Polls Shows American Believe There is Too Much Government Regulation

Mish's argument doesn't capture the full picture. The question isn't mainly a matter of too much or too little regulation. It's about having good regulations and enforcement vs. bad regulations and only selective enforcement. In general, there should be less, but not when it comes to the Too Big To Fail banking institutions. I doubt that ad hoc regulations thrown their way would have stopped their insatiable greed and prevented their obscene growth over the last few decades, but they shouldn't have been deregulated. Laws and regulations – against fraud, misrepresentation, misappropriation, regulations that attempt to prevent situations that foster the former - should have been enforced.

It seems to me that Mish is saying, by analogy, because we have a corrupt police force, we should dismantle it, except for a few laws against fraud remaining on the books. But fraud is very difficult to prove, and is proven after the fact. Regulations designed to prevent fraud help safeguard the public, before the disasters strike. ~ Ilene 

Polls Shows American Believe There is Too Much Government Regulation; Government Regulation a Leading Cause of the Housing Bubble

Courtesy of Mish.

Gallup Polls show Little Appetite in U.S. for More Gov't Regulation of Business

Americans say there is too much (47%) rather than too little (26%) government regulation of business and industry, with 24% saying the amount of regulation is about right. Americans have been most likely to say there is too much regulation of business over the last several years, but prior to 2006, Americans' views on the issue of government regulation of business were more mixed.

Question: In general, do you think there is too much, too little, or about the right amount of government regulation of business and industry?

The collapse of Lehman Bros., the failure of the secondary mortgage market, and other business problems in 2008 and 2009 might have been expected to increase Americans' desire for more government control of business and industry. But that was not the case. Americans' views that there is too much government regulation in fact began to rise in 2009, perhaps in response to the new Obama administration and new business regulation policies such as Dodd-Frank, reaching an all-time high of 50% in 2011 before settling down slightly this year to 47%.

There has been little change since 2003 in the percentage of Americans saying there is too little regulation of business. The changes that have occurred in recent years have involved shifts between the percentages choosing the "too much" and "about right" alternatives.

The polls look a lot different if you break down the results by political party.

  • 77% of Republicans say there is too much regulation and only 9% think there is too little.
  • 46% of independents think there is too much regulation, and 24% too little.
  • 25% of democrats think there is too much regulation, and a whopping 42% think there is too little.

Cause of the Financial Collapse

The Democrats are simply wrong. One of the reasons we are in this mess is because of too much regulation. Here several examples.

  1. President Kennedy allowed forced collective bargaining of public unions which eventually drove cities and states to fiscal ruin.
  2. The Fed micromanages interest rates and that was a huge factor in creating the housing bubble. Note the Fed was created as a result of government regulation.
  3. Congress had hundreds of affordable housing programs including Fannie Mae and Freddie Mac. Affordable housing programs and lending mandates such as the Community Reinvestment Act also contributed to the housing bubble
  4. The SEC anointed Moody's Fitch, and the S&P as "Nationally Recognized Statistical Rating Organization (NRSRO)". Once again this regulation came back to bite years later when  the ratings agencies labeled pure garbage as "AAA"

Time To Break Up The Credit Rating Cartel

Let's take a closer look at point number four. I discussed the ratings agencies in depth in Time To Break Up The Credit Rating Cartel

The rating agencies were originally research firms. They were paid by those looking to buy bonds or make loans to a company. If a rating company did poorly it lost business. If it did poorly too often it went out of business.

Low and behold the SEC came along in 1975 and ruined a perfectly viable business construct by mandating that debt be rated by a Nationally Recognized Statistical Rating Organization (NRSRO). It originally named seven such rating companies but the number fluctuated between 5 and 7 over the years….

 

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