However You Can Get It
March 27th, 2008 by Peter SudermanA few hours ago, Barack Obama gave a speech on financial regulation. As always, he’s a strong speaker. But I have to take issue what some of what he said. For example:
But the American experiment has worked in large part because we guided the market’s invisible hand with a higher principle. A free market was never meant to be a free license to take whatever you can get, however you can get it.
This is a straw man. No one ever claimed that’s how things are or should work. Free market advocates aren’t promoting absolute anarchy, nor anything much like it. And that’s certainly not what we’ve had in place, either, so it’s not got anything to do with our current situation.
On the other hand, a free market should mean being free to conduct business — and take the risks that come with it — without regulators standing over your shoulder and without massive compliance costs. Sarbanes-Oxley, for example, the last major financial oversight law, has been estimated to have cost $1.4 trillion (yes, with a T) dollars. Compliance costs have been estimated at an average of about $2.4 million a year per company.
No wonder advocates of stricter regulation tend to gloss over the costs involved. And yet Obama’s solution is… more regulation.
March 28th, 2008 at 12:27 pm
Here’s where you and I differ. I think that is how the market ends up working, because (for whatever odd reason) free-market champions don’t seem to accept the reality that people lie and cheat when they compete with each other for money.
March 29th, 2008 at 11:24 pm
The costs outweigh the consequences however with respect to cheating and lying. Laws and regulations governing fraud and malfeasance are more harmful than helpful when they stifle free market operation, as they probably have.
The alternative to free markets are over regulated and inefficient entities which can not compete in a global marketplace. Regulation is also a slippery slope and is frequently employed by liberals with an agenda, I suspect, that has little to do with prosperity for anyone, much less everyone.
Liberals are loathe to enforce laws and regulations already on the books, why enact more ?
There is a nascent straw man not mentioned which is applicable here…that liberals support the US.
No one could honestly claim that.
March 31st, 2008 at 3:03 am
Who let all the hot air in here…
March 31st, 2008 at 1:18 pm
Can you back this up at all? How many billions did the S&L deregulation cost taxpayers? The airline bailout after deregulation? Enron’s practices after deregulation of the financial services industry?
Once again, I don’t think you can back this up at all. For one, there are several alternatives to so-called “free markets,” not just the one you describe.
Another simply false statement. Lack of enforcement of regulations has been a Republican hallmark for a couple decades, now. How can anyone look at HUD and EPA under Bush and argue otherwise?
There are plenty of reasons to cheer free-markets, but you haven’t listed any of them, Greg.