Always bet on self-interest
Famed 20th-century British author Gilbert Chesterton (1874-1936) once observed, “The poor have sometimes objected to being governed badly. The rich have always objected to being governed at all.”
G.K. Chesterton didn’t have Elon Musk in mind at the time, but Musk’s recent and somewhat disturbing pronouncements suggest Chesterton hit the bullseye while simultaneously confirming the ultra-rich have not evolved to become more empathetic since Chesterton penned those words.
Most recently, in support of Donald Trump, Elon Musk, who, irrespective of his wealth, is nothing more than a private citizen, announced that he would cause “hardship” by personally overseeing a US$2 trillion cut to the federal budget. He added Federal Trade Commission (FTC) Chair Lina Khan “will be fired soon”.
Musk is acting like the professor of an ‘Applied Chesterton’ 101 course for billionaires who don’t like the idea of the law applying to them. And when many of them own major news information platforms, it’s almost impossible to even hear or read the counterarguments they don’t like.
It represents yet another example of how capitalism can fail the community. Don’t get me wrong, I think capitalism is far better than socialism, which eventually runs out of other people’s money. But it must be regulated in order to avoid its natural tendency to the accumulation of all wealth in the hands of the few.
Recently, U.S. political commentator, author, research director of the American Economic Liberties Project and anti-monopoly campaigner, Matty Stoller, noted he’s had Tweets and Facebook posts blocked for content reasons, such as alleging corporate consolidation and inflation are linked or citing articles about strikes.
Dave Dayen is the author of the Organized Money podcast and writes about tech platforms and censorship, as well as how big tech uses its platforms to control what people see and hear. Stoller writes, “To give you a sense of what corporate revenge might look like, Dave Dayen and I did an interview with entrepreneur and national security reporter Ken Klippenstein on how he and some of his readers were subjected to censorship by all the major tech platforms, and then an Federal Bureau of Investigation (FBI) visit, merely for publishing widely available information about a major vice president candidate.
Big tech isn’t the only sector in which Billionaires seek to control the narrative or change laws to harness, strengthen and preserve power and satisfy their self-interest. The finance sector I work in has been riddled with similarly-minded people for decades.
Recently, billionaire JP Morgan head Jamie Dimon effectively argued for the entrenchment of his bank’s near monopoly position by opposing the open banking rule, at a forum at the American Bankers Association.
The open banking rule would allow U.S. consumers to move their bank accounts more easily to other financial institutions by requiring financial institutions, credit card issuers, and other financial providers to unlock an individual’s personal financial data and transfer it to another provider at the consumer’s request for free.
JP Morgan holds 12 per cent of all deposits in America, and in 2024 made US$91 billion from the spread between what it pays depositors and what it charges for loans. It’s head, Jamie Dimon, reportedly said, “I’ve had it with this shit,” adding, “It’s time to fight back.”
Perhaps even more upsetting, his attack on regulators and on regulations that would benefit consumers, was met with rapturous applause from other bankers.
In the West, we feel empathy for the millions of good Chinese people who must submit to the dictatorship and rule of the Chinese Communist Party. But here in the West, we must acknowledge the reality many billionaires hold similar aspirations.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
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Less Government Regulation and More Laissez-faire Required to Prevent Further ‘Enron’ Scandals BY ANDREW WEST
capitalism operating under a “rule of law”. Under such a system there are laws which punish the violation of rights, but there are no laws explicitly “regulating” individuals who are not violating the rights of others. The difference is that regulations hold someone guilty until he is able to prove himself innocent to a government official; under a rule of law one is free to do what one wishes until one is proven guilty. This is an essential difference between a “common law” system and statutory or “code law” system.
The financial accounting system has become joined at the hip with the government regulatory apparatus. The SEC has delegated powers to the FASB, and has, in return, gained influence over the accounting profession. This, in turn, has caused financial accounting and auditing to move away from its English “common law” roots, where judgment, disclosure, and fairness are the key to winning the confidence of investors, and in which companies and auditors strive to preserve their reputations. The US financial accounting system, due to government regulations, is increasingly moving towards the “code law” system, where disclosure is fit into the straightjacket of government dictates, leaving companies and auditors to see themselves as merely bureaucrats filling out government forms.
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Why Lovers of the State Hate Uber
Gary North – October 03, 2015
Ah, yes: “inadequate consumer protection.” Protection by what? By the state. This always produces oligopolies, higher prices, and reduced service. It is the ultimate protection racket.
This is the standard critique of liberty: it is a free for all. The free market’s system of profit and loss produces chaos, we are told. Government is needed to provide order, we are told. To bring order, stability, and fairness, there must be a government agent with a badge and a gun. He must point his gun at the supplier of a competitively priced service and say: “This is illegal. Don’t do this again.”
State officials have been promising us the right mix of liberty and tyranny for centuries, but they never get it right in any field. If they did, there would be no opportunities for the Ubers of this world.
The legacy of Charles I lives on in our lives: the detailed regulation of our lives.
Step-by-step, technology is rolling back these regulations. Step-by-step, consumers are beginning to reassert their authority. Step-by-step, the extension of freedom is creating apoplexy in the thinking of the defenders of Charles I and his thousands of heirs. For these people, the whole world is a nail, and they have a government hammer. Every problem has the same solution in their view: more regulation by the government, and more negative sanctions against those who participate in voluntary exchange.
They have had an intellectual free ride for 150 years. The tax-funded public schools have given them this free ride. But this free ride is coming to an end. The Internet is providing technologies of liberation. People are regaining their power of choice.
Those who, like this author, resist this power of consumer choice do so in the name of state power. But they are convincing fewer and fewer people. The public is becoming aware of the fact that there are alternatives to regulation by the state. Profit-seeking entrepreneurs and benefits-seeking customers are coming together by means of the Internet, which is not controlled by the government. A new era of liberty has begun, and the defenders of the spiritual heirs of King Charles I are now on the defensive.
Think of the Internet as the scaffold. One by one, regulation by regulation, the Internet is beheading these petty tyrants. Price competition is the blade.
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Large established businesses have lawyers on retainer. They can afford to fight rules that will cost them a lot of money. They appeal to federal courts after their cases are decided against them in the administrative courts. These cases drag on for years. The agencies’ resources are drained. But large businesses are happy to see the agencies prosecute small competitors. This reduces the competitive threat from small businesses.
The agencies are almost autonomous. They are funded by the government. Few politicians pay any attention to what agencies do. The agencies’ employees cannot be fired except for criminal activity. They are protected by Civil Service laws. They are close to lifetime employees.
These government functionaries attempt to regulate entire sectors of the economy, agency by agency. The agencies do not agree with each other. There is no central plan. There are hundreds of these agencies in the United States government, each independent, each with the authority to issue regulations. There are at least 250 agencies and departments. There may be as many as 430. No one knows. This is why they are autonomous. Their rules govern production. This reduces the authority of customers. Businesses are afraid of violating rules. They do what they are told by bureaucrats, not what they are told by paying customers.
Unlike the governing principle of the Mosaic law, that every citizen heard the laws read publicly once every seven years, administrative law can barely be understood by specialized lawyers. There are so many rules issued by each agency that its bureaucrats can interpret them almost any way they choose. A bureaucrat can be arbitrary in picking and choosing which rules to enforce. He decides how it should be interpreted. The agency will back up its agents’ decisions most of the time: solidarity. Not to do so would be a public admission that the agency has made a mistake. No bureaucracy does this voluntarily.
The cost of regulations in modern economies is beyond accurate calculation. Businesses must spend money complying with the regulations, not complying with customers’ preferences. Regulations raise prices in some cases, or reduce production in others. Sometimes they do both at the same time.
Voters do not perceive that their choices are reduced by regulations. They do not understand that economic growth is reduced. They think they are being protected from exploitation by businesses. Instead, they are being exploited by bureaucrats.
The regulatory system protects large enterprises from competition from upstart companies. These new companies do not have the experience or the money to hire the legal talent necessary to fight new rules. This is a benefit for large companies. It creates barriers to entry. This reduces competition: sellers vs. sellers. The result is either higher prices or else reduced quality of the output of established businesses.
Over time, the procedures of businesses begin to resemble the procedures of bureaucracies. Bureaucracies establish the rules. Businesses must adopt the required procedures. Paperwork increases. The top-down hierarchy of state agencies replaces the customer-driven, bottom-up hierarchy of profit-seeking businesses. State agencies have guaranteed income from the government. Profit-seeking businesses do not. State agencies are governed by a rule book written in the past. A profit-seeking seller looks to future customer demand and future competition. He is future-oriented. The bureaucrat is past-oriented. This is a clash of institutional sanctions, a clash of financing, and a clash of cultures.
https://www.garynorth.com/public/16779.cfm
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Christian Economics: Teacher’s Edition by Gary North
Chapter 32: Regulation
There was no system of fines to the civil government under the Mosaic law. The only money collected by judges was for restitution to victims.
The judicial principle of self-government under God’s law was the foundation of Israel’s system of justice. The judicial system was not a top-down bureaucratic system of administration. It was a bottom-up system of courts.
These laws must not be used to justify the creation of a top-down bureaucracy that imposes regulations for safety’s sake. The legislature must declare liabilities after the fact. The case must be settled in a court. In the absence of legislation, a judge may determine liability. The modern bureaucratic system known as administrative law has grown in the West since 1900. Agencies write rules, and then they sue individuals. The bureaucracies supply the judges. In the United States, they are called administrative law judges. They are not independent. They are not part of the judiciary. They are part of the executive. They declare the laws, try the laws, and impose sanctions. In the United States, regulatory agencies publish over 80,000 pages a year of fine-print rules, three columns per page, in the Federal Register. The rules are written in legal terminology. They can be understood only by specialists. The individuals or businesses that are brought to trial must pay legal fees as high as $1,000 per hour per defense attorney. Most people capitulate. The agencies go after small businesses to get precedents. Then they demand that larger businesses comply.
https://www.garynorth.com/public/16779.cfm