Government is not reason; it is not eloquence; it is force! It is a dangerous servant and a terrible master.
George Washington (1732 - 1799)
There seem to be two themes that continually come up when the question of regulation of our industry
is on the table. A student of politics might suggest that the same two issues would come up in any regulated industry — which is every industry from the progressives’ point of view and no industry from the libertarian perspective.
The progressive position is that government intrudes into our universe only when we do bad things — and we always do bad things so the government always needs to intrude. Unfortunately, some people really do bad things — think Bernie Madoff.
But Madoff was heavily regulated. So what are we to make of that? The progressives say the Madoff experience proves we need more regulation, and here comes Dodd-Frank.
The libertarians say regulation doesn’t work. Let’s eliminate all regulation.
The problems with regulation
are manifold and dealing with them thoroughly could be a doctoral thesis — very boring and not very useful. Nevertheless, here are some thoughts: Regulations are the way government controls the lives and activities of businesses and — necessarily — the people that work in those businesses.
The extremes of government control were manifest in:
- Pre-WWII fascist Germany—make note of the early thirties in particular
- The godless Soviet Union
- Communist China
The complete lack of government is apparent in:
- The chaos of internecine conflicts in the Sudan
- The narco-wars in Mexico
- The complete lawlessness in Somalia — remember Lord of the Flies?
Regulations are like black mold. They grow incessantly and slowly until they take a toll that is too hard to bear … and by that time, the house is unlivable.
Example: Today, the dolts in D.C.— specifically the agriculture department — want to tell farm families what jobs their children can do, what tools they can use and how many hours they can work.
- No farm families are lobbying for this.
- No farm children are demanding or even considering it a need.
- No social workers are reporting abuse.
There is no reason beyond imagined evils by some bureaucrats. Black mold.
The insurance industry is a great example of a self-regulating industry that is successful in that regard. Our problems are few and solutions swift. There are either fifty good reasons for that — the states — or one good reason for that — no federal government. Or maybe both.
The federal government heavily regulates the securities industry and the banking industry. Both are flush with intractable problems. Go figure.
We need regulation that protects us from:
- physical harm
- loss of property
- loss of liberty
- other personal loss as defined in the Constitution, Bill of Rights, and amendments
We need courts to allow us to protect ourselves from these losses. We do not need knee-jerk rules written every time a rogue agent goes astray or some bureaucrat thinks there is a possible injustice that might occur, regardless of how remote. We most certainly do not need laws, regulations and bureaucratic hubris that criminalize the everyday activities of honest and ethical agents.
You probably guessed that I tend to live on the libertarian side of the spectrum, not all the way there, but mostly in the conservative precincts. I tend to feel that the more black mold we allow to accumulate, the less viable and valuable we become as an industry and a nation.
Conversely, progressives see the black mold of regulation by an ever-expanding federal bureaucracy as a solution as opposed to the plague that it is.
I hope that this blog post encourages a discussion of how we, as independent financial representatives, can reverse a painfully destructive trend in government regulation and free each of us to serve American families without the fear of retaliation from out of control regulators.