Speaking at the Democratic National Convention last Monday, U.S. Senator Elizabeth Warren let loose on her usual object of attack, banks and corporations, amidst an undercurrent of vocal Bernie Sanders supporters who accused her of being a sellout to the Clinton machine and their political dirty tricks.
Warren, who became a popular spokesman for the Democrats' socialist policies after becoming their banking industry attack dog, opened with a brief autobiography and then, while describing the sad state of the American economy (hmmm, isn't that the economy of 7 1/2 years of Obama in the White House?), made use of one of her favorite false phrases, namely 'trickle-down’:
"There’s lots of wealth in America, but it isn’t trickling down to hard-working families like yours.” --(Boston Globe-Elizabeth Warren speech)
What is implied with the term “trickle down” is a picture of money being hoarded by the super rich with the rest of us trying to prosper by catching what falls through the cracks. For Marxists like Warren, the only way, in our representative republic, to get more wealth to more people, is to open those “cracks” by increased taxation. Where Marxist parties completely control the government, that wealth is simply taken, or expropriated.
Ms. Warren, it’s government control that creates trickle down. The term “trickle down” is actually what happens in government-controlled economic redistribution. After taking what it can find by theft, either through taxation or expropriation, the government is then responsible for apportioning it out to the people in trickle down fashion.
But the opposite is what happens when government control is minimized and the economy is unleashed. As people create and build businesses, their businesses grow as more people use their products and services. Then, as their businesses grow, more people are hired to work for them, and more people accumulate wealth that is then used to purchase more goods and services. As businesses succeed, wages rise and the overall standard of living goes up.
Socialists like Warren think greed and excess during time of economic growth and prosperity mean capitalism itself is evil. But that confuses the human condition with a natural economic process. Government cannot eradicate the evils of fallen man. Where there is wealth and power, there will always be those desiring to misuse and abuse it. The more government controls the economy and appropriates the wealth of taxpayers, the more government corrodes due to greed, corruption, and mismanagement.
We have seen, over the last century, how extreme this can be in completely government-controlled economies. In the Soviet Union. in the 1930s under Stalin, millions of Ukrainians were deliberately starved to death during collectivization of agriculture. Then in Mao's Stalinist system in China, tens of millions died due to the failure of his Great Leap Forward, an effort to collectivize business and agriculture that began in 1958.
In recent years we have seen economic collapse in Robert Mugabe’s socialist Zimbabwe and in the centrally-controlled economy in Venezuela that Hugo Chavez created.
Warren always portrays the person who appropriates the most of others' wealth as being the most compassionate and helpful to the less fortunate. Yet government programs often do quite the opposite. President Lyndon Johnson’s Great Society, which created the War on Poverty, only increased the number of people dependent on government rather than help them out of poverty.
She also fails to take into account the detrimental effect of this appropriation of the wealth of, supposedly, the rich, which always taxes the not-so-rich as well.
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Adding laws and regulations to control the largest banks or largest corporations always hurts their smaller competitors the most. And the passage of laws to control monopolistic businesses has turned into laws to control business growth in general.
"Warren was a commercial law professor at Harvard for more than 20 years. She is widely credited with facilitating the creation of the Consumer Financial Protection Bureau (CFPB) to protect consumers from the insidious rip-offs in mortgages, credit cards, student loans and other financial products. -- Wallstreetonparade.com
An article by Norbert J. Michel, Ph.D. shows how government regulation led to the economic crash of 2008 and how the Dodd–Frank Wall Street Reform and Consumer Protection Act, which included the creation of the CFPB does little, if anything, to resolve the underlying issues that caused the recession:
“The financial crisis of 2008 led to the ‘Great Recession’ from which the nation is still recovering. Despite the slow economic rebound, and in the face of contradictory historical evidence, many critics are still trying to blame these events on the supposed failure of the free market....they say...it was the heroic application of federal power via emergency bailouts, massive stimulus, and new regulations that spurred the economy to recovery.
“Government bailouts designed to preserve a few irresponsible and overextended companies came at the expense of the taxpayer and with the consequence of punishing other banks and financial institutions with egregious regulations that only increase the danger of financial crises.”
“Since 2008, the government’s main response has been to either regulate completely unrelated issues or to create vast new powers for itself while protecting some of the very institutions that contributed to the crisis.
“This process stands to generate new opportunities for incompetent firm management, corruption, and unprecedented intrusion into the private affairs of American citizens. Rather than ending too big to fail, the Dodd–Frank Wall Street Reform and Consumer Protection Act has enshrined it into law.”
“The operations of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were a key cause of the financial crisis and are the poster children for the too-big-to-fail doctrine....When Congress responded to the crisis with the Dodd–Frank Act, Fannie and Freddie remained largely untouched and to this day pose a threat to taxpayers. In fact, the two companies—now essentially government controlled—are an even bigger player in the mortgage markets than before the crisis.”
“Given that Dodd–Frank expands financial market regulation with newer versions of the same rules and regulations that have been in place for years, there is little reason to expect less economic turmoil in the future. In fact, many of the private financial firms that had nothing to do with the 2008 meltdown now face expensive regulations that fail to address the original problems.”
The article concludes with four things that need to be done to reform government regulation of banks and other lending institutions:
First, Congress should repeal Dodd–Frank.
Secondly, large financial institutions that fail should be allowed to wind down through an orderly bankruptcy process.
Thirdly, government-sponsored corporations Fannie Mae and Freddie Mac should be eliminated altogether and the housing market made more stable by relying on private financial firms that are not backstopped by taxpayers.
And finally, Congress should undertake a major reform of the Federal Reserve, an institution that bears little resemblance to the central bank that was created in 1913.” --Heritage-repeal Dodd-Frank
Of course it would take a Republican-controlled House and Senate and a Republican administration or an Article V convention of states for a repeal of Dodd-Frank to even have a chance. But even some Democrats are fed up with government overregulation.
In conclusion, a recent letter to the CFPB dated July 16, 2016 from a bipartisan group of 70 U.S. Senators, including conservatives Jim Inhofe, Mike Lee, Ted Cruz, and Jim Lankford, as well as the rest of the Republican caucus, while only a tiny step toward the changes needed, such as a full repeal of Dodd-Frank, is a rare document of Congress uniting in a bipartisan way to limit government:
“We agree that it is important for consumers to be empowered to take more control over their economic lives, and that bad actors should be rooted out of the financial marketplace. However, the CFPB must also consider its impact on community-based depository lenders....Since we all recognize these community lenders were not the primary cause of the financial crisis, the CFPB must carefully tailor its rule making.
“Dodd-Frank explicitly granted the CFPB the authority to tailor regulations...and [we] ask that you act accordingly to prevent any unintended consequences that negatively impact community banks and credit unions or unnecessarily limit their ability to serve consumers. --Senators on community-banks-and-credit-unions
Rolf Yungclas is a recently retired newspaper editor from southwest Kansas who has been speaking out on the issues of the day in newspapers and online for over 15 years
