Tag Archives: regulation

Regulations Impacting Free Speech

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Now we see this from the New Jersey Law Journal [emphasis added]:

As corporate money continues its steady flow through the post-Citizens United world of U.S. elections, general counsel may soon have a new disclosure item to worry about. Last Friday, commissioner Luis Aguilar of the Securities and Exchange Commission called for the agency to consider a new rule requiring public companies to disclose all political spending. Shareholder proxy proposals seeking disclosure of corporate political donations are at a new high this year, according to the National Association of Corporate Directors. Aguilar says shareholder pressure is working, because nearly 60 percent of the S&P 100 companies had political disclosure policies in place as of December 31, compared with only a handful seven years earlier.

Never mind that, if shareholder pressure is working, a Government rule controlling free speech in this arena is plainly unwarranted.  This is just another cynical Progressive administration attempt to regulate free speech.

Managed Economies and Real Estate

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The People’s Republic of China offers a demonstration of the…complexities…involved in centrally managed a national economy, and the risks to those who attempt to operate in such an environment.

The present example centers on the Chinese real estate market.

Real estate was once one of the nation’s most successful industries. [D]evelopers plowed billions of dollars into huge developments—with apartments, commercial space, pools and golf courses—outside top-tier cities such as Beijing and Shanghai.

Now, having been drawn in by expansive government policies, those players are being damaged, if not destroyed, by that same government changing its rules.

Policies enacted since 2010 include restrictions on the purchase of second homes, higher down payments and tighter credit [, and] China’s two-year push to drive down property prices has punished many of the nation’s once highflying property developers and stymied a number of upscale projects.

And so we have this:

Today, the Xi Shui Dong development [for example, a 59-acre complex in Wuxi] stands less than half complete, hamstrung by its parent company’s high debt and tough new government restrictions. Last year, unit sales fell 25% from 2010, despite steep discounts. Construction cranes loom over mostly empty streets boasting only a handful of retailers.

Real estate developers are victims of the vagaries and capriciousness of government control over the nation’s real estate sector—controls which change as government changes its mind unpredictably, and as new members of government, anxious to make their own mark, decide they have a Better Idea and push it through.

Energy Then and Now

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I’ve been going back through a book I first read 30 years ago, the National Academy of Sciences’ Energy in Transition 1985-2010: Final Report of the Committee on Nuclear and Alternative Energy Systems.

At this point I’m less interested in specific predictions (over a future 25 year period?) than I am in the thinking and policies espoused by the NAS (and later by a variety of government administrations, as it will have turned out) to achieve the report’s goal of reduced energy consumption by the US.  Thus, the book leads off with this (remember, this is a 1980 copyright):

Slowing the growth of energy demand will be essential, regardless of the supply options developed in the coming decades.  In fact, the demand element of the nation’s energy strategy should be accorded the highest priority.  …this reduction could be accelerated by such explicit government policies as taxes and tariffs on energy and standards for performance….  [G]rowth of demand for energy in this country could be reduced substantially…by price-induced shifts toward less energy-intensive goods and services.

So much for recovering our manufacturing capacity.  The NAS continued [emphasis added]:

A major conclusion…is that technical efficiency measures alone could reduce the [energy/GNP [the earlier measure of US economic output]] ratio to as little as half its present value….  (This conclusion is sensitive to the prices assumed in the analysis,…result of this magnitude is attained only if prices…increase more rapidly than probable in a market at equilibrium.)

In some cases the price increases necessary…would have to be secured by taxes that would open up a wedge between consumer prices and the cost of producing and delivering energy.

The NAS had this to say about the impact of such measures [again, my emphasis]:

To avoid economic penalties, the rate of replacement must generally depend on the normal turnover of capital stock…though rising energy prices will accelerate this turnover in most cases.

“Normal turnover,” carefully manipulated by government interference with free market pricing through those taxes and tariffs and standards.

The real problem is finding a new balance between energy supply and energy demand, consistent with generally satisfactory overall economic performance. …

Tax, tariff, and price control policies…are important influences on the demand for energy.  But energy consumption can also be molded directly—for example, by imposition of mandatory standards for the efficiency of energy-using equipment….

Here is the NAS’ endorsement of economic management from the center—from government—preferring that to the clutter of a market of free actors freely interacting; i.e., we individual Americans acting in our own self-interest, unfettered by government, and achieving our own balance and defining for ourselves our “generally satisfactory performance.”  A free market at equilibrium is not to be tolerated.

Does any of this sound familiar in today’s political (I hesitate to say economic) environment?

Another 2nd Amendment Question

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But it’s (ostensibly) for a good cause: Illinois State Representative Kelly Cassidy (D, Chicago) wants to tax the sale of ammunition and use the proceeds to help defray the costs of “high-crime area” trauma centers that treat the results of violent crime.

Illinois Campaign to Prevent Gun Violence Campaign Director, Mark Walsh, actually argues with a straight face

[The money would go] into communities here in Illinois that have been damaged with gun violence.  I think it’s a legitimate way to pursue funding.

This is, at best, naïve.

Illinois State Rifle Association Director, Richard Pearson, makes things clear:

[Criminals are] not buying their ammunition (legally). They’re not paying any part of the tax. They’re getting their stuff illegally[.]

Taxing the law-abiding to pay for the criminals’ actions doesn’t address the problem—that violent crime.  If Illinois wants to lower the costs of violent crime outcomes, the answer is straightforward: reduce the incidence of violent crime.  This begins with enforcing crime laws, even in those “high-crime areas,” not waiting until the violence has been done, and then looking for ways to cover the price.

It’s unacceptable to expect law-abiding citizens to subsidize the outcomes of enforcement failure.  State Congresswoman Cassidy knows this full well—her move is nothing more than another attempt to restrict our firearm possession and ownership and use rights.

Do We Really Need This Sort of Thing?

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The Federal Housing Finance Agency, according to The Wall Street Journal, is looking at the development of a system that could replace both Fannie Mae and Freddie Mac, whose continued financial existence is an open question.

Given the lack of coherence in Congressional or Executive support for reform in this arena (beyond agreeing that “something” ought to be done “real soon now”), the FHFA wants to maintain flexibility in its own views of how deeply the government should support the $10.3 trillion mortgage market.

One of the things the FHFA is considering is combining the several forms of mortgage-backed securities (all those MBS, CMOs, etc. of not-so-long-ago fame) that Fannie Mae and Freddie Mac write into a single, standardized (mortgage-backed) security that each would issue.  The idea is that with this single instrument issued by both, it would be easier to eliminate both FMs in favor of a single agency.  Simplification is a step in the right direction, but this seems just a variation on a theme, and not real reform—it would retain the concept of a government agency in the mortgage business.

Another option under consideration is the transfer of mortgage portfolio responsibility to a third-party investment firm, but FHFA says that doing this would likely be more expensive and come at higher risks for the regulator.   But this perpetuates the myth that a government regulator should be involved at all.

In the meantime, in the administration’s usual vague manner, Treasury Secretary Timothy Geithner “pledged to lay out more detail on the administration’s approaches to reforming the U.S. housing finance system this spring.”

Why not carry out real reform, and get government out of the housing market entirely, while freeing the lenders to lend according to actual risk assessments, with no favoritism forced for government-approved groups of borrowers?