So instead of 535 crooks we'll have
THOUSANDS?????
What could go wrong??
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 11/27/2011 9:29 AM, Kevin Kervick wrote:
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
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