I came across an article in The Economist the other day and an article called "All It Needs Is Love". The basic premise was that Capitalism has been damaged by Bankers and <sshhhh> people are starting to notice. So I posted the article, guessing, correctly, that some of my favourite free market fundamentalists would take up the thread and not leave me alone. I was right.
First, I was educated about a few of life's little realities:
Yes it is for sure. But the banking industry is a wholly regulated and hampered enterprise. That is the reason it is a tool to damage wealth and civilisation.
It's a myth that they are unregulated. It is one of the most regulated industries in history. Along with medicine.
I responded, protesting that history clearly showed that any time regulations or appropriate oversight was taken away, even just a little bit, the financial boffins managed to get themselves, and sometimes the rest of the world's economy, into trouble. I was thinking, of course, of the partial repeal of the Glass-Steagall Law in the USA which was supposed to keep retail banking and investment banking separate, presumably to keep the boys out of trouble. One only needs to realize that the Law was repealed in 1999 and by 2007.... well, you're old enough to remember Bear Sterns, Bank of America, Citibank.... Nearly tanked the whole world's economy. Here it is late 2014 and we still aren't completely over it. My correspondee was having nothing of that line of thinking:
Regulations aren't removed. They are messed with to keep it as bureaucratic and confusing so that any one is basically in violation of something at all times. Also both those industries are completely infused with the government credit matrix. It's not deregulation that brings the problem. It's over regulation and price controls and regime uncertainty that leads to malinvestment.
His basic premise seems to shoot in several directions at once. Obviously, he rails against any government action that messes with the free market. Alternatively, he claims that lack of regulation wasn't what brought on the 2007-8 crisis, it was stifling regulation, or something, back with the recession of 1920-1, or that Canada did better during the last crisis because we didn't have Glass-Steagall, but that couldn't be because we were so much better regulated, or something about a government guarantee of deposits... it was just so confusing.
The mention of "government guarantee of deposits" and Canada in the same sentence caught my attention so I wondered if Mr Woods actually understood how the CDIC worked. He must have been waiting at home to read my words because, within a short time, he responded that he assumed that I was talking about the FDIC and that if I didn't understand how this was a government intervention, then it was obvious that it was I who didn't understand how it worked.
I know it's probably nit-picking, but I didn't make the claim that it wasn't "government intervention". I used his phrase: "government bailout". It's definitely a form of intervention, that nasty habit of making companies do something they wouldn't otherwise do, but if you understand how CDIC works (and FDIC - which gets NO Congressional appropriations), then almost any fool can see it's NOT a government bailout.
Actually, I think the real problem here is the word "government". Libertarians just go all wonky any time they hear/see/use that word and it doesn't seem to matter what other words appear in the same sentence. It's ALL bad and ALL evil. <sigh>
I can't wait to tell my favourite local Libertarian that I actually conversed with Mr Woods. I'm sure he'll be impressed. Coming up: Tom Woods and the "depression" of 1920-21.
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