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The Free Market as Regulator By Ron Paul Published 08/21/09 Since the bailouts last fall, lawmakers have been behaving as quasi-owners of the bailed-out banks and businesses, leading to calls for increased regulation of executive compensation and other wasteful expenditures. We have heard much about bonuses and executive pay packages that sound more like lottery winnings than an honest salary. Many lawmakers voted in favor of these unconstitutional bailouts, believing that these corporations were too big to fail, and allowing them to go under would precipitate widespread economic disaster. This second wave of citizen outrage at the bailouts has left these lawmakers with a bit of egg on their face, and once again, they feel the need to "do something" to "fix" it. Shouldn't there be a regulatory structure in place governing executive compensation? Politically, it seems quite feasible. People are outraged that the system has once again gutted the many to make a few at the top fantastically wealthy. But they are incorrectly demonizing the free market. What we need to realize is that there WAS a regulatory structure in place that was attempting to stop bad management, including overpaying executives. That regulatory structure is the free market, and when poor management brought these companies to the point of bankruptcy, Congress circumvented the wisdom of the free market, and inserted its own judgment at our expense. And now because of that intervention, we will burdened with massive new regulations. We can be certain this effort will fail. The free market is a naturally occurring phenomenon that can't be eliminated by governments, not even totalitarian ones like the former Soviet Union. It can be regulated, over-taxed and manipulated until it is driven underground. Lately it has been wrongly accused of doing so many things it just doesn't do, that are really the fault of crony corporatism and convoluted government policies that brought on the crisis. Too many people equate the free market with big business doing whatever it wants, but that is not the free market. Unconstitutional taxpayer funded bailouts are what allow giant corporations to run roughshod over the economy. The free market is what puts them out of business when they misbehave. The free market is you and your neighbors working hard to produce what you produce, and exchanging goods and services voluntarily, in mutually agreeable arrangements. The free market is about respecting property rights and contracts. It is not about building up oligarchs and monopolies and confiscatory tax theft -- these are creatures of government. We must watch out when government comes up with interventionist solutions to interventionist problems. The root of our problems lie in interventionism. Trusting the free market is the solution.
Posted By: Steve Williams
Saturday, August 22nd 2009 at 8:47AM
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I thought this a rather insightful analysis as to why we should have let those corporations fail, of their own mismanagement.
Saturday, August 22nd 2009 at 8:54AM
Steve Williams
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As always Clark, you have a lot of information to put things in perspective. But I think the American public has to take some responsibility for the boom-bust cycles. These have always occurred even before our modern form of government. What goes up must come down, and as ecstatic as people were over the stock market and housing boom (and I made out on that too) now they are suffering the downside (as I am too).
Saturday, August 22nd 2009 at 12:43PM
Steve Williams
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But I have to disagree that the presidential terms are what drive things. Clinton was there at the right place at the right time, when the Internet boom occurred ('94 - '01)
Saturday, August 22nd 2009 at 12:51PM
Steve Williams
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Clark, not trying to argue, not at all, just going on my personal experience.
I worked for Ascend Communications from 1991 - 1998. We made the first modem concentrators, BRI, PRI, DSL, interfaces, etc. Cisco was playing catchup to us. The stock went out in May '94. By '98 it had increased 3500%. So $18,000 became over $2mil. A house bought in '97 for $350K sold for $685K in '02, and after that in went up to $825K.
I say this to my shame because I blew it all. But Clinton had nothing to do either with my gain or loss. It was first luck (but hard work too), and then stupidity.
Telecom deregulation led to this result (the breakup of AT&T in 1980/81. That was under Reagan. I got into telecom in '81.
Saturday, August 22nd 2009 at 3:13PM
Steve Williams
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Irma, I applied at Winco for a warehouse job, got there ten minutes late for the information session because I got stuck in school traffic, but this showed me to be an unreliable employee, was automatically disqualified. This shows how tough the job market is out there (Modesto) and also the mentality of the companies who think they have all the power now.
I know too the about the central valley flood plains (also could not even get earthquake insurance in Alameda). But I'm reminded of an article in National Geographic about the dangers of the New Orleans levies just shortly before Katrina, almost prophetic.
Saturday, August 22nd 2009 at 4:11PM
Steve Williams
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And thanks for the reminder: DARPA was indeed the origin of the Internet. I guess we can be grateful to the DoD in this case
Saturday, August 22nd 2009 at 8:24PM
Steve Williams
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Me, I just look at the prices of gas at the pump. Has anyone noticed how they no longer even bother to give excuses for the rises in gas prices now?!?(smile)
Thursday, April 10th 2014 at 6:47PM
ROBINSON IRMA
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There is going to be these same booms and busts as long as this country is run by big business, who can buy the most commercials on our public information high ways.
As that expression goes, "If it works for you why change it"? Some thing it seem the average citizen being abused by their need to vote these people back into Washington, D.C to collect more and more monies to work in the interest of big business...that definition of INSANITY is going to continue to apply in America.(smile)
Thursday, April 10th 2014 at 6:47PM
ROBINSON IRMA
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Clark you are so right about those credit cards.I still wonder why it took so long to even bring up the credit cards by Congress. Me, I noticed this when those credit cards "use" TO COME TO MY MAIL BOX ALMOST EVERY DAY FROM NAMES OF BANKS AND COMPANYS i HAD NEVER HEARD OF BEFORE.. And, the sudden stopping of these in my mail box.
but, mainly when I began hearing about people going to the pawn shops to get enough money to buy gas to just get to work.Even the pawn shops said that they were being over run. then people loosing their homes and yet were still using those credit cars to buy things like food, paying bills, rent and buying for Christmas. this was way back last summer.
These people had only one way to go...max out their cards...have them taken away by these companys cutting off their credit or just taking the government's tax payers given in the stimilus package and go buy up those other banks that were failing, some, because of credit cards being abused!!!!!!!
common sense should tell us all that there is no way even raising the interests and offering those willing to pay off their credit cards by only paying the credit card only half of what they actually owe is just going to vanish into thin air the money lossed in this manner!!!!!
And, brother Clark if you can give me some idea how this is going to be dealt with please let me know, because I will not believe those in Congress on this matterunder any conditions or cover-ups until after next years' elections.(smile)
I do trust you Clark...thanks for this post brother Steve...
Thursday, April 10th 2014 at 6:47PM
ROBINSON IRMA
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Now on to building houses and giving those "no" down payments on them... well it got so bad out here building and promising outragous things to our county's politicians greed this is what has ended up with those $250,000 homes now going for from $1000,000 to rentals or being turned into section 8 to earn some money off of them:(it s costing the banks big bucks to just cut and water these for closed homes lawns)
These housings neighborhoods were built so close to Beale air force base that local citizens had to hold an election to stop this as this could have ended up forcing this base to close on the next round of base closings. You see an air force base must have a certain amount of open space for their planes to land or take off in, by law.
These countys local treasures were promised that they would build levys if they allowed them to build in flood zones. so these areas were actually taken out of the flood zone on the enviornment study that is required so that these homes could be built in the first place. Those levys were never built and guess what...those homes are right back as in a flood zone. I do not have to tell you that even more homes were lost because of the added and unexpected insurence as a requirment if you live in a flood area. And, just as this state burns in the summer it floods in winter. Some winters it rains 6 out of 7 days a week for months and months at a time.
And, this stae itself had better hope that these homeowners do not take notice at all of these almost dailyclass action law suits being filed against the state of Ca. and these home owners add the abuse of them also as one more classs action suit...
OUR POLITICAINS AT WORK AND JUST OUT AND OUT LAZINESS OF THE PUBLIC...pointing blame at all but one's own selves is not good enough, not in today's trouble this country is in...but then major desaster has never ever failed to about long over due,much needed change.
Thursday, April 10th 2014 at 6:47PM
ROBINSON IRMA
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There is a grocery store out here called Win Co. I don't know if you have this market where you all are... but, this store which is as big as those of a super Walmart store, but it only sells food. Any way this store has at its entrance a big that the only card they accept is a debit card.
Has anyone seen any thing like this?
Thursday, April 10th 2014 at 6:47PM
ROBINSON IRMA
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Question, what good is it to "break up" a company when all they are going to do is use enron style accounting and go buy up everyone smaller or weaker than them?!?
I believe that one of our greatest problems is that no one knows who owns who or what. this is why the housing market got to be such a record making failuar buying and selling only for profit for themselves. And, if the company failed, so what getting fired earned more that being the CEO doing the active manipulatings any way...
Thursday, April 10th 2014 at 6:47PM
ROBINSON IRMA
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Steve, I seldom shop at winco before now, but they are the only place it seem I have no problem trying to find sea foods not coming from China or where ever they get it from now a days.
I have taken it on my own to avoid markets that do not have unions as much as I can. And, unions are another entity that i chant(pray) goes back to working for the interest of the average citizens.I just assume that with those cheaper prices even though you have to bag your own self that they are not union.
but, thats for another blog.(smile)
Thursday, April 10th 2014 at 6:47PM
ROBINSON IRMA
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