“I don’t get it, Curmudge. The New Deal didn’t end the Great Depression, the Great
Society didn’t make society great, the 2009 American Recovery and Reinvestment
Act ($862 billion ‘stimulus’) didn’t stimulate the economy, and the countries
of Western Europe are trying to undo their unaffordable cradle-to-grave social
welfare programs. In the U.S. we
are recovering from the Great Recession at a snail’s pace. It looks as if the people in charge
have not studied history. They
persist in attempting things that have been proven not to work, and they refuse
to accept that the U.S. is a complex system that can’t be micromanaged from
Washington.”
“Actually, Julie, you do
get most of it. We both understand
what has happened, but neither of us fully understands the underlying
‘why?’. We may need to
speculate. Perhaps the
ultra-progressives have a sort of messianic vision that ‘this time it’s
different.’ Maybe we can better
understand the progressive mind if we look at some of the actions of the
administrative state. Laws and
regulations often have unintended consequences or reflect the political or
economic goals of favored groups.
The latter are termed ‘crony capitalism.’ Let’s look a some examples.”
Unintended
Consequences
“I know some consequences of the Endangered Species Act
(ESA), Old Guy. The red-cockaded
woodpecker is a protected bird that nests in old-growth pine trees in
eastern North Carolina. ‘When a landowner
felt that his property was turning into the sort of habitat that might attract
a nesting pair of woodpeckers, he rushed in to cut down the trees. It didn’t
matter if timber prices were low.’
And here’s another ‘bird’ example, the northern spotted owl
in the Pacific Northwest. Although
saving owl habitat was a noble goal, designers of the ESA probably didn’t
envision that it would decimate the northwest timber industry and the
communities that it supported. And
as it turned out, the barred owl drove the spotted owl out of its habitat.”
“I lived in the Northwest when this was a big issue, Julie. When one detected a spotted owl on his
property, conventional wisdom was to ‘spot, shoot, and shovel.’ And here’s a present-day example of
regulators’ overriding the needs of people in favor of wildlife. Despite the parched condition of
farmers’ fields in California, water desperately needed for irrigation is being
flushed into rivers running into the ocean to keep baby salmon comfortably cool
on their migration to the sea.”
Unpopular and
Unwise Regulatory Goals
“You know, Curmudge, sometimes the citizens of a community
are unhappy with things that the federal government bureaucrats are trying to
do ‘for’ them. One example is in
implementation of the Fair Housing Act by the Department of Housing and Urban
Development (HUD). Apparently HUD
is regarded as attempting to rewrite local zoning laws by federal fiat in
Westchester County, NY. This
pertains to construction of low-income
housing units. HUD says the
county is not being sufficiently ‘diverse’ and will withhold $5.2 million this
year. ‘This deprives Westchester’s
poorer neighborhoods of the very funds that are needed to build affordable
housing.’ (1)”
“Another issue, related in that it pertains to the Fair
Housing Act, is
disparate
impact. ‘The theory of
disparate impact allows regulators and plaintiffs to sue under the Fair Housing
Act and other ‘discrimination-focused’ laws using the legal theory that a
particular lending scheme – although unintentional – had a disparate impact on
a minority group.’ The
issue is that concern over unintentional ‘disparate impact’ might overrule a
banker’s judgment in mortgage lending.”
“It doesn’t take much reading to conclude that the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 is unpopular with a lot of people. I suspect that you, Old Guy, will agree
with these quotes from a recent article in The Wall Street Journal. (2) It was inspired by the progressives’
belief that the ‘housing bubble’ and Great Recession were caused by Wall Street
greed and insufficient regulation.
‘However it is now clear that government housing policies forced a
reduction in mortgage underwriting standards and were the real cause of the
crisis. The goal was to foster
affordable housing for low-income borrowers and minorities, but these loosened
standards inevitably spread to the wider market, building an enormous housing
bubble between 1997 and 2007.’ “
“The same article described some impacts of Dodd-Frank,
Julie. The act is 848 pages long, and only 208 out of 398 regulations required
by the act have been finalized.
‘The gross domestic product (GDP) from the recession that ended in 2009
has been the slowest on record.’ ‘J.P. Morgan Chase plans to hire 3,000 more
compliance officers this year, to supplement the 7,000 brought on last
year. At the same time, the bank
will reduce its overall head count by 5,000. Substituting employees who produce no revenue for those who
do is the legacy of Dodd-Frank.’ “
“Other big-government actions and regulations could be
categorized as crony capitalism. That is sort of a generic name, which
we introduced in our 4/20/14
posting, because there are also crony liberalism, crony progressivism, and
crony unionism. In an administrative
state where all ‘good’ things come from the government, an organization or its
cause must be favored by the Administration or its progressive bureaucrats to
get in on the ‘goodies.’ I’ll bet
that you know some examples, Old Man.”
“Limited only by the space we want to devote, Julie. The classic example is Solyndra,
that had a $535 million government-guaranteed loan when it went bankrupt. Bureaucrats felt they could make better
decisions with taxpayers’ money than private investors would with their
own. And then there’s the corn
lobby that forces us to have 10% ethanol in our gasoline. The failure of General Motors is an
example of crony unionism. The
Administration gave a big chunk of GM to the United Auto Workers and ‘stiffed’
the GM
bondholders holding senior debt.
A sure sign of government decay is when they don’t follow the rule of
law.”
“I’m certain that you couldn’t end a discussion of unwise
regulations without mentioning industry’s bête
noire (black beast or nemesis),
the Environmental Protection Agency (EPA).”
“Their worst is their latest, Julie. They consider carbon dioxide, which we
exhale and plants require, to be a pollutant under the Clean Air Act. Under the guise of global warming, they
will destroy
the coal industry with the hope of reducing the global temperature by a
fraction of a degree. But we dealt
with that topic a year ago in our five-posting series on Climate Science
beginning on July 23, 2013.”
“To me, Curmudge, the progressives’ ultimate insult to the
public is the Administration’s weaponizing
federal agencies to investigate and harass conservative citizens’ groups. And the worst offender is the Internal
Revenue Service, whom we always felt to be insulated from politics. Corruption in government makes me
sick.”
“Our discussion of obstacles to curmudgeonocracy will continue
in the next posting, Julie.
Meanwhile, give me your hand and I’ll put my thumb on the acupressure
point on your wrist to control your nausea.”
Kaizen Curmudgeon
(1) Westchester
USA Editorial in The Wall
Street Journal 7/08/14, p. A12
(2) Wallison,
Peter J. Four Years of Dodd-Frank Damage, WSJ 7/21/14, p. A13.
Link to posting
from blog archives: Evidence-Based
Medicine 4—10/14/10
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