In his latest pivot to jobs, President Obama says he wants to stimulate job creation, but with the constant release of new regulations under his Administration, his actions belie his rhetoric.
The progressive liberal view of Wall Street is that it is populated by greedy individuals looking for suckers to fleece and must be micromanaged to prevent these cheats from getting the upper hand on an unsuspecting public. In reality, nothing could be further from the truth as most of the workers on Wall Street are honest, hard-working individuals protective of their good reputation amongst a relatively small community. True, there is the occasional Bernie Madoff, but they are quickly ostracized upon discovery; their reputations tarnished beyond repair and guaranteeing that they never work anywhere near Wall Street again.
The fact is that we will always have people like Bernie Madoff who seek to shirk the hard work necessary to succeed by cutting corners, engaging in unethical and unfair practices, and cheating those who’ve placed their trust in them. No amount of regulation will ever rid us completely of these charlatans, but burdensome regulations will punish the honest majority and tempt the weak into taking illusionary shortcuts to success. We have laws against homicide, yet murders are still committed. Interestingly, progressive liberals argue that the death penalty is not an effective deterrent to murder and should be abolished, then turn around to argue that more regulation is needed to keep traders on Wall Street honest and deter financial shenanigans.
Americans are an ingenious people always seeking new ways to accomplish a task. A search of patent records will quickly confirm this observation by revealing thousands of clever contraptions and business ideas. We seek to build a better mousetrap as it were, to provide a useful invention that makes the lives of others easier while making us richer. We seek to provide something of value in the form of goods and services in exchange for something of value in the form of money. We seek to protect our reputation so that our customers will not be hesitant to trade their hard-earned dollars for our product. This is the power of capitalism and free markets, ruthlessly regulating the marketplace to protect both sides of all transactions.
Unethical cheats appear from time to time and practice their deception with success for a time, but are eventually discovered and banished from the marketplace as the word gets out about their behavior amongst consumers and fellow traders. This process of market self-regulation and correction takes time as the word gets out – although modern communications makes it possible to get the word out much faster, but is effective in punishing the unethical at a minimum of disruption to the ethical.
The primary purpose of government is to protect its citizens, and the way it protects its citizens from each other is through regulation to insure forthright behavior according to a set of established and agreed upon rules based on Judeo-Christian principles. When especially egregious behavior is discovered to be widespread, sensible regulations are enacted communicating to all that this behavior is no longer tolerated and should be avoided. The unscrupulous will test these laws for a time, and upon discovery that they are enforced vigorously with penalties exacted, practice of the regulated behavior will drop off but never disappear completely. Witness the occasional occurrence of the long illegal Ponzi scheme in the modern age by the likes of Bernie Madoff.
Unethical and unscrupulous behavior will always be with us until humans renounce sin; not a likely possibility in these times. Care should be taken when enacting laws and regulations to declare a behavior legally unacceptable without unnecessarily increasing burdens on those already avoiding their practice. Our regulatory system is fond of enforcing regulations through the production of paperwork in the vain idea that meticulous paperwork will guarantee honesty in business by making it too hard to be dishonest. In fact, just the opposite is true as regulators focus on paperwork details to the exclusion of evidence right before their eyes. It is this focus on paperwork details that allows a Bernie Madoff to perpetrate his frauds right under the noses of the regulators ostensibly watching him. Madoff realized that as long as his documents appeared to be legitimate, no one would pay any attention to anything else he said or did, and they didn’t.
Government is often justifiably accused of failing to keep up with the times or with technology. The Internet has introduced an effective format by which consumers can trust businesses whose only presence is a digital storefront. This format includes consumer ratings and comments of their experience displayed prominently for anyone to view. The system is not perfect as it is subject to manipulation through false comments and the omission of negative comments, but this could be remedied through the introduction of trusted third parties whose function would be to guarantee the authenticity of consumer feedback.
Government could easily assume this trusted third party role and apply this model to all businesses and provide consumers with instant feedback from other consumers dealing with a particular business in order to make an informed decision. This would allow the marketplace to assume its natural regulatory role without unduly burdening those who seek to protect their reputations through honest dealings. It would also allow businesses instant customer feedback that could be used to improve their business model and provide a much richer and more rewarding customer experience. They would be able to target a particular customer and address his problem, using this information to improve their product or service. Government could provide meaningful data to businesses in the Internet Age.
The business community has screamed to government that burdensome regulations such as the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Patient Protection and Affordable Care Act (Obamacare), and numerous EPA regulations that marginally improve environmental conditions in the most minor of ways is preventing them from expanding their businesses and hiring new workers. In a show of protest, the business community has shrugged its shoulders in deciding to sit on its wealth and wait for less burdensome times as the present conditions do not allow for a proper return on their risk. The Obama Administration is ignoring these warnings as the economy spirals downward in the vain belief that business is crying wolf and will resume operations once they see the inevitability of these regulations.
President Obama will continue to watch his poll numbers slide until he is defeated in 2012 by frustrated voters tired of unemployment and willing to vote for prosperity over likability. The progressive liberal sees business as something to be regulated and micromanaged for its own benefit, while the conservative capitalist sees business and the free market as the cornerstone of prosperity, individual freedom, and national security. President Obama has not demonstrated the ability to diverge from the progressive liberal viewpoint even in the face of overwhelming evidence to its ineffectiveness and economic harm. It is this inflexibility that will continue to depress the economy and prolong the suffering of Americans. Another stimulus package will be just as ineffective as the first two in creating the conditions for employment, while being just as effective in increasing our debt and lowering America’s standing in the world.