Tag Archives: Regulation

These People Lost Everything to Big Government … Are You Next? by Mark Nestman

Sometimes putting human faces on what the government does to people is more effective than reams of statistics and denunciations. From Mark Nestman at nestman.com:

In one of his most memorable statements, former President Ronald Reagan said in his 1981 inaugural address, “Government is not the solution to our problem. Government is the problem.”

When faced with a truly intractable problem, it’s tempting to throw our hands in the air and wait for the government to solve it. Whether it’s ensuring sustainable development, fighting the war on drugs, or any other difficult issue, the mainstream media tells us time and again that government ought to pass a law to fix it.

I beg to differ. Here are two stories about people who lost everything to government through no fault of their own. And you could be next.

Retirement Wiped Out by Executive Order

Tom and Jane Flagg have lived in Jersey City, New Jersey for the past 42 years. Only 24 hours before they were scheduled to sell their property there and retire in Tennessee, their lives fell apart.

The Flaggs arrived in Jersey City in the 1970s. The city was rife with crime, but property was cheap. They took a chance and purchased two small homes, both over 100 years old. The homes were well-built, but they needed a great deal of renovation, which the Flaggs did mostly themselves. The family lived in one home and rented out the other.

Forty years later, the neighborhood they bought into has gentrified. Property values have skyrocketed.  The Flaggs, now much older, wanted to cash in on the modest nest egg they had painstakingly created. They put the homes up for sale and quickly found a buyer. The closing date was March 24, 2018.

But at the last minute, it was all snatched away from them. On March 23, Jersey City Mayor Steven Fulop destroyed their retirement with the stroke of a pen. He issued an executive order to stop granting demolition permits for homes that housed four or fewer families. This directly affected the Flaggs, because their buyer planned to tear down both homes and build new structures in their place.

Fulop justified his order in the name of “architectural preservation.” The only way a builder can obtain a demolition permit now is to get approval from the Jersey City historic preservation officer. If that person turns the permit down, the builder can appeal to the Historic Preservation Commission.

To continue reading: These People Lost Everything to Big Government … Are You Next?

 

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Without Help From Uncle, by Eric Peters

Would you consider a car that averages 80 MPG and retails for less than $8,000? Too bad the government won’t let you buy it. From Eric Peters at theburningplatform.com:

Why don’t cars that make sense make it?

Five years ago, Paul Elio bought up a shuttered GM assembly plant In Shreveport, Louisiana with the intention of using it as home base for the manufacture of a low-cost/high-economy car – the kind of car no other car company makes anymore. Instead of $12k and maybe 40 MPG on the highway – the best you can get in a new car sold by any other manufacturer – the Elio would average at least 80 MPG and sell for less than $8,000.

Such a car makes all kinds of sense.

At a stroke, it would cut the cost of getting around by car in half – minimally. Keep in mind that the least-expensive new car being manufactured right now, the one referenced above, is the Nissan Versa. Most new cars cost significantly more. The average price paid for a new car is currently well over $30,000 – and the average new car averages a great deal less than 40 MPG, on the highway or otherwise.

It would also render many “alternative” fuel cars irrelevant; make them look even sillier as economic and functional and evenenvironmental propositions than they already do. The Elio’s “carbon footprint,” for instance, is so small it’s hardly there.

Which is why the Elio faces every kind of obstacle imaginable to preventits manufacture.

Unlike the manufacturers of those other cars, which make no sense at all – including environmentally-speaking – and so are given every artificial advantage (via government) imaginable.

Electric cars.

It is doubtful anyone would by them at a price which reflected their true cost to manufacture, absent all the manufacturing subsidies, including sweetheart deals/financing on their manufacturing facilities – such as the $1.3 billion the taxpayers of Nevada were compelled to provide the billionaire crony capitalist Elon Musk to finance the battery plant for his electric luxury-sports cars. As well as the retail ones, including not only the tax breaks dangled in front of buyers of the cars but also on the “fuel” they use – the electricity – which isn’t subject to any motor fuels taxation (for the moment) and often literally given away for free (well, at taxpayer expense) at so-called public charging stations, to further nudge the electric car into general use.

Elio enjoys no such help.

To continue reading: Without Help From Uncle

The Age of Petty Tyrannies, by John W. Whitehead

Add up a bunch of petty tyrannies and you get a full-blown tyranny. From John W. Whitehead at rutherford.org:

“Whether the mask is labeled fascism, democracy, or dictatorship of the proletariat, our great adversary remains the apparatus—the bureaucracy, the police, the military. Not the one facing us across the frontier of the battle lines, which is not so much our enemy as our brothers’ enemy, but the one that calls itself our protector and makes us its slaves. No matter what the circumstances, the worst betrayal will always be to subordinate ourselves to this apparatus and to trample underfoot, in its service, all human values in ourselves and in others.”—Simone Weil, French philosopher and political activist

We labor today under the weight of countless tyrannies, large and small, carried out in the name of the national good by an elite class of government officials who are largely insulated from the ill effects of their actions.

We, the middling classes, are not so fortunate.

We find ourselves badgered, bullied and browbeaten into bearing the brunt of their arrogance, paying the price for their greed, suffering the backlash for their militarism, agonizing as a result of their inaction, feigning ignorance about their backroom dealings, overlooking their incompetence, turning a blind eye to their misdeeds, cowering from their heavy-handed tactics, and blindly hoping for change that never comes.

The overt signs of the despotism exercised by the increasingly authoritarian regime that passes itself off as the United States government are all around us: warrantless surveillance of Americans’ private phone and email conversations by the NSA; SWAT team raids of Americans’ homes; shootings of unarmed citizens by police; harsh punishments meted out to schoolchildren in the name of zero tolerance; drones taking to the skies domestically; endless wars; out-of-control spending; militarized police; roadside strip searches; roving TSA sweeps; privatized prisons with a profit incentive for jailing Americans; fusion centers that collect and disseminate data on Americans’ private transactions; and militarized agencies with stockpiles of ammunition, to name some of the most appalling.

Yet as egregious as these incursions on our rights may be, it’s the endless, petty tyrannies inflicted on an overtaxed, overregulated, and underrepresented populace that occasionally nudge a weary public out of their numb indifference and into a state of outrage.

Consider, for example, that federal and state governments now require on penalty of a fine that individuals apply for permission before they can grow exotic orchids, host elaborate dinner parties, gather friends in one’s home for Bible studies, give coffee to the homeless, let their kids manage a lemonade stand, keep chickens as pets, or braid someone’s hair, as ludicrous as that may seem.

To continue reading: The Age of Petty Tyrannies

“Capitalism Has Failed”, by Jeff Thomas

People point to present systems, none of which are capitalism by the usual definition of capitalism, and say that capitalism has failed. From Jeff Thomas at internationalman.com:

“Capitalism Has Failed”

Today, more than at any time previously, Westerners are justifying a move toward collectivist thinking with the phrase, “Capitalism has failed.”

In response to this, conservative thinkers offer a knee-jerk reaction that collectivism has also had a dismal record of performance. Neither group tends to gain any ground with the other group, but over time, the West is moving inexorably in the collectivist direction.

As I see it, liberals are putting forward what appears on the surface to be a legitimate criticism, and conservatives are countering it with the apology that, yes, capitalism is failing, but collectivism is worse.

Unfortunately, what we’re seeing here is not classical logic, as Aristotle would have endorsed, but emotionalism that ignores the principles of logic.

If we’re to follow the rules of logical discussion, we begin with the statement that capitalism has failed and, instead of treating it as a given, we examine whether the statement is correct. Only if it proves correct can we build further suppositions upon it.

Whenever I’m confronted with this now oft-stated comment, my first question to the person offering it is, “Have you ever lived in a capitalist country?” That is, “Have you ever lived in a country in which, during your lifetime, a free-market system dominated?”

Most people seem initially confused by this question, as they’re residents of either a European country or a North American country and operate under the assumption that the system in which they live is a capitalist one.

So, let’s examine that assumption.

A capitalist, or “free market,” system is one in which the prices of goods and services are determined by consumers and the open market, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.

Today, none of the major (larger) countries in what was once referred to as the “free world” bear any resemblance to this definition. Each of these countries is rife with laws, regulations, and a plethora of regulatory bodies whose very purpose is to restrict the freedom of voluntary commerce. Every year, more laws are passed to restrict free enterprise even more.

To continue reading: “Capitalism Has Failed”

Regulating Cryptocurrencies–and Why It Matters, by Charles Hugh Smith

Cryptocurrencies have two potential values, and the right legal framework would add to those values. From Charles Hugh Smith at oftwominds.com:

Nations that attempt to limit cryptocurrencies’ ability to solve these problems will find that protecting high costs and systemic friction will grind their economies into dust.

There’s a great deal of confusion right now about the regulation of cryptocurrencies such as bitcoin. Many observers seem to confuse “regulation” and “banning bitcoin,” as if regulation amounts to outlawing bitcoin.
Further confusing things is the regulation of cryptocurrency exchanges, where cryptocurrencies are bought and sold.
In China, for example, cryptocurrencies are not outlawed, but exchanges were shut down until regulators could get a handle on how to deal with the potential for excesses such as fraud, misrepresentation, etc.
A Wild West free-for-all is conducive to scammers, and so some thoughtful regulation that protects users is to be welcomed.
Governments tax income and capital gains. This is how they fund their activities. Clearly, gains reaped from cryptocurrencies are no different from gains reaped from other speculations and investments, so they should be recorded and taxed in the same manner.
Some enthusiasts of cryptocurrencies seem to think that regulations requiring the reporting and taxation of gains made buying and selling cryptocurrencies is tantamount to destroying cryptocurrencies.
I think this view has it backwards: fully legalizing and regulating cryptocurrencies as financial instruments legitimizes them in a much wider circle of potential users, and common-sense regulations are to be encouraged and welcomed, not viewed as threats to cryptocurrencies.
I want to stress that beneath all the speculative frenzy we see in the cryptocurrencies, what will retain value and remain scarce and in demand is whatever solves problems.
Cryptocurrencies have the potential to solve two problems:
1. reducing the cost and friction of financial intermediaries.
2. holding value as the $250 trillion in phantom wealth created in the asset bubbles of the past 12 years vanishes.

The Corporatocracy, by Robert Gore

cartoon-regulatory-octopus

The interests of Washington and large corporations have merged so completely they are now inseparable.

America’s large corporations and its government have merged. Or was it an acquisition? If the latter, who acquired whom? Unfortunately, the labels affixed to purely corporate combinations lose their analytical usefulness here. While the two retain their own distinct legal structures and managements, so to speak, such a close community of interest has evolved that it’s no longer possible to separate them or delineate their individual contours. Political labels are no help; the ones most often used have become hopelessly imprecise. The Wikipedia definition of “fascism” is over 8,000 words, with 43 notes and 16 references.

However, the conjoined blob is so big, rapacious, and intrusive that akin to Justice Potter Stewart’s famous non-definition of obscenity, everybody knows it when they see or otherwise come into contact with it. This article will use the term “corporatocracy.” It’s less letters, dashes, and words to type than “the corporate-government-combination.” No serviceable understanding of either US history or current events is possible without close study of the corporatocracy. Unfortunately, such study, like entomology or cleaning septic tanks, requires a stout constitution. But take heart, entomologists grow to love their creepy crawly things, and septic tank cleaners say that after a few minutes you don’t even notice the smell.

A cherished delusion of naive liberals holds that big government is a counterweight, not a partner, to big business. Such a rationale is touted when the righteous demand new regulation, the public and media endorse it, the legislators pass it, and the president signs it into law. However, there are always unpaved stretches on the road to hell—once regulation is law, the righteous, public, media, legislators, and president, and their ostensibly good intentions, are on to the next cause.

In the quiet obscurity they relish, regulators and regulated get down to doing what they do best: bending the law to their joint benefit. Business, whose P&L’s can be powerfully affected by regulations, hire armies of lobbyists and lawyers in a never ending effort to tilt the playing field in their direction, and improve bottom lines, stock prices, and executive bonuses. The return on such investment is far higher than on old fashioned expenditures like research and development, plant and equipment, and job-creating expansion.

PRIME DECEIT TORCHES THE SWAMP!

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Not-so-naive liberals, professed conservatives, and apolitical opportunists work both sides of the street. The revolving door ensures that all concerned do well. Playing this game isn’t cheap, which serves as a barrier to entry to scrappy competitors who compete those old fashioned ways: innovation, hustle, and better products and services at lower prices. Regulation cartelizes industries; look, for instance, at banking and medicine. No surprise that regulatory barriers are one of Warren Buffett’s favorite “moats”: deep and hard-to-cross waterways that protect durable commercial advantages.

Washington doesn’t just fortify favored corporations’ business plans. A $4-plus-trillion-a-year enterprise, the government is the world’s largest purchaser of goods and services. Procuring those contracts employs more armies of lobbyists and lawyers, and has a powerful effect on policy. The shoddy premises supporting the welfare and warfare states, and their epic waste, are obvious to many of the taxpayers forced to underwrite them. They’ve decried them for decades, and voted for candidates promising to cut welfare, waste, war, and taxes. However, beyond voting, taxpayers can devote little time to stopping or slowing the gravy train. Their resources are infinitesimal compared to the resources its passengers expend to keep it running.

The modus operandi for Washington and big business have converged. Debt, its issuance and marketing, is the pillar of the financial nexus and revolving door between Washington and Wall Street. The government and its central bank artificially pump up the economy and hide its deterioration with debt and machinations: ultra low interest rates, quantitative easing, and debt monetization. Big businesses lever their balance sheets to pump up their stock prices or make acquisitions, machinations that do nothing to improve core businesses but often hide ongoing deterioration.

The history of any long-running government program is a catalogue of failures and expanding budgets. Washington cherishes failure, the fountainhead of larger appropriations and more power. Success would put bureaucrats out of work and give politicians less influence to peddle. Likewise in business, failure has become much more acceptable than it was during those bad old days of cutthroat capitalism. Marissa Mayer’s undistinguished five-year tenure at Yahoo, while perhaps not a complete failure, certainly can’t be termed a success. Nevertheless, she’s walking away from the company with at least $186 million for her middling endeavors. Given all that discrimination out there against women, one can only imagine what she would have made if she were a man.

Silicon Valley puts billions into companies like Uber, AirBnb, Snapchat, and Lyft that lose those billions and will continue to do so for the foreseeable—and probably the unforeseeable—future. Private equity shops load up companies with debt that gets paid out as special dividends to the private equity shops, leaving the indebted and enfeebled companies unable to compete and the rest of us wondering how such rape is legal in our rape-conscious age. This recipe for inevitable failure is now playing out in the beleaguered retail sector, which would be nowhere near as beleaguered if it wasn’t so beset with debt.

Tesla, a stock market darling and the quintessence of companies in which failure is the business plan, milks Wall Street for financing and Washington (and a bunch of state and local jurisdictions) for subsidies. It has lost billions during its ten years of existence, but its many admirers sing the praises of CEO Elon Musk, always using the term “consummate salesman”—perhaps it’s on his business card. Musk and fan club dream of “the next big thing” and engage in mutual masturbatory fantasies of transforming the world…and Mars. All this is harmless enough as fodder for dazzling audiovisual presentations and slick speeches, but downright dangerous when real billions, private and public, gets sucked in.

Meanwhile, the corporatocracy crucifies an old-line, profitable corporation, Volkswagen, that cheated on one of its hundreds of thousands of regulations. It undoubtedly wasn’t the cheating that got VW in trouble. Regulations are made to be cheated—it’s impossible to run a business without doing so—but the proper offerings must be made to the corporatocracy. If that were not the case, there would be Wall Street, Pharma, and Defense Contractor wings at federal penitentiaries. VW didn’t kowtow low enough or pay high enough to the bureaucrats and politicians, who retaliated, probably “nudged” by a VW competitor.

As a successful businessman, President Trump knows many of the corporatocracy’s skims, scams, and schemes. Perhaps that will enable him to keep his pledge and drain the swamp. However, it’s extensive, fetid, and teems with loathsome creatures, so a bet he’ll succeed involves exceedingly long odds. You’re probably better off buying Tesla stock.

A BLESSED TIME WHEN THERE WAS NO SWAMP

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When the “Solutions” Become the Problems, by Charles Hugh Smith

You can only paper over problems for so long. From Charles Hugh Smith at oftwominds.com:

Those benefiting from these destructive “solutions” may think the system can go on forever, but it cannot go on when every “solution” becomes a self-reinforcing problem that amplifies all the other systemic problems.

We are living in an interesting but by no means unique dynamic in which the solutions to problems such as slow growth and inequality have become the problems. This is a dynamic I have often discussed in various contexts. In essence, a solution that was optimized for an earlier era and situation is repeatedly applied to the present–but the present is unlike the past, and the old solution is no longer optimized to current conditions.

The old solution isn’t just a less-than-optimal solution; it actively makes the problem worse.

As a result, the old solution becomes a new problem that only exacerbates the current difficulties. The status quo strategy is not to question the efficacy of the old solution–it is to apply the old solution in heavier and heavier doses, on the theory that if only we increase the dose, it will finally resolve the problem.

Take borrowing from the future, i.e. debt, as a prime example of this dynamic.Back when credit was scarce and expensive, unleashing a tsunami of cheap, abundant credit supercharged growth by enabling millions of people who previously had limited access to credit to suddenly borrow and spend enormous sums of cash.

This tsunami of new spending supercharged growth such that servicing the debt was easy, as incomes and wealth both expanded far beyond the cost of the new debt.

Fast-forward to today, and adding 50% of the nation’s GDP in new federal debt ($9 trillion) and trillions more in corporate and houshold debt in the past 8 years has yielded subpar growth–roughly 2% a year.

This poor response to massive floods of credit, borrowing and spending has flummoxed conventional economists, who incorrectly assumed old solutions would always work as they had in the past.

To continue reading: When the “Solutions” Become the Problems