regulation

Home » regulation

How Regulation & the Fed Killed the Competitive Spirit in the Banking Community

in Business and Economy, Economic Liberty, Economics, Liberator Online, News You Can Use by Alice Salles Comments are off

How Regulation & the Fed Killed the Competitive Spirit in the Banking Community

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

During a recent House Committee on Oversight and Government Reform hearing, a group of lawmakers wanted to know why there have been so few new banks opening their doors in America in recent years.

MoneyWhile it’s hard to admit that, for once, a group of Washington insiders are actually asking the right question, it’s also important to go beyond their concern by looking at why the sluggish economy is, in fact, to blame, but not because of economic factors alone. The problem, Mercatus Center’s Stephen Matteo Miller wrote, is regulation.

As the country announced the end of the economic crisis of 2008, the Federal Deposit Insurance Corporation’s application process was prolonged, hoping to cap the number of failed banks over time.

While this explains part of the problem, another issue also brought up by the Mercatus scholar may explain the other reason why there’s so little competition in the banking business.

According to a study carried out by the Federal Reserve Bank of Richmond, the implementation of low interest rates defended by the Federal Reserve leadership may have had been directly to blame for low competition as well.

The conclusion both economists and the Mercatus scholar agreed on despite the findings by the Richmond Fed is that, laws like the Dodd-Frank Act, which adds to the regulatory burden, as well as the FDCI’s rule change had the most negative effect on the competitive aspect of the banking market, effectively protecting established banks and keeping smaller, more consumer-oriented banks out of the market. The artificial modifications made by the Fed have also contributed.

Over time, restrictions developed as regulations embodied in the Code of Federal Regulations have also had a negative effect on the overall health of the American economy. According to the Cumulative Cost of Regulations study carried out by the Mercatus Center, the regulatory burden may have helped to reduce gross domestic product (GDP) by $4 trillion. This aggressive and dramatic reduction may have also prompted entrepreneurs in the banking community to think twice before launching a new business.

So when reviewed carefully, the phenomena now under consideration by Congress has little to do with what many believe to be slow economic growth, or what many progressives like to call “record profits.” After all, it’s easy to measure how successful the established, too-big-to-fail banks have become over the past 6 or 7 years. What’s hard to assess is how much wealthier we would have been if government had gotten out of the financial system altogether.

New Poll: Millions of Voters Say They’re Libertarian

in Liberator Online by James W. Harris Comments are off

(From the Activist Ammunition section in Volume 20, No. 15 of the Liberator Online. Subscribe here!)

A new poll from YouGov brings exciting and unprecedented news for libertarians. Millenial Poll - Libertarian

Asked “Would you describe yourself as a libertarian or not?” fully one in five of likely millennial (ages 18-29) voters said yes — thus self-describing themselves as libertarians.

YouGov found that young Americans are more likely than any other age group to accept the label libertarian — great news for a growing political movement. And there is room for this figure to grow significantly as libertarian ideas spread, because, in addition to the 20% who self-identify as libertarians, another 42% said they were “not sure.” Only 39% rejected the label.

Among older voters, 17% of 30- to 44-year-olds, 15% of 45- to 64-year-olds and 9% of those 65 and older say that the word “libertarian” described their views.

More great news: a majority Americans are, broadly, embracing libertarian ideas of limiting government. Fully 51% say they want to shrink the size of government. A whopping 30% of Americans even agree with the radical libertarian statement that “Taxation is theft.” (It probably didn’t hurt that the poll was conducted April 8-9 — a week before Tax Day.)

But what is most remarkable about the YouGov poll is that it has found so many millions of voters who accept the libertarian “brand” as a label for their political views — something inconceivable just a few years ago.

Nor are these self-described libertarians tied to either of the two older political parties. The libertarian vote is up for grabs to the candidate or party that appeals most to it. Writes YouGov: “There is little difference between partisans when it comes to identifying as libertarians. Republicans (13%) are essentially no more likely than Democrats (12%) to identify as libertarian, while 19% of Independents describe themselves as libertarian.”

Notes Reason.com’s Nick Gillespie: “Let’s be clear about a couple of things: First, the fact that YouGov and other groups are hunting down the number of libertarians afoot — Pew even went ‘In Search of Libertarians’ just last year — is itself a sign that something new and different is happening. When you start touting up the way many things are breaking in a libertarian direction — the energy surrounding Ron Paul in 2008 and 2012, majority acceptance of pot legalization and gay marriage, serious efforts at criminal justice reform, plummeting numbers for faith in government, the rise of school choice, embrace of a sharing economy that routes around old-style regulation, general acceptance of free trade and free speech as positive values, and much more — it’s fair to call attention to what we’ve dubbed here as ‘The Libertarian Moment.’”

For more excellent commentary on the YouGov poll see “Millennials Are More Likely to Identify as Libertarians” by Robby Soave, Reason.com.

Ron Paul: My New Year’s Resolutions for Congress

in Liberator Online by Advocates HQ Comments are off

(From the Libertarian’s New Year’s Resolutions section in Volume 19, No. 27 of the Liberator Online. Subscribe here!)

In late December 2012, as he approached retirement from Congress, Ron Paul presented some New Year’s resolutions for his fellow members of Congress to ponder. 

If anything, they’re more relevant today than ever, and we’re pleased to share them with you. 

* * *

Ron PaulAs I prepare to retire from Congress, I’d like to suggest a few New Year’s resolutions for my colleagues to consider. For the sake of liberty, peace, and prosperity I certainly hope more members of Congress consider the strict libertarian constitutional approach to government…

In just a few days, Congress will solemnly swear to support and defend the Constitution of the United States against ALL enemies, foreign and domestic.  They should reread Article 1 Section 8 and the Bill of Rights before taking such a serious oath. Most legislation violates key provisions of the Constitution in very basic ways, and if members can’t bring themselves to say no in the face of pressure from special interests, they have broken trust with their constituents and violated their oaths. Congress does not exist to serve special interests, it exists to protect the rule of law.

I also urge my colleagues to end unconstitutional wars overseas. Stop the drone strikes; stop the covert activities and meddling in the internal affairs of other nations. Strive to observe “good faith and justice towards all Nations” as George Washington admonished. We are only making more enemies, wasting lives, and bankrupting ourselves with the neoconservative, interventionist mindset that endorses pre-emptive war that now dominates both parties.

All foreign aid should end because it is blatantly unconstitutional. While it may be a relatively small part of our federal budget, for many countries it is a large part of theirs — and it creates perverse incentives for both our friends and enemies. There is no way members of Congress can know or understand the political, economic, legal, and social realities in the many nations to which they send taxpayer dollars.

Congress needs to stop accumulating more debt. U.S. debt, monetized by the Federal Reserve, is the true threat to our national security. Revisiting the parameters of Article 1 Section 8 would be a good start.

Congress should resolve to respect personal liberty and free markets. Learn more about the free market and how it regulates commerce and produces greater prosperity better than any legislation or regulation. Understand that economic freedom IS freedom. Resolve not to get in the way of voluntary contracts between consenting adults. Stop bailing out failed yet politically connected companies and industries. Stop forcing people to engage in commerce when they don’t want to, and stop prohibiting them from buying and selling when they do want to. Stop trying to legislate your ideas of fairness. Protect property rights. Protect the individual. That is enough.

There are many more resolutions I would like to see my colleagues in Congress adopt, but respect for the Constitution and the oath of office should be at the core of everything members of Congress do in 2013.

Three Caterpillars, a Butterfly… and Liberty

in Liberator Online by Sharon Harris Comments are off

(From the President’s Corner section in Volume 19, No. 21 of the Liberator Online. Subscribe here!)

Three caterpillars — a conservative, a liberal, and a libertarian — looked up and saw a butterfly. butterfly

The conservative caterpillar said, “That should be illegal. Why, it’s blasphemous! If God had meant for caterpillars to fly, he would have given us wings.”

The liberal caterpillar said, “That looks incredibly dangerous! Who’s in charge of it? What’s going to happen to the crawling industry if this catches on? This needs to be stopped until the government can investigate it and set up inspection and regulation to make sure it’s safe.”

The libertarian caterpillar said, “One day we’ll all fly together, and we’ll wonder why we ever feared the freedom of flight.”


 

People have always feared the innovation and choice that liberty brings. Liberty shakes up the status quo. Liberty constantly creates new opportunities and replaces old industries and institutions with new and better ones.

This wonderful process is scary and threatening for many people. That’s understandable.

Yet the history of the progress of the human race is the history of removing government control of our personal and economic lives.

Religious liberty made both religion and the state more humane. Economic liberty — lessening government control over the economy — brought us incredible abundance and saved billions of lives. Ending alcohol Prohibition in America ended the crime and loss of civil liberties that misguided policy provoked.

Time and time again, we see that personal and economic liberty create harmony and abundance.

Yet in each of the examples above, and many more, good people from across the political spectrum feared and opposed the changes that ultimately proved to be so beneficial.

Today our liberal and conservative friends are on our side on these once-contentious issues. No one yearns for subsidies to prop up the horse and buggy industry. No one wants to return to slavery, or alcohol Prohibition, or compulsory state religion.

As libertarians, an important part of our job is to reassure our fearful friends on the left and the right that liberty works, and the more liberty we have, the better off we will be. On every issue.

Eventually, just as they did on the issues above, they will come to see the benefits of liberty on the remaining issues as well, and they will join with us on them.

As the libertarian caterpillar said, “One day we’ll all fly together, and we’ll wonder why we ever feared the freedom of flight.”

(Thanks to that most prolific of authors, A. Nonymous, for the original version of this fable that I encountered on the web.)