Ron Paul: Why More Regulation Makes Things Worse

Abolish the "Federal" Reserve.

Prosecute predatory bankers and return the money to the treasury.

Abolish the IRS.

Close the stock markets.

End corporate/government partnerships except for emergencies or temporary infrastructure projects.

Pull out of the WTO, IMF, World Bank.

Pull out of NAFTA etc.

Pull out of and protest the existence of the U.N. "Security Council"

End the dysfunctional relationship with Israel, Saudi Arabia, Pakistan, Korea, Cuba, Iran etc.

End U.S. military occupations, secret prisons, support for dictatorships, and plundering of resources, world wide a.s.a.p.

Begin process to develop a fair, understandable and TRANSPARENT economic system.

Begin process to develop a fair, understandable and TRANSPARENT new government.

Throw Them All Out.

Start Over.

CONSTITUTION 2.0

There is an interesting assumption from those opposing this article. They all assume that without regulations there are no checks on companies, and they will automatically start doing things that are bad for their customers. That doesn't make sense. Companies want to make money, not please the government, and they make money by pleasing their customers, not by pleasing the government. Government regulations just don't accomplish anything, and should be reevaluated.

Now, I know people say, “We can’t do that!” We need the government to impose a level of standards, for the common welfare. Lives are at stake. There are obvious negative results to that to that justification. First, it just limits our choices. I can’t choose to sell a food product from my home, you can’t choose to buy lemonade from a lemonade stand. You can’t choose to pay anyone with a car for a ride, and if you don’t have a couple thousand dollars you can’t get approved to charge other people for a ride in your car. For simple business licenses the cost is too great for many people to overcome.

Secondly, even with the billions of dollars being spent by the government on licensing agents and hundreds of bureaus of safety and such, and the billions of dollars being spent by companies trying to follow all the regulations, even the useless ones, there are still problems! Every few years there is an e-coli breakout. Recently in spinach and peanut butter. Even with all the regulations, you still get drugs pulled off the market for extreme side effects. Even with all the auto regulations, you still get cars with faulty brakes. Which had a stronger effect on Toyota; the government response, or millions of horrified consumers? Even with medical regulations, you still get deaths from routine operations and incidental infections.

whyimconservative.wordpress.com

Regulations, for the Regulations to check the Regulations hmm this is confusing.

Go Ron Paul :-)

Here's some lack of regulation for you...HOW is it "liberty" when the people are overturned by unstoppable leverage of corporate money???

http://www.nakedcapitalism.com/2011/08/matt-stolle...

Savings and Loan Fraud, Enron, Wall Street Derivatives Con, Fannie Mae privatized, Corporate Off-shoring, Florida Special Ed Con vouchers...so , you want to privatize the water now, guess where your rates will go then, IF you can get water at all...Let's see what all the those sand huffing retirees in Phoenix do without the Federally built Hoover Dam...the world is not an open playground, and all you rightie "libertarians" are just deluded Reaganites who were propping up Walmart nation while they were blowing the Chinese in the back seat. Want to privatize everything and lose control of oversight? Then you ought to travel to Africa if you want to see what your world will look like when it's totally run into the ground. Don't claim to be for the people when you don't even know what the original Tea Party was about, and don't call yourself a patriot when you want to sell the highways, land, and water of the people, for the people...there is another way to freedom and away from Fascism, but you aren't there yet, and sadly, neither is Dr. Paul.

I read this article and I blacked out. The next morning I woke up in a field covered in blood next to a half-eaten deer carcass. The only explanation I can come up with is that somehow the insanity of the article wormed its way into my skull and I lost all sense of judgement.
I think it was the part about how water inspection is a waste of time because government scientists don't actually know anything.

Hi All:

PNC Financial Services Group, Inc. of Pennsylvania plans to buy National City Bank of Ohio. National City is one of our in "trouble" banks, and NCB could not qualify for funding under the "bailout rules". But, PNC did qualify for funding (almost $8 billion to date) and is using just more than $5 billion of that money to acquire NCB!

PNC states (I'm paraphrasing) "the bailout funding puts the NCB acquisition on very firm footing".

Really!? Imagine that, PNC gets "free" money to acquire a "troubled" competitor and PNC says its purchase is "on very firm footing".

I didn't authorize PNC to spend my (our) money in this manner, I also didn't reject funding for NCB.

In my opinion, this is more proof of the empowered (government bureaucrats along with PNC and its directors [the "in" people]) using the disenfranchised (in this case NCB and its directors [although I believe the directors of NCB will not be hurting]) to solidify control over our government and our finances.

The bailout bill was a complete disaster, and I believe history will confirm this belief.

Now, the question is, what do we do? What is the best use of our time and efforts?

I watched the video of RP in Houston supporting the End the Fed protest. How do I best support the needed change in our government?

I have joined my local "meetup" groups and have reached out to other local groups. I plan on assisting in and on the Bill of Rights movement in December.

Can anybody provide guidance to regional/national groups, or other relevant groups/sources that may further our cause?

Thanks,

k

What he does not mention is that the government can easily outlaw these loopholes that corporate lawyers will find which will make it harder for lawyers to get unnecessary loans passed.

i wonder why not one single congressman, senator, president stood proudly forth and graciously offered to take a 40 % cut in salary, staff salary, etc. right through the white house, congress, senate, pentagon. also while we're at it, how about a 40% drop in regulations& laws,.
imagine if the state and local went along. wow. if that's not worth 2,000 points on the dow i would be surprised. and not one of our darling media, left or right. keith or rush or bill or npr have breathed a word of a cut like that. and to the one part of our national economy that we can afford to cut

RP: "It is often difficult for those being regulated to understand the many complex rules they are expected to follow. Very wealthy corporations hire attorneys who may discover a myriad of loopholes to exploit and render the spirit of the regulations null and void. For this reason, heavy regulation favors big business against those small businesses who cannot afford high-priced attorneys.

Ok, So all this says is that in the presence of Regulations, Big Corp can find loopholes to avoid said regulation, while small business can't afford too. My point is that If there were no regulations , no corporation would have to pay to find loopholes, they could just exploit us with no checks and balances whatsoever. Melamine in our coffee, cheap air bags in our cars, and hedge funds, derivatives and regularly manipulated stock prices and financial reporting Enron style - all to our detriment.

RP: Many people did not understand the financial house of cards that are derivatives, but since they were legal and promised a great return, people invested. It is much the same in any area rife with government involvement."

Lack of regulations would not make people understand Derivatives anymore than they do now with regulations. Again, without regulations of any kind, Corporations would be free to deceive us even further than they do now - just like JP Morgan and cronies did in the early 1900's - manipulating the stock market in absence of regulations so bad that they effectively brought about the stock market crash and central banking as we know it.

RP:" Is your drinking water safe, just because the government says it is? Is the internet going to magically become safer for your children if the government approves regulations on it?"

How would deregulation tell me that my drinking water is safe? Were it not for Gov Reg's. who would be preventing any corporation big or small from making my water with Melamine or other cheap chemicals? Less regulation would allow them to do this however they see fit to make a buck and higher profits.

RP "The question then becomes “what can I get away with,” and there will always be advantages for those who can afford lawyers to find the loopholes. The result then is that bad behavior, that would quickly fail under the free market, is propped up, protected and perpetuated, and sometimes good behavior is actually discouraged."

Ummm, again, in a free deregulated market, there would be no checks and balances to prevent corporations from killing us with their practices. Who would test for cheap airbags? Who would test for bad ingredients in our food? How would we find out about these things? We would find out be people dying first, and investigations following - of course, we then have to ask who would investigate? Can the regular American afford the attorney's to sue some big Corporation? Remember the true story movies "Erin Brockovitch" and "A Civil Action"? In these movies big Corporations were illegally poisoning a large portion of our population with illegal dumping of chemicals, leaving the common citizen to fend for themselves to bring justice. The only difference between what happened under regulation and the great "free market" is that under a Free Market, what these companies did would be LEGAL.

I have to say, both sides of the argument here are making excellent points and acting relatively mature. Most people at this point start name-calling and vulgarities. I believe that minimal governmental interference is best, but of course there has to be SOME regulation; hopefully minimal.
Since we cannot predict, therefore regulate the entire economy because of the infinite variables there are, we must have a system that is the most natural, so that the largest amount of incentives are available to do the right thing. This, however, doesn't mean that there won't be exploitation. This of course has to be stopped.
But I urge people to understand both sides, because the truth has no bias.

Well, at least it seems that everyone agrees that there is an issue at hand, and hopefully one day we will all be united to come up with a solution and work towards betterment rather than sit and argue about who might be right/wrong.

"With central planning, everything shifts from one’s own judgment about safety, wisdom and relative benefits of a behavior, to the discretion of government bureaucrats."

Is there not some truth in this, the more regulations one has in life, the more strings one has to become entangled in?
My ideas shift immediately to our current healthcare system, and the amount of regulations and policies Medicare has and how they silently mandate the way pricing for services are structured, how it directs contracts between service providers and "private" insurance companies, how it, in some cases, prohibits physicians and hospitals from being paid for billable services. I encourage one to consider the way regulations related to Medicare impact the healthcare economy, and then take it one step further.

Also, I think one should keep in mind that never before has humanity been documented to exist in this particular kind of environment; we are co-existing with one another during the human race's largest population, our consumerist tendencies are putting the greatest strain on the environment, and all we have to look to the future with is what we've learned and carried over from the past. We need to take into consideration that by learning from the past we not repeat it in our future, in our present, because no matter what, the only time that matters is now. Now is all that exists... [uh oh, I'm starting to think about quantum physics!]

America, from what I have been able to "see" in my life, is a large piece in the pie of world's society. We are now so involved with foreign affairs, that if we were to fall, it would impact the entire world. Hopefully the extent of our current tangling is not so similar to those of the Roman Empire.

A leader does not need to govern in order to be successful.

http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=107...

@Rob

Hi, it is good thing you have your picture up so people can see what a idiot looks like. Firstly. you DON’T fully understand the problem. Under Clinton, median household income rose an average of 1.65 percent per year. Under bush (free market) income has fallen an average of 1.15 percent per year. Over the course of Clinton term, people had more money to buy shit i.e. houses. So, Clinton PEOPLE looked around and saw that Fannie and Freddie wasn't taking this into acct. Which doesn't surprise me, so they were ordered to give a little more attn to low-income and medium-income borrowers. Makes sense to me. Under Bush “free market” w, all this should have stopped. They should have removed the mandate. Economics is not magical. It is not even complicated. Free MARKETS let wealth concentrate with a few. America was created by high wages enabled through investment in efficiency and shared with workers rather than hoarded by executives. And with less regulation and tax breaks for the wealthy, that is just what has happened.

An example: A guy owns a widget factory. There is stable market in widgets. The government gives him bunch of money through tax cuts. What incentive does he have to increase the number of widgets he makes? None! If he increases the number of widgets in the market it will drive the price down, and may drive him out of business. What happens when the government gives a tax break to the bottom of the earners? They will spend the money! There is now an increase in the demand for widgets, and the price goes up. Now the owner of the widget factory sees that he can make more money by making more widgets. He puts his employees on overtime. They have more money and they spend it. The economy needs to make more cars, clothes, eat out; etc. The rising tide raises all the boats. Money in the hands of regular folks is the foundation of an economy. Without it, all the investment in the world will not create an economy.

@civil westman: I was with you up until you signed onto the "blame America first" charge levelled against the democrats. While I can't sign onto the majority of democrat politics, I'm not easily drawn into this idea that democrats are to be considered haters of America simply because they're more prepared than republicans to level criticism where it is due. Sadly and all too often, the solutions they propose are worse then the problem itself though.

I wish I had the time and energy to undertake a Ph.D. - level analysis of the state of economic and financial regulation operant over the past 20 years or so. A cursory survey, in the form of merely counting the number of volumes required to contain the U.S. Code and the Federal Register for that period might greatly surprise those blaring the misrepresentation that "laissez faire" was the order of the day. Presently, for instance, the Federal Register contains 70,000 pages devoted to economic and financial regulation. If that is what we all agree to call a free market, so much the worse for us. We have, in reality, never seen one. My hypothesis is that the bad behavior we have witnessed - and reflexly named greed - likely resulted from efforts to get around layer upon layer of absurd and meaningless regulations and still conduct a profitable business. When the layers became so complex that they were beyond comprehension by anyone, values became unknowable and things fell apart - in a system which had accrued heretofore unimaginable levels of debt - personal - business - and especially government - which simply can never be repaid. There is and will be insufficient wealth (not paper) to pay it back. If you do not understand the difference between money and wealth, please learn some economics and then see a psychiatrist. The latter will be required when you gain the understanding of the amount and meaning of our cumulative debt.

The next question is, "Do markets always work?" The answer is simple and unsatisfying. "Yes, they always work in that they are by their very nature self-correcting. Most transactions are win-win and promptly and clearly so. The time course of corrections of systematic imbalances where zero-sum and lose-lose events intrude, however may be unpleasant - as in the present instance. And they may be protracted.

Now the present dilemma did not arise out of whole cloth on Jan. 20, 2000, as demanded the rubrics of the left's meta-narrative. The dilemma arose in a governmental/cultural cabal, wherein elitists organized victim groups according to shared grievances and willfully mis-educated these groups about economics; the biggest lie taught that the federal government's job is to take care of all of your needs, and that it is competent to do so (as a practical matter and under the terms of the Constitution) regardless of what effort you yourself make. There is little actual evidence for the assumed practical or legal competence to finance and direct most of our major financial institutions.

This necessary but insufficient cultural transformation which permitted this occurrence is made obvious by comparing retail politics of 1960 to that of today. Then, JFK believed in American Exceptionalism and said, "Ask not what your country can do for you...." Now, democrats trample each other to get to the microphone to announce the latest federal teat from which the aggrieved group my freely suckle (at someone else's expense). At cocktail parties, off mike, they say, "Ask not what good your country had done in the world. It is morally equal with Stalin, Mao, Chaves, Ahmadinejad, Saddam Hussein, etc." Short form: Blame America First."

Bork described much of this most eloquently in "Sloughing Toward Gomorrah." He used the term "bleak" many times. I am afraid that is an apt description of the future of this nation. "Campaign Finance Reform", "Fairness Doctrine" "Employee Free Choice Act," Open Borders, Higher taxes on everything and everyone (notwithstanding promises). No oil drilling. No gas drilling. No nuclear. Barak's promise to bankrupt the coal industry, Nationalized health service (I have worked as a doc for 30 years, and if I know anything about medicine, I know that everyone (except to politburo) will hate the system. They will wait and wait and wait and wait. Count on it. For now, my keyboard is out of bleakness. It is cold comfort to see what is coming in the name of utopia.

History teaches a clear lesson of utopians in charge: they distribute misery, not goods and services, equally - outside the political class; and they get very efficient at killing lots of people who are insufficiently appreciative of the great efforts of the State to which they are subjects. We are well along the way to that place.

@"nobody": A lot of the wealth that disappeared from your 401k was a fairytale to begin with. Since WW2 the US government has been adding exponentially escalating incentives to home ownership. This skewed the market, making housing more available than it should be. Because the market was distorted towards making houses more available, the market responded by making house prices rise artificially. As with any other time that the government dicks with the supply/demand balance to make something more affordable, the opposite happens, because when something has artificial incentives, enterprising folks will raise prices to counterbalance the effect and maximise profits.

Now imagine that most people keep most of their wealth in their houses. If house prices double artificially, which it appears they have done over the last 20 years, you have essentially doubled the wealth of many people. However, with all these increased wealth, the economy hasn't gained anything. When a house gains value, no jobs are created, no services are rendered, and the economy doesn't get anything to warrant the expansion. That makes that wealth a fairy tale. Now imagine that the government makes credit easy to come by, so people can borrow against that fairytale wealth and buy products from the economy. Millions of people consuming real products with fairytale wealth. Doesn't sound sustainable, does it?

One thing that would go a long way towards helping America's economic solution would be to dissolve all government policies pertaining to the incentives for home ownership. There is no reason for a home's value to increase if it's just sitting there and being lived in. In fact, the opposite should happen. Like all other products, its value should decrease as it deteriorates and becomes obsolete, just like any other product. This would also go towards making housing more affordable, since older houses would become better bargains over time. It would also be a boon to innovation in house construction; allow me to explain why. Imagine if a TV you bought in 1990 increased in value ever year; do you think HDTV and other audio-visual innovations would've happened so quickly if a TV was an appreciating investment? And also, if you're into the environmentalism thing, there's a little in my theory for you too. If houses are a depreciating asset, like any other, innovation would be fuelled, and it would become profitable to be rebuilding better, stronger and more efficient housing. That would create many more skilled domestic jobs in construction and aid scientific innovation in safety and energy efficiency.

But, of course, the government will continue to dick around with the housing market and stifle all these fantastic opportunities for growth and progress, and its sad.

When you ELIMINATE "RISK" ,you need regulation...SIMPLE, in a free, no interventioned maket...OUR markets have been intervened in & comprimised into crisis mode...SIMPLE

ALL this fancy pants talk of markets & economics ,etc. doesn't do squat..Every person who is alive today uses these same principles EVERY day in their financial dealings...Small scale ,but the SAME principles ...You have nothing over the people except insider influences....SIMPLE

I'll say it ONCE more ..I worked ,earned & placed MY earnings into MY 401K ..IT was there...NOW it is not there, anymore ...WHERE did it go ??..IT still exists ...Answer: IT is in the hands of the wealthy ,who are withhlding it from the markets to create the panic,so they can break you & me into submission...SIMPLE..There is no credit problem & no need for regulating a STACKED DECK...You cannot force the "rich" to put the stollen monies back into the markets while they seek to steal more from you & your tax payments...They control the markets that are in trouble... You just gave them more capital with which to buy YOU out cheap...SIMPLE

BUT you now have a friend in the White House ..HA!

ALL you people are SO unenlightened it's rediculous..THE BAILOUT is & was ONLY to recapitalise the rich who would have lost 50 % or more on THEIR bad investments ..SIMPLE...THEY want more at your expense ,untill you have no more to give ...NWO

lvleph, you appear to be confused.

I suggest you read Roderick T. Long's article on Conflationism (which is defined as the "pervasive conflation of corporatist plutocracy with libertarian laissez -faire") before continuing to comment on a website dedicated to a man who has spent a good portion of his life explaining how marketplace actually works when it is free of government intervention.

The free market is a naturally-occurring spontaneous order, a self-organizing system that emerges out of the free exchange of the people in that economy. Outside interference in that system will always result in perverse incentives and unintended consequences. More, it results in a simplification of a complex system. And if you simplify a complex system, you get sickness and death -- consider what happens if you simplify a cell from a complex system to a simple pile of chemicals. More, when government interferes, it is typically trying to import something appropriate to that system into another system. It would be as though the economy were a rain forest and the government were the arctic, and the arctic government decided the rain forest economy needed polar bears. Neither the polar bears nor the rain forest would benefit. Or let's say that someone decided that what rain forests really needed was more cashew trees, so efforts were made to grow more cashews. naturally, that would push out other tree species, and reduce the biodiversity that makes the rain forest healthy. Environmentalists would object that we are trying to force a monoculture on the rain forest, which reduces biodiversity. Yet many of the same people (unfortunately) are more than willing to support policies that have the same effect in the economy. The phrase "too big to fail" is much like complaining that if we let a banana plantation revert back to the rain forest, we will harm the biodiversity of the rain forest itself. This is utter nonsense, which we can see in the ecological examples given, but which too many cannot seem to see with the economy. Perhaps this is because nobody understands that the economy too is a kind of ecosystem, or environment. Until we understand that, though, we will continue to make the mistake of thinking we can do better with our planning than the system itself can do naturally.

@Raphael Wegmann: Quoting: "As I understand it, the housing bubble was a result of low interest rates set by Greenspan, which led to cheap credits and high risk investments."

Part of the problem here is that you DON'T fully understand the problem. While low interest rates do make money cheap (FED - should't be doing that) that alone will not allow loans to go to unworthy borrowers.

In 1992, Congress mandated that Fannie and Freddie (both GSEs) increase their purchases of mortgages for low-income and medium-income borrowers. The purchase of these loans made them much more attractive to lenders, who rushed to create more of them. Fannie and Freddie then kept buying the paper and turning them into MBSs and selling them to investors, who assumed that the government would back the GSE securities Congress mandated into existence.

All of this depended on a steady and significant increase in housing prices — which came to an end late last year. When prices fell, an entire class of overextended borrowers could no longer refinance their ARMs to get affordable mortgage payments, and they began to default.

(the last 2 paragraphs taken from http://hotair.com/archives/2008/09/25/a-great-exam... but I couldn't have said it any better)

Anyway.. you can see here that was ANYTHING but FREE MARKET driven. What bank would loan themselves out to crappy borrowers and threaten their own very survival? It was the GSEs mandated to buy the bad paper up and so all banks started doing it because they could do the loan, make the money on the docs, and then push the paper up the line. The investors got stuck with the "hot potato".

lvleph: Please go learn something. You embarrass yourself.

I'd love to see some substantiation to the assertion "The result then is that bad behavior, that would quickly fail under the free market, ..."

As much as I sympathise with libertarian ideals, I find it odd that the "free market" is cited as the solution to everything with very few examples in which the free market have lived up to libertarian claims. To me it sounds similar to what the socialists do when they cite "the community" as the solution to everything.

While I believe free market ideology can be the solution to lots of problems, I don't like seeing it blithely cited as a miracle cure to all economic woes with very little to back up the claims.

Paul Krugman stated "In the aftermath of the Great Depression, there were many people saying that markets can never work. Friedman had the intellectual courage to say that markets can too work, and his showman's flair combined with his ability to marshal evidence made him the best spokesman for the virtues of free markets since Adam Smith. But he slipped all too easily into claiming both that markets always work and that only markets work. It's extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose."

Anyway, you assume that without regulation the companies will do the right thing. But companies are greedy and will only do the right thing when it is profitable.

Mr Paul writes, that gov regulation results in bad behavior, that would quickly fail under the free market. But can he tell us, what kind of regulation resulted in the housing bubble? As I understand it, the housing bubble was a result of low interest rates set by Greenspan, which led to cheap credits and high risk investments. But do you consider low interest rates a gov regulation? Where was the common sense and due diligence of those investors, who made those silly high risk investments? After all those markets had no regulation whatsoever. I understand, that regulators are not omniscient and cannot anticipate every possible thing that could go wrong. OTOH is it impossible for them to keep those greedy investors from risking our economy again?

...uh, no?

you oughta read or something. milton friendman wrote a book on the monetary history of the united states, and proved (not thought, pondered, or hypothesized...proved) that the great depression was brought on by the market interference on the part of the FED.

or check out rothbard's "history of the great depression".

we havent tried the free market yet, lets give it a whirl before we go headfirst into 'bama-nomics.

I guess Ron Paul has forgotten about the Great Depression, which was a direct result of Laissez Faire Economics. In fact, it was the deregulation of the markets that resulted in the Stock Market crash of 1929. Go figure a libertarian would try to convince the people that such nonsense is good for them. Libertarian try to convince people that they are for individual freedoms when in fact they are for corporate freedoms, which leads to the exploitation of the working class. If you want to talk real freedom, then let's talk Anarchy (and Anarcho-Capitalism doesn't count).