9/28/2008

09-28-08 - 1

I just don't understand the anger against regulation and big government. People act like regulation killed their mother. Here we are in the middle of the nation's second largest ever financial collapse, caused almost 100% by lack of regulation, and still people are railing about how government needs to be smaller. Taxes have been slashed for the super rich, and 90% of americans are far worse off for it (even though their taxes were slightly cut, the cost to them in inflation and loss of services and the national debt and the failure of our government to take care of the country is worth much more) - and yet still people rail about how taxes are too high. Certainly most of the politicians are simply in the pocket of industries, when they push for deregulation it's just so their donor can make more money at the expensive of the safety and security of the average citizen, but a lot of the voters actually believe this malarkey.

Bill Clinton was on the Daily Show last week, and he was charming and charismatic as ever. He gave a very simple analysis of the problem, which I largely agree with. After the dot com crash, we were basically in a recession. The Fed and GWB tried to block the recession by cutting taxes and slashing the Fed overnight rate to ridiculous lows, pumping the US economy full of tons of cheap credit. Unfortunately that money wasn't invested into anything productive since all our industries were tanking, the only thing profitable they could find to jam it in was real estate. It's easy to be seduced by Bill, but we should remember that he's one of the people behind this mess. The 1999 bank deregulation (also here ) that he passed was the opening of the floodgates for financial irresponsibility. Those regulatations were put in place in the depression because the financial industry had been so reckless and caused that mess, and guess what, you repeal them and they immediately do it again, big surprise! (Clinton's first step was followed up whole heartedly by GWB, who gutted the SEC and just about every other regulatory agency through appointment of people who were incompetent or simply not interested in enforcing the law; this is the real tragic legacy of the Bush administration IMO, not the Iraq war).

Of course nobody's talking about fixing the corruption that would really help. How about opening up the government-sponsored mopolies of the cable and cell networks to true open competition so that we can get some innovation and compete with other countries on tech infrastructure? How about opening up immigration for qualified applicants? Tech companies desperately want to hire more skilled labor; hell, the entire Indian tech boom would be diminished or delayed if we'd just let them come to America the way they all wanted to.

This crisis also brings into focus something I have often written about here : the corruption & giant loop hole of the corporate veil. It's almost like you can call yourself a corporation, then go on a killing spree, then when the cops come looking for you, you go "oh yeah, that corporation really fucked up, unfortunately it went bankrupt and dissolved" and the cops just say okay and go home. You can basically do whatever the fuck you want as a corporation, no laws or code of ethics binds you in any way, because if your malfeasance ever catches up with you, you just go bankrupt and everyone walks away clean. In the mean time you paid yourself huge profits. This is assuming that everyone in charge is smart enough to not link themselves personally to any of the bad deeds or do something stupid with finances to pierce the corporate veil, but that's not a question of how bad their deeds are, it's just a question of how good their lawyers are and how careful they are about working the loop hole.

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