Arbitrary Power

Freedom of Men under Government is, to have a standing Rule to live by, common to every one of that

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  1. Our present-day problem is that our regulatory state has grown - as most regulatory states will as doing so increases their power over the governed - to the “many laws inconsistently and arbitrarily enforced” model, which leaves the law-abiding always uncertain and the devious (or, in ET-speak, the raccoons) seeing opportunities.

    An honest trader or money manager on Wall Street - one who deeply and sincerely wants to play by the rules - can only guess at where the lines are drawn, how rules and regs will be interpreted and where “safe harbors” really exist. And worse, to be competitive with the raccoons - to keep ones business or career going - one is pushed further into the grey or he or she will fail.

    As a very smart FA - who appeared to me to be sincere in wanting to do the right thing by his clients - told me years ago, “if I had the risk disclosure conversations with my clients that the regulators and our compliance area want me to have, I’d have no clients as they’d all leave me for FAs who wouldn’t have those conversations.” He wasn’t saying he lied or didn’t want to tell the clients about risks - he did - he just knew that if he played by the “safe harbor” approach, all he’d do is end his career and, probably, leave his clients less informed.

    And this doesn’t even address the horrible “gotcha” game when a regulatory body allows, for years, certain grey behavior, so it becomes an industry norm (common knowledge in the game theory definition) to only arbitrarily decide one day to enforce the rule against that behavior and it starts arresting or fining advisors and firms for what had been tacitly acceptable behavior.

    Last thought, as someone who was a line-of-business risk manager (you do your LOB day job while compliance dumps a bunch of additional compliance responsibilities on you that your boss doesn’t want to do him/herself and that compliance wants to be able to blame you for not properly policing if a problem is found later), I quickly realized that almost anyone with real responsibility on Wall Street could be found guilty of a rule or reg violation if the regulators wanted to do so.

    That’s a very long way of saying I’m for fewer laws clearly and consistently enforced because, yes as you note, it increases your freedom, in part, because it reduces the arbitrary power of the state.

  2. Interesting that you have chosen to live in Connecticut(as have I). This state is well down the path to far too many rules and taxes and clearly headed further in that direction - unless something changes very soon…

    The problem stems from the fact that once the government grants a benefit - let’s say healthcare for example; it becomes the public’s business what you eat and drink or what you smoke, because those choices cost other people money.

  3. As a healthcare provider, I am confident that a massive amount of rhetoric will be composed about Healthcare these next few years. As to the point about choices costing money, it works both ways. Are you sure smoking costs more? Sudden dealth is very inexpensive and prevents a multitude of future patient ‘touch’ visits and preventative care, not to mention all those future ortho problems and long term care with end-of-life costs still waiting in the wings. Meanwhile, everybody in the ‘business’ knows the big money is in preventing diseases that don’t exist rather than treating the ones that do. You can be sure that Medicare for All will be spun as Socialized Medicine and Medicare with Limits as ‘Death Squads’. The widening gyre virtually guarantees that the Healthcare conundrum will not be ‘fixed’. Putting Big Pharma, Insurance, Academia, and corporate providers together with politicians and the state will never work. How Big Tech managed to get into the room is a tribute to their persuasion. Next time you hear the quality-of-care mantra, especially with comparative effectiveness, think of what ET authors write about portfolio manager analysis. Then take kaopectate!

  4. Excellent point on the relative costs of medicine - which somehow don’t enter the debate. thanks for the insight.

  5. Avatar for bobk71 bobk71 says:

    Thanks for the insight and the story. The incentives to do ‘bad’ things are everywhere in this system. Labs are encouraged to dream up new products regardless of their impact on the environment. Savers are encouraged to invest in the labs and other risky ventures by being left with no erosion-free storage for their savings. This is not to mention finance!

    The key for the top elites is to create demand for the money and debt they issue. Called ‘growth,’ this demand is the only long-term way to stabilize the system they have destabilized by issuing the paper ‘wealth.’ ‘Growth at all cost’ is the only religion subscribed by all major political candidates.

  6. Avatar for rguinn rguinn says:

    The nature of the Leviathan, unfortunately, and the problem with any kind of central planning. There is always some related human activity which must come under centralized power in order to facilitate another.

  7. Avatar for rguinn rguinn says:

    Amen, Mark. If I ever slept poorly managing an investment firm, it was from fear of caprice on the part of gatekeepers and regulators. And that’s not an accidental state of affairs. It’s a wholly intentional part of the design of every compliance program in the world: not protection of the interests of fiduciary charges, but fear.

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