Thursday, April 29, 2010

Finance Reform: A Bullet to the Brain

The issues underlying financial "reform" are incredibly complex. Yet, it is utterly banal, average people, with average (or less) knowledge of the subject who will pass laws to force financial practitioners to act in a certain way. Imagine a quack who could pass a law telling a dentist how to pull a tooth. Financial "reform" will be equally painful, although the pain will be spread over decades and be much harder to detect. If one needs a visualization of how regulation is simply force that negates the mind, think of that dentist and the quack-regulator.

The other consequence of the complexity of the financial mess is that it becomes nearly impossible to fight financial "reform" except at the philosophical level. Philosophically, the broad case for capitalism is made by Ayn Rand's philosophy of Objectivism. It validates reason and individual rights, the base of capitalism. However, the battle must also be fought at the level of economics, and on that level the issues are simply too complex to fight something as "real-time" as this bill.

At the level of economics, unraveling the mess means understanding how a history of financial intervention dating back to our country's founding has cumulated into the current mess. We have the consequences of the state laws against branch banking, the government's ossification of the gold standard after the Civil War, the establishment of the Federal Reserve Bank, the 1930s laws (Glass-Steagall, the SEC), government-sponsored securitization of mortgage finance (Fannie Mae and Freddie Mac, also beginning in the 1930s), Regulation Q, laws against corporate takeovers, the final abandonment of the gold standard in the late 1960s, laws that restrict the trading of derivatives on exchanges, etc.

The consequences of each of these laws can be traced, sometimes through spans of time longer than a century, all the way up to the present day. Each of them was involved in the current crisis (and each was passed in response to bad consequences stemming from the prior laws). The solution requires the repeal of all of them, and the establishment of free, private banking in a form that has never existed in this country.

This is the type of case that must be made on economic terms and is the proper context for the congressional hearings on financial reform. However, very few people can present such a case. Certainly, none of them have appeared in these hearings.

Bottom line: The quacks are going to tell those of us in finance how to practice our craft. Finance is the "brains" of capitalism. It allocates capital to where it can create the most wealth. Our economy's brain is about to take another bullet.

Saturday, February 06, 2010

Healthcare Is Not a Right

Healthcare is not a right. It is a good and service to be bought voluntarily from willing providers, like anything else. Do I tell my barber that a haircut is my right, and then force him to provide me with the haircut of my choice at the price that I dictate to him? That is what socialized medicine does to doctors.

If it is my right to that haircut, what has happened to the right of the barber to offer his service on terms agreeable to him? And if his rights are violated -- if he is reduced to the status of an unwilling servant -- imagine how lousy my haircuts will look, as he rushes them along to provide them at the price set by government.

Now consider that this same scenario plays out right now with a far more vital service, one upon which all of our lives depend. Today about 50% of medical costs are paid for by the government under terms set by government. We have 50%-socialized medicine in the United States. The problems we have are due to this high level of socialism that already exists.

The solution is not to drink the whole bottle of poison and condemn all of us, doctors and their patients, to life-shortening medical "care" by rights-less doctors and their disgruntled, sick patients.

The solution is freedom. It has never really been tried. Abolish government funding of medical care. Eliminate the rules that bind insurance companies and doctors from offering the care that customers want. Respect the rights of doctors and their patients to freely contract with each other for medical services.

Healthcare is not a right, and our lives depend on acknowledging this fact.

Say "no" to any scheme to further entrench socialized medicine.


I just posted this here on a website that is soliciting solutions for the problems in healthcare. Register your vote.