http://www.nytimes.com/2009/02/07/opinion/07urofsky.html?_r=1| For Brandeis, regulation was not supposed to be a restraint on innovation or the entrepreneurial spirit, but rather a check on unbridled greed. He believed in a free market, but one in which the government enforced rules of fair competition so that the most talented could succeed. Clear rules would help ensure that business was... [more]
http://www.nytimes.com/2009/02/07/opinion/07urofsky.html?_r=1|
For Brandeis, regulation was not supposed to be a restraint on innovation or the entrepreneurial spirit, but rather a check on unbridled greed. He believed in a free market, but one in which the government enforced rules of fair competition so that the most talented could succeed. Clear rules would help ensure that business was conducted fairly and openly.
Our current crisis, after all, was in part fueled by bankers making big gambles with other people’s cash. They bundled and sold sub-prime mortgages, took their profits, and then left others holding portfolios full of worthless, even toxic, paper. This was exactly the kind of behavior that Brandeis despised. He believed that it was one thing for an individual to put up capital in risky ventures, playing to win but prepared for failure. But he saw the bankers of his time dodging failure by manipulating the marketplace at the expense of smaller entrepreneurs and consumers.
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Brandeis was right on the politics of size and what that meant in turn for the American economy — and he is very much in tune with the cutting edge of modern economics. When large companies can 1) shape their regulatory environment, 2) take advantage of lax regulation to take on more risk than they can manage, and 3) “put” the downside losses onto the taxpayer, we should be very afraid.
This exact problem has repeatedly slapped us in the face over the past 12 months with almost every development in the financial sector, and it remains inherent in every “too big to fail” bank. Brandeis was exactly right on the dangers that could arise from the financial system — even though he could not foresee how the creation of the Federal Reserve would, when combined with weak regulation, lead to even worse outcomes.
But we should not suffer another failure of imagination or apply Brandeis to our modern circumstances too narrowly. The problems before us now are not limited to the financial sector. Just as Brandeis argued, beginning with a piece titled “Our Financial Oligarchy” in Harper’s Weekly in November 1913, we have allowed other parts of our economy to become “too big to regulate.” Any company that can set its own rules and then behave in a reckless fashion is potentially damaging to prosperity and democracy.
Teddy Roosevelt thought you could regulate and control monopolies, and his idea that “big corporate” could be controlled by “big government” was taken forward with some success by Franklin Roosevelt, in the reforms of the 1930s and the way our system operated for 30 to 40 years after World War II. But the complete breakdown of financial regulation under great political pressure in the 1980s and 1990s should serve as a wake-up call, both with regard to banking and much more broadly.
We need to go back to Brandeis who, with his extensive experience on the interface between politics and law, thought that breaking up big firms was essential: “ We believe that no methods of regulation ever have been or can be devised to remove the menace inherent in private monopoly and overweening commercial power.”
didn't you post this yesterday?
http://economix.blogs.nytimes.com/2009/10/08/big-is-bad-again/
Brandeis was right on the politics of size and what that meant in turn for the American economy — and he is very much in tune with the cutting edge of modern economics. When large companies can 1) shape their regulatory environment, 2) take advantage of lax regulation to take on more risk than they can manage, and 3) “put” the downside losses onto the taxpayer, we should be very afraid.
This exact problem has repeatedly slapped us in the face over the past 12 months with almost every development in the financial sector, and it remains inherent in every “too big to fail” bank. Brandeis was exactly right on the dangers that could arise from the financial system — even though he could not foresee how the creation of the Federal Reserve would, when combined with weak regulation, lead to even worse outcomes.
But we should not suffer another failure of imagination or apply Brandeis to our modern circumstances too narrowly. The problems before us now are not limited to the financial sector. Just as Brandeis argued, beginning with a piece titled “Our Financial Oligarchy” in Harper’s Weekly in November 1913, we have allowed other parts of our economy to become “too big to regulate.” Any company that can set its own rules and then behave in a reckless fashion is potentially damaging to prosperity and democracy.
Teddy Roosevelt thought you could regulate and control monopolies, and his idea that “big corporate” could be controlled by “big government” was taken forward with some success by Franklin Roosevelt, in the reforms of the 1930s and the way our system operated for 30 to 40 years after World War II. But the complete breakdown of financial regulation under great political pressure in the 1980s and 1990s should serve as a wake-up call, both with regard to banking and much more broadly.
We need to go back to Brandeis who, with his extensive experience on the interface between politics and law, thought that breaking up big firms was essential: “ We believe that no methods of regulation ever have been or can be devised to remove the menace inherent in private monopoly and overweening commercial power.”
http://www.pbs.org/moyers/journal/10092009/watch.html
and more on Bill Moyers....
yes...indeed...posted yesterday...and no doubt posted all week long. and then responded to by itself.
lol..a bit tiring