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Posts Tagged ‘Government’

Our Bloated, Ineffective Regulatory State

Lawrence Auster, in a discussion of a documentary regarding Jewish master-criminal Bernie Madoff, notes the following:

The program also goes into the SEC’s total failure to investigate Madoff despite the credible accusations made against him by Harry Markopolis. When you see the SEC’s enforcement chief Linda Thomsen being grilled by a congressional committee, it becomes clear that she didn’t do anything. She didn’t do the simplest thing that would have revealed the truth about Madoff’s Ponzi scheme in one day, i.e., demanding that Madoff show the records of his trades with the companies he was supposedly trading with. Since no such records existed, because no such trades had ever taken place, his entire fraud would have been exposed by the posing of the simple demand, “Show us your transactions.” But they didn’t make that demand. Alternatively, they could have looked at the lists of the companies Madoff was supposedly investing with, gone to five of those companies, and said, “Has Madoff purchased these stocks from your company?” The truth would have been revealed in one day. But the SEC didn’t do that.

The SEC people give new meaning to the term “empty suit”–a person who is supposedly filling a certain job and carrying out certain functions, but in reality is doing nothing. There’s no one there, except a self-important non-entity receiving the salary, perquisites, and respect accruing to the job that he is not performing and hasn’t the slightest interest in performing.

This is, indeed, the worst aspect of government involvement in so many areas of our lives.  It creates massive costs, paperwork burdens, and anxiety for ordinary people.  On the other hand, certain lawless people that are willing to deliberately flout the system often get away with it, because the regulators are so incompetent and lazy.  We get the worst of both worlds: high costs and reduced freedom without the benefits of protection from predatory criminals.

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The Republicans appear likely to indulge in their worst instincts by agreeing (a) to extend unemployment benefits while (b) signing on to various tax cuts.  While perhaps tax cuts would be valuable, the real driver of our economic troubles is a widespread fiscal disaster among individuals, states and localities, and the federal government.  At all levels there is too much spending, not enough saving, and therefore too much debt.  Tax cuts and spending increases are a formula for more debt, and real debt hawkishness–not the timid embrace of welfare concomitant with tax cuts–is what is called for.  If anything taxes should stay the same while massive spending cuts are enacted in order to go to war with the debt.  If things continue as they are, there will soon be a complete devaluation of our currency, a debt default and/or hyperinflation, and continued stagnation.  Further, these various efforts at stimulating the economy through deficit spending have little to show for them this time around at home, in Japan for the last ten years, or in the US in the 1930s.  Only the private sector can create real wealth, and for it to work, this 1/3-of-the-economy-sucking-government to shrink.

The government needs to get out of the way of the economy.  In the late 70s, the way to do that was through tax cuts, which were exorbitant before Reagan came into power.  But today the way is by its overall mass and impact to shrink:  smaller spending, less generous entitlements, and a serious effort to attack the debt.  If that does not take place, tinkering with this or that program or tax rate will mean little.  Further, the real lesson of the Bush years, one would hope, is that we cannot follow the repeated Republican short-term-thinking which would cut taxes only to maintain generous spending programs.  This only kicks the can down the road.  The spending is the problem:   whether that money comes from borrowing or taxes is somewhat immaterial, either way it is sucked out of the productive economy and will be foisted on taxpayers eventually in some fashion or other.

The worst kind of politics often comes from bipartisanship, where each side gets what it wants, gives up its principles, and the public as a whole suffers due to mutual political expediency by the parties.  Obama must be opposed tooth and nail, along with nearly every component of his agenda.  If taxes slightly rise to deny him a victory on continued deficit spending, so be it.  He must be stopped, rendered impotent, and spending must be cut.

On the merits, unemployment benefits for 99 weeks are ridiculous.  People need to work, lean on family and friends, and nothing makes that happen more surely and quickly than a cut in these benefits.  Yes, there are bona fide hard luck cases, but there also a great many people that will look for and find a job within weeks of benefits running out.  If you subsidize something–in this case unemployment there will be more of it.  A much better program would be one where difficult make work was required to receive benefits, or if the government subsidized home sales and moves to places like North Dakota or Texas where work is plentiful.  More stringent work requirements for unemployment benefits (in the manner of the old “poor house”) would separate those truly unable to find a job from those running out their benefits to the max, while a spouse or parent or significant other’s income allows a middle class living when coupled with the benefits, plus some highly valuable leisure time.

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