nearly $42 billion to help Iowa residents and businesses. Iowa banks also paid $158 million in taxes, made $39 million in community donations, and sponsored financial education programs in more than 129 schools.

For perspective, this compares to Iowa’s estimated 2012 GDP of $158 billion.

Despite this value-add, though, here’s what Uncle Sugar is doing to these smaller banks, courtesy of Dodd-Frank:

This expanding multitude of [Dodd-Frank] rules is…why some banks have decided not to offer certain types of consumer loans and more accommodating repayment terms.  A recent survey of Iowa bankers reveals that 89 percent of respondents say the regulatory environment has impacted their ability to provide credit; 81 percent say it has hurt their customers’ ability to understand financial products; and 68 percent say it has caused them to consider eliminating financial products.

As Spirit of Enterprise notes, this favors big banks, who can afford the costs of staff whose sole function has no relation to a banks’ actual business, but instead centers on compliance with government mandates, and it’s driving these community banks out of the industry.  Defending Enterprise puts it this way, and rather than seeing him as cynical, I agree with him:

Once heavy new banking regulation became inevitable, Wall Street and the Democrats insured that the government would make the big banks even bigger by driving the small banks out of business. One might argue that these were “unintended” consequences. We respectfully submit that these consequences were so predictable, akin to the timing of the rising of the sun or at least tomorrow’s weather, that they were, in fact, intended.

Government Regulator Abuse

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Described by John Stossel:

Today, Americans were told that they must close their Intrade.com accounts. That happened because the federal government agency known as the “Commodity Futures Trading Commission” (CFTC) today sued the prediction market, where people from all over the world bet about things like who will win elections.

Because

Intrade has…successfully predicted events like Saddam Hussein’s capture and the winner of the Oscars.  People with the best information trade about those events, and drive up the odds on Intrade.

After all, such things are against US financial regulations, don’t you know:

Section 4c(b) and 9(a)(3) of the [Commodity Exchange] Act, §§6c(b) and 13(a)(3) (2006); Section 2(e) of the Act, as amended by the Dodd-Frank Act, to be codified at 7 U.S.C. § 2(e); and Regulation 32, as amended, to be codified at 17 C.F.R. § 32 (2011)

The CFTC is, here, specifically and deliberately targeting “prediction markets:”

It is against the law to solicit US persons to buy and sell commodity options, even if they are called “prediction” contracts, unless they are…traded on a CFTC-registered exchange….  Today’s action should make it clear that we will intervene in the “prediction” markets, wherever they may be based.

Why does this matter?  Because if the government can “intervene” to destroy an obscure little idea and the free market business it generated, it can do so in the free market generally, and that market becomes a  government run market.

The CFTC argues that the regulation

is important for a number of reasons, including that it enables the CFTC to police market activity.

So the CFTC says it’s necessary to enforce so that it can enforce.  Nothing circular here.

One more thing.  The CFTC has, with this…position…placed your penny-ante poker game at risk, too.  After all, each of you, as you deal the next round, are soliciting options on the future—of your and your opponents’ hands.

An Empirical Demonstration

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Investor’s Business Daily provides one.

Renting a 20-foot truck one-way from San Francisco to San Antonio, for example, will cost $1,693. But the U-Haul tab to go in the opposite direction is just $983.

Hmm….

This figure compares, across just a few parameters, the outcome of big government, high taxes, and profligate spending—California—with the outcome of limited government, low taxes, and (more) disciplined spending—Texas.  Texas has many faults, but the routine of government interference with its citizens’ wallets and businesses isn’t among them.

California has become a state that people are increasingly trying to escape, and Texas a state people are increasingly migrating to.

…

A study by the Manhattan Institute found that Californians have been leaving for states with better job prospects, lower taxes and better business climates.

In other words, states that are pursuing the kind of low-tax, limited government, free market policies [President Barack] Obama typically rejects.

The public may have voted to give Obama a second term.  But many people in California are voting with their feet, leaving the state that’s already put in place policies Obama has promised to keep pushing for four more years.

Obamanomics, as California demonstrates—its economy actually shrank sharply in the last four years—are an utter failure.  RTWT.

Fairness

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Columbia College Chicago Professor of Philosophy Stephen T Asma is quoted in a recent Wall Street Journal:

Our contemporary hunger for equality can border on the comical.  When my six-year-old son came home from first grade with a fancy winner’s ribbon, I was filled with pride to discover that he had won a footrace.  … “No, it wasn’t just me,” he explained.  “We all won the race!” …. Everyone who ran the race was told that they had won, and they were all given the same ribbon.

More troubling than the institutional enforcement of this strange fairness is the fact that such protective “lessons” ill-equip kids for the realities of later life. … The focus on equality of outcome may produce a generation that is burdened with an indignant sense of entitlement.

Oh, wait….