Missing the Mark on Financial Regulation

John Médaille over at The Distributist Review nails the issue:

We live in an age of regulation. But surprisingly, there are very few principles of regulation… The result is that we are simultaneously over-regulated and under-regulated; we have thousands of pages of regulations that deal with situations that don’t require any, and no regulation in areas that need to be closely watched. The regs raise formidable barriers to competition, as the small businessman often finds that the cost and trouble of dealing with them is an insurmountable barrier to entering a given business. This leaves only the large players, for whom such regulation is a mere nuisance, a cost of doing business that brings a benefit of reduced competition. And since there are fewer competitors, they tend to be more politically powerful, and proceed to capture the very regulatory bodies that are intended to curb them. The government becomes, in effect, the protector of the oligarchs rather than their regulator.

What to do? Well, Médaille suggests we take a page of our Aristotle. Or, if that is too old-fashioned for all you hip, advanced people out there, something more up-to-date: St. Thomas Aquinas.

I can hear my liberals, now: what do such ancient men have to say to us? Well, they can provide you the truth. If you can handle it. The problem, as noted later in the linked article, is that we regulate the heck out of normal financial activities (borrowing for a home, financing a new business, etc) but don’t do anything about the bizarre flights of fiscal fancy – things which wind up being the CDOs Goldman Sachs is now in trouble for hawking.

Médaille then brings up something most people don’t know about – “natural” and “un-natural” transactions. Boiled down: a natural transaction is something a person does on a day to day basis to make a living. An un-natural transaction is something a person does merely to pile up money. There is a pile-up-money free-for-all going on while we are making it ever harder for people to transact normal business. You can invest money in some phony scheme much easier than you can invest money in, say, starting up a farm.

This, needless, to say, is backwards. Wrong. Stupid. And the Democrat’s proposed regulations really won’t do anything about it – mostly because they don’t understand economics and thus don’t see the need to have money readily available for people who want to work and produce wealth. It’d help, of course, if more Democrats would actually try to run a productive enterprise – academic work, government service and community organizing not being great training grounds for understanding reality.

As we set about the task of reforming our political system we must never lose sight of what the end is – the principle we are fighting for. We want a society geared towards the needs of the average man and woman. That, really, is all “We, the people” is about. A nation which neglects the mundane but vital tasks of every day life is a nation on the path to extinction.

As we enter this debate over financial reform and as we head towards November, our minds should run in this groove. Endlessly refer back to this first principle: does it help or hinder the common man? Keeping in mind that “help” doesn’t mean “coddle”. Dependency cripples the common man. Help means setting a stage where a man who wishes to work has a fair shot of achieving his desires.

Our world is not for a billionaire manipulating the financial sector. Our world is not for the socialist with a desire to decide for others. Our world is for that guy down the street, who just wants to be able to do the right thing and do for his own. If it is not such a world, then it isn’t a world worth living in.

Advertisements