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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review June 24, 2009 / 2 Tamuz 5769

The nirvana fallacy

By John Stossel


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http://www.JewishWorldReview.com | President Obama has announced his "sweeping overhaul of the financial regulatory system."


We can debate endlessly whether the Constitution authorizes any president to "overhaul" the financial system. But I want to focus on a different matter: whether any president, with all his advisers, is capable of overseeing something as complex as the financial system.


My answer is no, and it is ominous that a bright guy like Obama doesn't know this. He thinks he must regulate the system because it is so complicated and important. In fact, those are the reasons why he cannot regulate it, and should not try.


As F.A. Hayek said in accepting the 1974 Nobel Prize in economics, "[W]ith essentially complex phenomena, the aspects of the events to be accounted for about which we can get quantitative data are necessarily limited and may not include the important ones." So when regulators set out to redesign an economy, they display not wisdom but a "pretence of knowledge".


Yet Obama is so confident.


"[W]e will … coordinate and share information, to identify gaps in regulation, … solve problems in oversight before they can become crises … that will allow us to protect the economy ." (Emphasis added.)


What Obama cannot tell us is why these are anything more than words. We've heard them before. Why should we be comforted?


Regulators are human beings with the same shortcomings as everyone else. Even if we assume they have the best motives, on what basis do we believe they could possibly know what they need to know to manage a financial industry that is complex beyond conception — and changing every day in response to new conditions?


Obama speaks as though these facts don't exist. He goes so far as to say, "[W]e're proposing a set of reforms to require regulators to look … — for the first time — at the stability of the financial system as a whole ." (Emphasis added.)


That is precisely what no one can do. The financial system isn't a machine. It's people — a huge number of them — engaging in countless transactions often on the basis of hunches that are not quantitative and never written down. How is a regulator to keep tabs on — much less manage — that?


It cannot be done. If he tries, he'll end up stifling competition, innovation and life-enhancing economic growth.


Contrary to the foes of free markets, the choice is not between regulated and unregulated markets. As the French economist Frederic Bastiat long ago pointed out, the free market is regulated by its own logic. If we have simple, easily understood rules against fraud, then people acting in their self-interest, without privileges or bailouts, generate market forces that create order and make our lives better. The key is market discipline, which government reduces whenever it intervenes.


Is the market perfect? Of course not. The market is people. But the same kind of people will run the regulatory bureaucracy — except they play with other people's money and have brute power in their hands. Here is where Obama's planners commit what economist Harold Demsetz calls "the Nirvana fallacy". They compare the real-world marketplace to an idealized regulatory apparatus run by omniscient bureaucrats.


But the latter is not available, so the comparison is pointless. We must choose between two systems, both run by fallible people. The decentralized, competitive market full of free people is hands-down preferable to a centralized body of clueless bureaucrats who can hold a gun to our heads.


Obama says the free market is "not a free license to ignore the consequences of our actions." He's right but doesn't understand why. A genuine free market allows risk takers to fail and suffer "the consequences." Only government can grant "license" to ignore consequences. Government caused the financial morass by doing just that — pushing banks to weaken mortgage lending standards, pressuring Freddie and Fannie to buy up dodgy mortgages and sell them as safe securities, bailing out big banks when they got into trouble and insuring bank deposits — thereby encouraging us not to care if banks are reckless.


Government failed, not the market. Obama's answer? Just like George W. Bush's: more government.


Give me a break.

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© 2009, by JFS Productions, Inc. Distributed by Creators Syndicate, Inc.

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