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joether -> RE: Dodd-Frank (3/16/2015 12:50:57 PM)
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quote:
ORIGINAL: BenevolentM
My Second Dodd-Frank Thought for the Day
If you have a lot of money, isn't this good news? If you do not care that this creates needless wear and tear on your employees, it suggests that the law is vacuous and if the activities of the big banks are unhealthy and they cannot self-correct, it could destroy civilization.
Money tends to do funny things to different people. It used to be that water, food, shelter and warmth were the needed things. After that, came protection/defense and after that understanding/knowledge. A sort of 'Maslow's Hierarchy of Needs' progression of mankind over the many thousands of years. Sometime within the last fifty years, money, it seems has been added to this 'need' concept. To the extent that some people will behave irrationally to obtain and/or keep it.
Every form of government mankind has encountered has one or more problems with its use. Likewise, each form for handling an economy comes with its source of problems. Try as we might, we have not found neither the perfect government nor economy to operate. However, through the use of mechanisms, we can create a hybrid system of both concepts to a creation that works most of the time. Unfortunately, its.....REALLY....complex. Its done that way given circumstances that lesser creations have either failed or found to have huge faults in their operation (short or long term).
Capitalism by itself has one huge problem: no mechanism to control greed. If Capitalism is left to its own to exist, greed quickly takes over. What might have been 'sound and good business practice' is thrown away if it interferes with the creation of more money coming into the company. That as time progresses, more and more unethical or even illogical actions are taken to support the creation of methods to acquire more money. The fallout usually being terrible on all those associated with that government viewpoint. Note here, that a company is a form of government. A 'sole proprietor' in business is the equivalent to a dictator in politics. A corporation usually has a board of directions whom hire a CEO to run the day-to-day operations; much like a town might have a council whom hires a town manager to run day-to-day operations.
The economic crash of 2006-2007, was created because certain laws at the federal level were removed and/or lessen by Republicans in Congress. The belief was it would help companies become more competitive towards outside forces. However, those laws and regulations were put in place for a number of reasons. When one looks at why those that created the laws in the first place, put them into law will find an issue to prevent what took place in 2006-2007. A law exists to do one of two things: promote good behavior, or minimize bad behavior. Those back then knew what would happen if companies were allowed to prey upon the unknowable or financially unsophisticated with impunity.
If you recall all those ads in print, radio, and TV of 'Have no money? Have bad or no credit? You can buy a house!" Many people whom had non-consistent incomes or above a certain threshold, were allowed to buy houses. Likewise, those with bad or no credit history were also given the chance to purchase a home. The results of both created a destabilizing effect in the under-current of the economy. When those individuals started failing, homes were foreclosed on. The property reverting to the companies that had 'purchased' the house in the first place. Large financial entities obtaining homes cents on the dollar! These people should have NEVER gotten that chance to purchase these homes, had those laws remain in effect. People decades before KNEW THIS. Its been known to anyone that took a microeconomics course in college. So why was it allowed? GREED. Greed demanded the regulations removed, the regulators made powerless, and then to pray on the unsuspecting whom thought such laws were still in effect (that they wouldn't get a house if things were bad, right?).
Play a game of Monopoly helps explain this cause/effect very well. If the game is played per the printed rules, it takes about an hour or two with four players. Three players lose with one clear winner. Since the game has come out, people have added 'homebrew rules' that created problems to the function of the game. Some of these rules added into an effect that was not existing (i.e. money on Free Parking), or an imbalance to the system (i.e. adding more houses to the standard allotment). An what happened? Games would go on....FOREVER. Which is why when most people my generation and older hear "Do you want to play Monopoly" there is a collective groan of pain and desire to watch paint dry instead!
The rules of the game allow for capitalism to exist, but within limits. Imagine if one player after passing 'Go' collected $2,000 instead of $200 like everyone else. Would that imbalance things? Or if a player stopped along the route of his dice roll for Community Chest instead of the actual roll of Boardwalk with a hotel?
The game itself is a very simplistic understanding of economics from 1910, NOT, 2015. Much has changed in over a hundred years. From finance to technology. As such, laws have had to keep pace to keep things from blowing out of pieces. due to problems. Either by people passing laws or their reduction; which creates an unbalancing effect. So creating good laws, to keep pace with reality without becoming to broad or narrow, nor to restricted or unrestricted; is a very tough action to perform every time. Finding good people, to create good laws, that benefit society as a whole; is not as easy of a task as one would hope.
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