...today we are seeing the results of a regulated state, government intervention at its height. So, you would think that if such government intervention and regulations, which are in absolutely unbelievable super-human proportions, actually worked or were even effective, then we would see a very different situation in this country. My contention has been that the vast majority of problems we now face are a direct result of the regulatory process that intervenes within this country, its economy and its social structure. Every single problem that has reared its ugly head in times of economic distress is portrayed as an issue of unregulated free-markets; we have not see a free-market in this country for decades. The latest "mortgage crisis" is being blamed, particularly by politicians, on the lack of regulations in the mortgage industry but when you look at the rotting mass of regulations in that industry you have to ask yourself where are regulations lacking. The Federal Reserve and the government have regulated that industry to the hilt, don't believe it, go to the ALLREGS site or to the American Association of Residential Mortgage Regulators. The policies of the FED were a prime contributor to the latest mortgage "melt-down", the FED promoted many of the very same mortgage instruments that it now seeks to restrict through regulatory oversight.
I will confess at the outset that I have not followed everything on this thread, but I believe that this was a relatively succinct recitation of your previous position. I am afraid that I will have to join the chorus in disagreeing with your premise. I will be very specific in this particular criticism, in fairness to my limited participation. To that end, I disagree with your central premise,
My contention has been that the vast majority of problems we now face are a direct result of the regulatory process that intervenes within this country, its economy and its social structure.
If you look at the examples that
Phil provided, for example, and the one you have addressed, the "mortgage crisis" - they completely undermine this assertion. My response is specific to this point:
The Federal Reserve and the government have regulated that industry to the hilt[.]
In this instance, and the ones described by
Phil and
ardy, are
not attributable to the areas
that are regulated, but to the areas that are not. The subprime mortage crisis in particular was not the result of government action or overregulation but occurred in the areas around the margin that were outside the scope of current regulation. It wasn't federal reserve policy at all, but irresponsible
lending practices that hid, sometimes criminally, the risk from the the buyers (of the mortage papers). Billions of dollars of bad debts were obscured by the practice of commoditizing debts. That had nothing to do with overregulation - nor, by the way, did the junk bond crisis of the 80's (
Michael Milken, Ivan Boesky ring any bells?), and the
1987 stock market crash. It is, in my opinion, a convenient argument to claim that "there has not been a free market" in decades, centuries, whatever, because these crashes are
not attributable to government action. They are, indisputably, related to "market forces" - the market, in this case, not being the
actual market (e.g., product or services), but the speculative markets of stock trading in general. The real problem, economically, is that we attribute all economic vitality to the health of the "stock market" which is, as we can all observe a world that is often disconnected from the real world we all have to inhabit.
