The Glass-Steagall Act, also known as the Banking Act of 1933 (48 Stat. 162), was passed by Congress in 1933 and prohibits commercial banks from engaging in the investment business. This act is an example of principled regulation of business because it (1) protects private property of citizens, (2) encourages efficient banking practices, (3) eliminates exorbitant Wall Street profits which is the basis of much government and banking system collusion and cronyism, and (3) eliminates the cost of much government oversight and unproductive legal costs.
It was enacted as an emergency response to the failure of nearly 5,000 banks during the Great Depression. The act was originally part of President Franklin D. Roosevelt’s New Deal program and became a permanent measure in 1945. It gave tighter regulation of national banks to the Federal Reserve System; prohibited bank sales of Securities; and created the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits with a pool of money appropriated from banks.
As it turned out, this was very sound legislation that significantly stabilized the U.S. banking system until its repeal in 1999. This was immediately followed by a wave of corporate scandals in 2001, unsound government home loan guarantee legislation that subsidized banks with taxpayer money in 2005 leading to the housing bubble of 2007, and an explosion in fraudulent financial securities and derivatives that led to Treasury Secretary Paulson’s extortion of a $700 million bailout from taxpayers for irresponsible behavior of his Wall Street colleagues.
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“The Blind Leading the Blind” by Sebastian Vrancx (1573-1647)
The metaphor “the blind leading the blind” comes from ancient wisdom and is an apt metaphor for Western politics and higher education today. Not that there aren’t very smart and shrewd politicians or many new discoveries in the sciences. But, when it comes to knowledge of where we want to go and how to get there, our culture is full of statements and policies that reflect the ancient metaphor taught in the Bible, the Upanishads, and Roman Classics that complain of the blind leading the blind. Sextus Empiricus (160-210 a.d.) wrote in Outlines of Scepticism: “Nor does the non-expert teach the non-expert—any more than the blind can lead the blind.”
This saying is just one example of pertinent ancient wisdom discarded in the twentieth century by a rejection of conventional wisdom that followed the rise in faith in modern science and the nation state. This modern faith in science and the state became a basis for the rejection of religion as superstition and an opiate, and the idea that the principles informing the U.S. Constitution could be rejected on the basis that it was “the philosophy of dead white men,” and in this age of pluralism, everyone’s cultural views were as valid as everyone else’s. Continue reading →
Edward Snowden is a lightning rod for when law conflicts with principle
Edward Snowden’s revelations are, in part, a result of the growing divergence of law and principle in the United States. When laws are rooted in political lobbying efforts, or rules created by administrative agencies, and unconnected to principle they increasingly diverge from the principles of respect for others, human rights, and individual freedom.
For him, it is a matter of principle. “The government has granted itself power it is not entitled to. There is no public oversight. The result is people like myself have the latitude to go further than they are allowed to,” he said.—The Guardian
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The Mayo Clinic was rewarded for lobbying the legislature to define Rochester, MN as a “Destination Medical Center,” giving it special favors
The use of legal definition has become a common strategy for legislatures to fund special interests that contribute to political parties. Most people became aware that legal redefinition was going on at some level when marriage was redefined from its biological definition of a union of male and female, to a social definition of two individuals committed to a partnership. But while the legal redefinition of marriage could be defended on the basis of equal rights, despite its ultimate objective related to financial redistribution to a new class of people, much legislation, like Minnesota’s recent aid and tax omnibus bill (HF677), uses new definitions to create special interest legislation that is opposed to equal treatment under the law:
the bill defines a “medical business entity” as a business that “collectively employs more than 30,000 persons in the state.
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Examples of poor feedback:
This year, the government will spend at least $890,000 on service fees for bank accounts that have nothing in them. At last count, Uncle Sam has 13,712 such accounts, each containing zero dollars and zero cents. These are supposed to be closed. But nobody has done the paperwork.(1)
Clarence Prevost, the flight instructor assigned to Moussaoui, began to have suspicions about his student… Prevost was confused as to why Moussaoui would seek simulator time if he lacked basic plane knowledge. After some convincing, his supervisors contacted the FBI, who came to meet with him… Some agents worried that his flight training had violent intentions, so the Minnesota bureau tried to get permission (sending over 70 emails in a week) to search his laptop, but they were turned down. FBI agent Coleen Rowley made an explicit request for permission to search Moussaoui’s personal rooms. This request was first denied by her superior, Deputy General Counsel Marion “Spike” Bowman, and later rejected based upon FISA regulations (amended after 9/11 by the USA Patriot Act). Several further search attempts similarly failed.(2)
WASHINGTON (AP) — An interim report released Tuesday by House Republicans faults the State Department and former Secretary of State Hillary Rodham Clinton for security deficiencies at the U.S. diplomatic mission in Benghazi, Libya, prior to last September’s deadly terrorist attack that killed Ambassador Chris Stevens and three other Americans. Senior State Department officials, including Clinton, approved reductions in security at the facilities in Benghazi, according to the report by GOP members of five House committees. The report cites an April 19, 2012, cable bearing Clinton’s signature acknowledging a March 28, 2012, request from then-U.S. Ambassador to Libya Gene Cretz for more security, yet allowing further reductions.(3)
The above quotes are examples of a problem of feedback in U.S. government processes. They are examples of government processes that are unresponsive to the feedback provided by the real world. Such lack of responsiveness is symptomatic of authoritarian, brute force, systems of governance where power flows from the top down, denying known principles of sound governance. And, these types of systems tend to be standard operating procedure (SOP) for many government agencies, based on a lack of sophistication and refinement of US political processes. They cause financial waste, they prevent followup on terrorist suspects, and they generally produce agencies that fail to either perform their mission well or serve the citizens they were created to serve. Continue reading →