Totally with you Mike. One of our contributors is leading that charge.
http://www.thirty-thousand.org/
"The framers of the Constitution and the Bill of Rights intended that the
total population of Congressional districts never exceed 50 to 60 thousand.
Currently, the average population size of the districts is nearly 700,000
and, consequently, the principle of proportionally equitable representation
has been abandoned."
Kevin
What if we had 10,000 elected part-time congressmen (a single
representative per ~30,000 citizens)? That would seem to address
quite a few workload and expertise questions.
Not only that, it would bring many more minor parties and independents
into representation, flood out lobbyists, and increase representative
responsiveness. It would certainly also decrease the expense of
running an election, possibly leading to some middle income or working
class reps.
On Nov 26, 8:01 am, "Kevin Kervick" <[email protected]> wrote:
The argument that size does matter comes from the idea that our
representative system that depends on upward influence cannot be efficient
if it is being asked to do too much stuff. That's why I believe it would
be immediately helpful to shrink the beast. It cannot work if it is too
large.
Kevin
Actually, the "issue" of Big Government is mostly a non-issue for me.
I want the government to do its job, to be efficient, not to be corrupt,
not to be owned by special interests, to spend in a ruthlessly responsible
way,
to levy taxes that are necessary and not one dime more, and to be based
on actual justice and objective evaluations of our problems. The size
of gvt is FAR less important to me than if it does these things
or does not do these things.
Billy
-------------------------------------------------------------
11/23/2011 5:18:39 P.M. Pacific Standard Time, [email protected]
writes:
I thought that you liked big government and lots of regulators and
regulations.
And it should probably be titled "How Bigger Government props up Big
Finance," because the Government would have to be big enough to support
not only its weight, but also the weight of "Big Finance" in order to be
able to prop the latter up.
David
"Remember, to a liberal, anyone who makes money in an endeavor frowned
upon by liberals is 'greedy' and any person who expresses an idea contrary
to basic liberal dogma is preaching 'hate.' How shallow these people
are."—Neal Boortz
On 11/23/2011 5:04 PM, [email protected] wrote:
Real Clear Politics / Real Clear Markets
November 22, 2011
How Government Props Up Big Finance
By Marc Joffe & Anthony Randazzo
Since medieval times, writers and ethicists have counted envy among the
seven deadly sins. In utilitarian terms, envy is at best a zero-sum game
because it can only be satisfied when someone loses.
Given this moral and practical failing, it is a shame that envy plays such
a large role in the Occupy Wall Street protests spread around the country.
And, yet, the Occupy movement does have a point that transcends this
negative emotion: the financial industry has grown large on the backs of
government handouts, manipulated regulation, and taxpayer bailouts.
While there is no objective size the financial industry should be, it is
fair to say it would never have become this large without the crony
capitalist system that has masqueraded as a free market. In the process,
the financial industry has absorbed resources that could better be used
elsewhere while imposing large, systemic risks on the economy. Watching
others grow rich from special privilege understandably leads to envy, but
from this perspective, the high compensation received by financial
industry leaders is merely a symptom of a much larger problem.
Big finance has achieved its present girth on the back of numerous policy
decisions - some going back centuries. Many of these policies had the
intention of protecting the general public, but often had the unintended
consequence of enriching bankers beyond the product of their labor.
For example, central banks often seek to encourage growth by lowering
interest rates for small businesses and individuals. But in the process it
is mainly large banks that benefit from higher margins, as the Fed
provides lendable funds at a steep discount - not all of which is shared
with borrowers. Federal policies designed to assist homebuyers also
benefit mortgage investors and grant them taxpayer supported guarantees
they will get paid (bailing out Fannie Mae and Freddie Mac has already
cost $182 billion as a result).
Subsidized mortgages also result in higher home prices - undermining
affordability goals. Over the long term, consumers become more leveraged,
while financial firms collect more interest and fees.
But special privileges to the financial industry predate discretionary
monetary policy and subsidized lending. Indeed, these privileges are so
embedded in our system, they never occur to us. Perhaps the most
distortionary of these is banking licenses that offer limited liability.
Without such licenses, bank owners would have to use their personal assets
to redeem deposits if borrowers default. Limited liability reduces the
bank owners' risk to just their initial investment. The large number of
state banking licenses granted during the nineteenth century allowed
"one-percenters" of that era to profit from borrowing and lending, without
worrying about large losses. They could also grow their institutions by
making loans to less creditworthy borrowers, thereby creating systemic
risk.
This risk was usually shouldered by depositors, who often lost money
during bank runs. During the Depression, the federal government solved
this problem by creating deposit insurance. FDIC insurance enabled banks
to grow even more, and it also freed them to take on even greater risks,
since depositors no longer worried about how their funds were being
deployed.
As financial institutions have grown and consolidated over the years, some
have become so systematically important that they have been deemed too big
to fail. These institutions are now effectively eligible for bailouts in
which all creditors - and not just small depositors - are made whole while
management can either remain in place, or walk away with all their
previous compensation plus a severance package to boot.
These protections and hidden subsidies have enabled the financial industry
to achieve enormous size and profitability, while placing the overall
economy at great risk. Usually, these protections were accompanied by
regulations such as capital requirements or size restrictions. These
regulations usually failed to achieve their intended results - especially
over the long term - because financial institutions are able to wear down
the restrictions by lobbying and by hiring away key regulators.
Instead of adding to the quantity of regulation, thereby creating more
opportunities for the financial industry to game the system, we should
tame the financial beast through greater accountability. One way to do
this is to add a 10 percent co-insurance feature to FDIC insurance for
deposits above $10,000. Depositors with $11,000 in a failed bank would
receive $10,900; while those with a $250,000 balance would get $226,000.
Depositors would not be wiped out in the event of a failure, but they
would have an incentive to select banks that are more careful with their
money (while the poorest are still fully protected). Banks would then have
to compete for depositor business, in part, by demonstrating that they
have strong risk management.
Those with exposure above the FDIC limit should take at least a 25 percent
haircut through the resolution process in the event of a bank failure.
These stakeholders are often large financial institutions, acting as
counterparties, who have the skill and resources to more closely monitor
the banks with which they deal. This reform would address one of the most
disturbing episodes of the financial crisis: Goldman Sachs' full recovery
on CDO insurance contracts that triggered the AIG bailout. Certainly low
and middle income taxpayers had better uses for this money than awarding
it to the highly compensated financial wizards at Goldman.
Bank managers should also have more skin in the game. If a bank fails or
receives a bailout, directors, senior managers and highly compensated
employees should have to repay creditors or the government at least a
portion of past compensation they received from their failed
institutions - particularly compensation tied to performance. Fear of
impoverishment would have a substantial impact on the risk appetites for
those leading major financial institutions.
Finally, federally subsidized or guaranteed loans should be restricted to
the truly needy. Today, mortgages of up to $625,500 can be purchased by
Fannie Mae and Freddie Mac on the federal government's credit card. This
subsidy should be limited to homes that are below the median price for a
given area. If financial industry players want to originate mortgages to
members of the upper middle class, they should be willing to assume the
full risk of providing these loans.
Indiscriminately taxing the rich is an envy-driven policy that only
marginally addresses Wall Street's size, profitability and systemic risk.
Vindication should always be discarded in favor of an effective reprieve.
Policies that require financial industry participants to shoulder more of
the risks they create will reduce the burden Wall Street imposes on the
general public, will shrink the industry, and will release human talent
for higher and better purposes.
Rather than demotivate the next Steve Jobs, or reduce the resources Bill
Gates deploys to fight AIDS and malaria, let's instead focus the
Occupiers' energy on advocating solutions that truly improve the lives of
the 99 percent.
--
Centroids: The Center of the Radical Centrist Community
<[email protected]>
Google Group:http://groups.google.com/group/RadicalCentrism
Radical Centrism website and blog:http://RadicalCentrism.org
--
Centroids: The Center of the Radical Centrist Community
<[email protected]>
Google Group:http://groups.google.com/group/RadicalCentrism
Radical Centrism website and blog:http://RadicalCentrism.org
--
Centroids: The Center of the Radical Centrist Community
<[email protected]>
Google Group:http://groups.google.com/group/RadicalCentrism
Radical Centrism website and blog:http://RadicalCentrism.org
--
Centroids: The Center of the Radical Centrist Community
<[email protected]>
Google Group: http://groups.google.com/group/RadicalCentrism
Radical Centrism website and blog: http://RadicalCentrism.org
--
Centroids: The Center of the Radical Centrist Community
<[email protected]>
Google Group: http://groups.google.com/group/RadicalCentrism
Radical Centrism website and blog: http://RadicalCentrism.org
