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House Financial Reform Bill

This sort of thing will end up doing little to help the average citizen, and much to hurt business and taxpayers. It is a classic example of how meddling "requires" more meddling. The federal government should let companies fail without throwing any money into them. The feds should aggressively prosecute interstate fraud and other like crimes. Other than that, they should mostly stay out of the way of business.

The more limitations, regulations, incentives, and disincentives that we have, the move convoluted the system, the more discouraging things are to the average small investor or businessperson. Lawyers and accountants and lobbyists benefit. But what about innovators and producers?


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More on the California Divide

The Los Angeles Times, analyzing a poll they did with USC, notes certain divides in California, though a general agreement on pessimism. Cathleen Decker reports.
One always presumes a fair amount of communal thought in a state, even one this large. But apart from a shared disdain for the governor and the Legislature, there is hardly anything communal anymore in California politics.
I've said it here many times before, and I’ll say it again – the state needs to be split up.
"There are dozens of different Californias -- hundreds, demographically -- and every single one of those Californias thinks the rest of them are wrong about everything," said Dan Schnur, head of the Jesse M. Unruh Institute of Politics at USC, whose College of Letters, Arts and Sciences co-sponsored the poll with The Times.
Actually, the paper goes on to detail a noticeable split between the coastal area and in the inland area in various demographic and idealogical indicators.

I maintain that a if San Francisco and Los Angeles County, and the coastal counties between them, and perhaps a couple of others in the Bay Area were to split off from the rest of California, the remainder of California would be better off - either staying together, as one, or further dividing, perhaps with the areas being annexed to neighboring states. (Those states would not only gain some fine resources, but they wouldn't have their Senatorial representation diluted if the number of states remained at fifty, and they would have a larger House of Representatives presence.

Will it happen? Not without a miracle. Most likely, we're just going to continue to see California kill itself financially, and the would-be social engineers on the Left grow increasingly bitter as the rest of us fight to keep them from dragging the state too far into the cultural dump.

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Henhouse Repairs Ordered by the Fox

Something is wrong with this headline from David Morgan's Reuters article:
U.S. Labor Group Unveils Plan to Tackle Joblessness
You know how to really tackle joblessness? 1. Encourage people to work; 2) Let the marketplace create jobs.

Usually, Big Labor does plenty that works against those two things.
The head of the largest U.S. labor federation urged President Barack Obama on Tuesday to use the $700 billion Wall Street bailout fund to help cash-starved small businesses as a way to stem rising joblessness.
So – take money from taxpayers and hand it out to businesses? I have a better idea. Let people, including business owners, keep more of the money they earn instead of sending it to D.C. as taxes, and we'll use that money to create jobs. One-time payouts by the government do not create lasting jobs.
In a preview of labor's contribution to Obama's December jobs summit, AFL-CIO President Richard Trumka said money from the Troubled Asset Relief Program could be lent directly to small- and medium-sized businesses at commercial rates.
"Lent". Like the money that was "lent" to pay off the autoworker unions via GM?
The AFL-CIO jobs plan also calls for extended unemployment benefits, food assistance and healthcare for the unemployed, more money for infrastructure projects and state and local governments, and job creation aimed at distressed communities.
Ah, yes. Pay people not to work using money from people who do work, and throw money at failing neighborhoods.
Rising unemployment poses a political danger to Obama as his fellow Democrats in Congress approach the 2010 election with voters increasingly dissatisfied with incumbents.
I'm surprised they don’t make it simpler and call for a "Jobs Corps", where people are "employed" in a government job that involves watching their own stuff, in which they simply issued a regular "paycheck", and thus those people are no longer "unemployed". Problem solved!
"If small businesses can get credit, they will create jobs. And we need jobs now," Trumka said in a speech to the Economic Policy Institute, a left-leaning Washington think tank.
If small business can do more of what they want to do with their own resources, and keep more of their own resources to begin with, they will add jobs as the market creates them. But that would mean that the Big Labor leaders wouldn't have as much power, so we can’t have that.
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I Want My Steak Served By a Woman

A Pasadena, California-based restaurant chain has agreed to pay more than $1 million to settle charges over a policy that went back to 1938, but was ended in 2004.  Jerry Hirsch reports in the Los Angeles Times.
The Lawry's chain of high-end steakhouses will pay more than $1 million to settle a federal discrimination lawsuit contending that for decades it hired only women as servers, the government said Monday.

The lawsuit, filed in 2006 by the U.S. Equal Employment Opportunity Commission, said that a company as large as Pasadena-based Lawry's Restaurants Inc. should have known that the passage of the Civil Rights Act of 1964 prohibited such a policy.
Now we all know that this law was really meant to protect African-Americans, Latino-Americans, Female-Americans, and other victims of Evil WASP Males. But the law has to be applied equally, so in this case it is going to help men.
The case was based on a 2003 complaint by a busboy who said he was denied a higher-paid position as a waiter because of his gender.
Well, yeah.
The case was unusual because the standard employment complaint against expensive restaurants is that they fail to promote women to server positions, said Anna Y. Park, the EEOC attorney who handled the case.
And the busboy could have gotten a job at one of those places.
Under the consent decree, Lawry's agreed to pay $500,000 to men denied jobs as waiters for the chain. Park said several hundred people might be eligible to share the compensation.
If a lot of men come forward, they're each going to get a small amount. Such is the nature of these things. There are many class action lawsuits that make lawyers rich but bring very little to the supposed victims.
Lawry's also agreed to set aside $225,000 to train its workers to comply with discrimination laws.
The company will spend an additional $300,000 for an advertising campaign to let the public know that it now hires men as waiters.
Hooters seems to still be getting away with it.

Yes, in 1964, systemic discrimination against African-Americans and women was a huge problem. It’s much less of a problem now. Much less. There are a lot fewer bigots who will deny someone a promotion based on their sex or skin color. Realistically, it is very easy for someone who has been discriminated against because of their skin color or sex to go elsewhere, especially if they’re good employees. Isn't it time we got back to allowing business owners (as long as they don't accept tax money) to run their businesses the way they want to? If someone wants to only hire young, fit lesbian Latinas, well then fine. That excludes me, but I can go elsewhere.

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Nanny State Policy Doomed to Fail?

The Rand Corp says that the Los Angeles City Council's vote restricting fast food establishments in "south central" Los Angeles is unlikely to curb obesity rates. Jerry Hirsch of the Los Angeles Times brings us the update on this, which I wrote about here and here.
The study was based on InfoUSA business data and a survey of 1,480 Los Angeles County residents. It was funded by the National Institutes of Health, with no financial support from the fast-food industry, Sturm said.

Contrary to "conventional wisdom," the density of fast-food chain restaurants per capita is actually less in South Los Angeles than in other parts of the city, said Sturm, a Rand senior economist.
Uh oh! Now the companies are going to get sued for not being there!
They found that the far wealthier West Los Angeles has 29 fast-food chain establishments, 14 small food stores and 10 large supermarkets per 100,000 residents. South Los Angeles, by comparison, has 19 fast-food chain restaurants, 58 small food stores and three large grocery stores.

The authors said those data were at odds with "media reports about an over-concentration of fast-food establishments" in South Los Angeles.
Imagine that.
Among those reports, the study cited a chart that accompanied a July 30, 2008, story in The Times. The chart said fast-food establishments represented 45% of all restaurants in South Los Angeles. That was a higher percentage than in any other section of the city.
But what that means is that there are not as many establishments in general. This is not surprising, given crime, lack of spending, and the fact that the population density is higher in South Cental.
Councilman Bernard C. Parks, whose 8th District includes part of the area where the moratorium is in force, took exception to the Rand report.
He's not one to let facts get in his way.
However, the study found no difference in fruit and vegetable consumption between residents of South Los Angeles and people in other areas. Likewise, there was no difference in the proportion of people who participate in 300 minutes of exercise or more per week.

Residents of both West and South Los Angeles tend to eat out about 3.5 times a week, though South Los Angeles residents are more likely to obtain food from a food cart or truck rather than a sit-down restaurant, the study said. South Los Angeles residents also were likely to watch more television.
Radio reports are also citing convenience stores.

Like I said in my previous messages – let the free market work.
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California’s $493B, 3.8M Job Hit

California regulations are costing 493,000,000,000 dollars and 3,800,000 jobs, according to this interesting entry from Jan Norman that I found on her Orange County Register blog.
That’s an average of $134,122 per California business, $13,801 per household and $4,685 per resident each year.
Scary.
The study parallels a 2005 federal report on business regulations commissioned by the Office of Advocacy within the U.S. Small Business Administration.That report concluded that federal regulations cost $7,647 per employee for businesses with fewer than 20 employees.

This state report is based on data used by Forbes magazine’s annual ranking of state for business friendliness. It does not single out specific regulations that drive up costs.
I'm sure there are plenty of people who have counters to this. But if you've ever tried to start or move a business to California - especially one that employs others, you'll be able to decide for yourself.
Among the California conclusions:

The total cost ($493 billion) is almost 5 times the state’s general fund budget and a third of the state’s gross product.

The 3.8 million jobs lost equals 1/10th of California’s population. California has about 14 million jobs, down 1 million from the peak in July 2007.

The total cost breakdown is $266.5 billion in direct costs of various regulations, $210.5 billion lost labor income and $16 billion in business taxes the state would get without the regulations
Beautiful.
One producer of construction aggregates in the state, Vulcan Materials, testified in an Assembly Jobs Committee hearing in June that it 'is not uncommon for the permitting process to involve millions of dollars and in some cases to take as long as 10 years to secure the necessary permits, many of which address duplicative regulatory aspects.'
You can read the entire report here. I don’t know if it takes into account local regulations, too.
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The Bigger Picture in California

Three pieces in the Los Angeles Times show why California is in trouble. Shane Goldmacher has an article on the latest tax increases.
While Californians are still feeling the sting of income and sales tax hikes signed into law earlier this year, now comes news that state tax authorities plan to take a little more from their pockets.

For only the second time in 30 years, the tax board is lowering the point where each tax bracket begins, bumping many people into a higher category. At the same time, officials are cutting back some deductions. Everyone will pay more, even people whose bracket or income doesn't change.
Great.

Meanwhile, columnist George Skelton enthuses about yet another group that claims to have the answers.
The bipartisan reform group California Forward has proposed a modest, reasonable and doable set of significant changes in how state and local governments operate.
We'll see.
There's no denying the problems: gridlock, perpetually late budgets, chronic deficits, IOUs, Sacramento raids on local coffers...
Don't forget high taxes and an environment hostile to business.
But these are some steps recommended unanimously by the California Forward's Leadership Council after 18 months of mulling:

Lower the Herculean hurdle for legislative passage of a state budget from a two-thirds majority to a simple majority. But retain the two-thirds requirement for tax increases.
Not sure how that would work. Sound like it would mean more borrowing, which necessitates more taxes.
For fiscal conservatives and anyone with common sense, require that unexpected spikes in tax revenue be spent only for one-time purposes, not to enhance programs in perpetuity.
This is toothless. The "one time" purpose every year could be "budget deficit", right?
Require the sponsor of any new spending proposal, whether in the Legislature or at the ballot box, to identify the funding source.
Good.
Budget for two years, rather than one, and regularly monitor the spending plan to watch for red ink.
Good.
Set clear goals for each program. If they're not met, change or chuck the program.
Good.
Prohibit the Legislature from raising taxes on a majority vote and calling them "fees."
Good.
Provide local governments with more control over their own fates by barring the state from raiding property taxes and other revenue.
Good.
Permit cities, counties and school districts to unite in some common endeavor, such as gang suppression, and pay for it with a tax increase passed by a simple majority of voters. Now it would require a two-thirds vote.
Keep the two-thirds requirement. Otherwise, we're screwed.
Relax term limits while reducing the overall time a person could spend in the Legislature.
Get rid of term limits.

Well, I’m not too impressed. I’ll say it again: 1) Split the state. 2) Make the legislature unicameral; reduce the number of legislators if possible. 3) Make the legislature a part-time "citizen" legislature.

Finally, there's this commentary from Ethan Rarick, director of the Robert T. Matsui Center for Politics and Public Service at UC Berkeley. He knocks Nevada's ads calling on California businesses to come to Nevada to escape taxation and regulations.
Relatively few businesses, once they're formed, pick up and move across state lines. Over the last several years, the nonpartisan Public Policy Institute of California has done exhaustive research trying to measure precisely how many jobs California has lost because of such moves, while also measuring the offsetting number we have gained from businesses moving into the state. The conclusion? The impact is tiny. The researchers found that the average annual job loss was only .06% of California's total employment. Just to be clear, that's not 6%; it's six one-hundredths of 1%.
The fact is, businesses are moving out, and how many are moving here from other states?. Others are choosing to expand or start up elsewhere instead of California. That study doesn't deal with business that would have added jobs in California, but didn't because of the business climate in California. Also, individuals who are good workers and citizens and entrepreneurs - people who produce more revenue for the system than they take - are leaving and being replaced by welfare/subsidy-dependent people.
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Nevada Seeks California Businesses

The Nevada Development Authority is running ads on TV, radio, and in print encouraging California businesses to relocate.  They rightly point out that California is an expensive and overly regulated business climate.  Alana Semuels has the article in the Los Angeles Times.
California has battled such negative perceptions for years. But its huge consumer base, great weather and dynamic entrepreneurial culture have kept many businesses anchored here. Still, in a tough economy when companies are looking to slash costs, some industry leaders fear poachers will be more successful this time around.

...

The Nevada campaign touts the fact that the Silver State has no corporate or personal income tax, no inventory tax, and lower workers' compensation costs. A light-industrial facility that costs $405,478 a year to operate in Las Vegas would cost $625,774 to operate in Los Angeles County, according to the Nevada Development Authority.
I'm sure the Leftists of California would sooner seek to "solve" this problem by imploring the federal government to impose California-style taxation and regulation nationwide than they would reform California government.

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Unequal Retirement Planning

African Americans and Latinos are saving even less for retirement than whites.  Gail MarksJarvis has the Los Angeles Times article.
Millions of Americans aren't saving enough for retirement, but African American and Latino investors, on average, are further behind than whites and are more likely to be a greater burden to their families because they save too little and invest too conservatively, new research has found.
Well, there can only be one explanation for this - whites refuse to take money from them!  The whites would rather not have the investment money to work with than get it from African Americans and Latinos!  It couldn’t possibly be because of people freely choosing to make decisions that put themselves in these situations, could it?
Although some people assume that insufficient savings are a result of low incomes, Hobson said her research indicates the problems come from behaviors such as waiting too long to start investing, borrowing too much from 401(k) plans and avoiding stocks.

When researchers compared people of similar income levels, they found that black and Latino investors accumulated less than whites in 401(k) plans.
Well let's see, since these group have been "historically oppressed", then by the Left's reasoning, it is the government's responsibility to make their lives better and give them things at the expense of the majority - even if they could have already gotten those things from doing the same things the white were doing.  Taxpayer money should be used to end the disparity.  Let's get the feds to write checks to African Americans and Latinos.
/sarcasm
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CA Losing Manufacturing Jobs Due to Regulations: Report

Alana Semuels of the Los Angeles Times has the article.
Two months ago, more than 300 people were employed at the site making engine parts for trucks and heavy machinery for Gregg Industries, which is owned by Neenah Enterprises Inc. in Wisconsin.

But a settlement with the South Coast Air Quality Management District required Gregg to spend $5 million on factory improvements, so the company decided instead to leave the state. Company spokesman Adan Ortega Jr. said Gregg didn't want to make the payment in the difficult economic climate.

Gregg is part of the parade of companies marching out of California. The state lost 79,000 manufacturing jobs between 2003 and 2007, while seven other states with a meaningful percentage of U.S. manufacturing gained 62,000, according to a report scheduled to be released today by the Milken Institute.
What is causing this?
The report blames the state's onerous regulations and high taxes in particular for pushing businesses elsewhere.
But isn't the whole country losing manufacturing jobs?
The state is shedding manufacturing jobs at a faster pace than the nation as a whole, the report said. Though many jobs left the country in the 2002 recession, states such as Arizona, Nevada and Oregon saw an increase in manufacturing employment in 2003.
It isn't just the number and restrictiveness of the regulations.
Part of the problem, Wong said, is that regulations change so often in California that it's difficult for companies to plan. The state enacted an average of 15 changes in labor law each year from 1992 to 2002, four times more than state legislatures averaged nationwide.
It's hard enough to hit the target.  Hitting it while it is moving is that much more difficult.
California also often requires projects to be approved in many different jurisdictions, so that a plan vetted by the state could be sidetracked by the county, Wong said.
It's one thing after another.  In California, in addition to the usual federal, state, and local (County and City) laws, codes, and regulations, there are many for various special districts and commissioners such as the aforementioned AQMD, the Water Quality Control Board, the Coastal Commission, and so forth.
California GDP grew last year despite the global financial crisis, said Brian McGowan, the state's deputy secretary for economic development and commerce. And green-energy jobs in the state have grown at a rate 10 times faster than total job growth since 2005.
You mean taxpayer supported or taxpayer subsidized jobs?  Those don't count.
To evaluate a state's business climate, he said, companies should focus on workforce skill, availability of capital and overall quality of life, rather than just on taxes and regulatory costs.
Well, yes, and when they see the land prices, artificial water and energy shortages, crime rates, graffiti, and the third-world unskilled, uneducated workforce with an entitlement mentality, they are further encouraged to leave or to expand elsewhere instead of here.
To prevent more departures, the study recommends creating incentives for innovation, assisting companies in obtaining capital, investing in workforce development and establishing an office to streamline the regulatory process.
The last one is the key.  The other suggestions are likely to involve more government control and more centralized planning, which is the problem in the first place.  Enough with the convolution system of rewards and punishment.  Let property ownership and free enterprise work.
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Pay Limits? Great!

Obama is set to issue limits on "Wall Street" executive pay, according to this article by Associated Press Writer Jim Kuhnhenn.
The Obama administration will give a new Treasury official power to reject executive pay packages at firms that receive government assistance and wants legislation that would seek to tame compensation across the corporate world, an administration official said Wednesday.
You, perhaps this great idea should be extended to other areas.  Many films made by major film studios lose money, and yet various state and local governments offer incentives to attract or retain film production.  How about we go to all of those studios and production companies and place limits on pay?  Some of those stars are paid tens of millions of dollars a picture, after all.  Isn't that "excessive"?
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One Problem With Cultural Deterioration

Many people cite violent crime, abortions, illegitimacy, high divorce rates, sexualization of children, obscenity, and a general decline in good manners and civility as a deterioration of our culture, and I'm not going to say that they aren't.  However, I do believe the current national fiscal situation and the government response is as a much an example of a cultural deterioration as anything else.

It is immoral to spend money you don’t have to acquire goods and services that are not about survival.  It is immoral to covet goods and services that belong to someone else and are not rightfully yours.  It is immoral use force to take from others who have not wronged you.

Too many of us have lost our way in our personal lives, in the businesses we own or manage, and in the legislation we allow.

What happened to thrift?  What happened to carefully investing, and being stewards of our investments?  What has happened to preferring personal charity over government hand-outs?  What has happened to hard work, planning, and restraint?

Two quotes come to mind here.
"A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury." -- Alexander Tyler

"Our Constitution is designed only for a moral and religious people. It is wholly inadequate for any other." -- John Adams, 2nd President of the United States
It is counterintuitive for a politician to leave something to the market to work out, or to the people so solve.  There is no power in not meddling.  How do we find politicians who will assume positions of power, but not use that power to their own personal advantage?  How can they get elected without promising spoils to those who back them?

Our form of government only works when we have a moral populace - morality including moral financial behavior - and enough politicians who love the Constitution and sharing power with the people more than personal power.  This is why we are in the mess that we're in now.

So what to do?

  • Get informed.
  • Inform those in your sphere of influence.
  • Practice fiscal morality.
  • Help to elect those who understand these things and have the strength of character to limit their own power for the sake of limited government.
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What HE Said

Here's a great letter to the Orange County Register.

Gary Ford of Lake Forest wrote:
Socialists meddle in the free market and try to manipulate it through laws and politics.  When the results are bad, they claim capitalism has failed and that we need to push even harder for socialism.

The current political and economic situation was created, not by the free market, but by government meddling with the free market.

The bureaucrats perpetuate the problem by refusing to allow the market to correct itself.
I couldn’t have said it better myself.  Kudos to Mr. Ford, and kudos to the OCR for printing his letter.
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The Joke is on Californians

Kalifornia's tax increases are the subject of an article and an editorial in today's Los Angeles TimesRich Connell has the article, in which he details that two Los Angeles County cities - Pico Rivera and South Gate - will have sales tax rates of 10.75% as of July 1, due to statewide, countywide, and city increases.
Both cities are on track to surpass Chicago, which now collects a 10.25% sales levy, one of the country's highest. And they'll be closing in on a handful of small Arkansas towns collecting 11%.
Ah, Chicago and Arkansas.  What has come out of those places in the last couple of decades, besides high sales taxes?  Oh, right.  A couple of bad Presidents.
Speculating how customers, who are counting dollars more closely these days, will react had several retailers on edge.

Ariel Gonzalez, co-owner of a high-performance car accessories shop, said he planned to enlarge a copy of the instructions he received for collecting the tax and post it near his cash register. He's hoping that will assuage any suspicions about the unusually high rate.
Suspicion and confusion are minor problems compared to cutbacks in spending.
Medrano said he and his wife have been checking out new cars costing up to $25,000. Now they're adjusting their sights downward. In addition to the higher sales taxes, he noted that the cash-starved state had raised car license fees. "We're looking to see how much it's going to affect us... We're looking at something lower," he said.
Nice.

Now, what does the paper's editorial board have to say?
Today, April 1 -- no fooling, unfortunately -- Californians will see a full-cent increase in the nation's highest sales tax rate, to 8.25%.
Okay, there is some confusion here.  A cursory look at the state's official website hasn’t made it clear to me, but I read somewhere else that the statewide sales tax is actually 6%.  As I wrote in my last post, I also thought it was 8.25%, but maybe that's just the lowest rate you can find in the state, thanks to county and city sales taxes.
Catch your breath and add it up. In July, Los Angeles County sales taxes will come in at 9.75%, and 10.25% and 10.75% in a handful of the county's smaller cities.

Vehicle license fees -- the "car tax" that swept Schwarzenegger into office in the anti-tax recall of Gov. Gray Davis -- will rise from 0.65% of the vehicle's purchase price (the value is adjusted downward annually when registration is renewed) to 1.15% beginning May 19. State personal income taxes rise this year as well.
I forgot to mention the gas tax in my previous entry.  Isn’t this fun?
And there should be no misunderstanding: The higher taxes Californians begin paying today will be damaging. One in 10 Californians is out of work, thousands each week face foreclosure, and many of the rest are trying to cope with a faltering economy. As the federal government cuts taxes and doles out money to states, the benefit for most Californians is countered by the increasing difficulty of making daily purchases. The economic stimulus of federal dollars must combat the deadening grip of higher state taxes.
Nowhere, though, do they mention that reductions in planned spending increases, or even actual cuts in spending, should be considered - other than other possibilities besides the tax increases being "disastrous".  This is despite the size of the state government and budget expanding dramatically in the last ten years.
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The Entire Concept Is Wrong

Capitalism exists everywhere.  In free markets, all have access to it.  In other kinds of markets, only the connected or the criminal have access to it.  Do we want a free market, or another kind of market?

Our founders did not set up a religious system.  They did not set up a moral system.  They did not set up a social system.  And they did not set up a financial system.  They set up a governing system.  The other systems unavoidably express some of their influence through the government system (especially via our votes), but it is not the place of the governing system to exert control over them.  It is the place of the governing system to defend our freedoms, which includes dealing with crime.  As such, our government can help facilitate trade – but it ought not control trade, either on a micro level or a macro level.

The other systems were already in place when our founders replaced one governing system - the Articles of Confederation - with another, the Constitution.  All of the systems are important to our society, and breakdowns in a system tend to hurt us.  But we should not trade our freedoms in a vain attempt to improve another system through the government system.  It is not the government's place, nor within the government's capability, to change everything we don't like, or every wrong, or handle every problem.  We can't force people to be true to God.  We can't force people to be right to themselves or each other.  We can't force them to be polite.  We can't force them to be financially responsible.

This is the headline set that me off: Administration Unveils Financial System Overhaul

It's not the government's place to overhaul the financial system.  It is the government's involvement in the financial system that has contributed to current conditions in the first place.

The headline comes from a story by Associated Press economics writer Martin Crutsinger.

Here's my plan:

1. The federal government should stop doing anything it isn't expressly instructed to do in the Constitution, sticking to things like prosecuting actual fraud and other forms of theft involving interstate commerce.

2. Reduce taxes accordingly, eliminating taxes on corporations, truly simplifying taxes.

3. Let people make their own financial decisions and let them enjoy or suffer the consequences - don't try to punish some and reward others with targeted taxes, tax credits, and loopholes.

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