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WILLIAMS: Let’s shrink big government, big banks
Question of the Day
As we recover from the celebration of our national independence, many in America are taking time to consider what makes America a truly exceptional place. Some point to our world-leading economy. Others revere our beautiful expanse of rivers, lakes, mountains, forests and plains. But to me, what makes America truly great is our system of government.
It’s not just that we are a democracy. Thats nothing special. After all, democracy has been around since the Greeks. Ours is unique because at the outset of the country, the Founding Fathers decided that our government would be limited in its authority over the people. Unlike in other systems, here the people bestow power to the government, power that they are free to revoke at any time.
But I am somewhat concerned about what I see in America today. I see an America in which the elite are increasingly distanced from the masses. I’m concerned about the trend toward concentrating wealth in the hands of a few. And, I am most concerned with the alarming growth and complexity of our government. Never before has the government controlled such a large part of the economy. This trend was prevalent long before the most recent recession, but has become drastically worse since then.
With all the government bailouts of large banks, the government now owns the mechanisms by which the economic system functions. Of course, the politicians will all say that massive government investment was necessary to avert an even deeper recession. And they will argue that since the government stepped in, it obviously deserves a say in the business operations of these banks. But all that misses the point.
The reason why banks got so big in the first place is because of the disproportionate power they wield over the political system. The influence has had pernicious effect on both major parties, and all branches of government. There had been laws in place that limited bank growth and constrained their lending and investment activities. But over time these restrictions were eased. As a result, we now have a few banks controlling the vast majority of economic activity in this country - the point that they have become “too big to fail.”
Financial industry leaders have chafed under the government’s recent efforts to rein in banks, calling them heavy handed and even alleging that the government is rigging the game by forcing them to invest in U.S. Treasuries at a time when government debt may be one of the riskiest assets out there. Government, on the other hand, is desperately trying to ramp up its capacity to regulate these increasingly complex and impossibly large institutions. It is trying to do so at a time when expenditures are coming under increasing pressure from the American people, who feel burdened by a ballooning national debt and government spending. Add to that our inherent God-given distrust of government, and you see we have crisis brewing.
The truth is governments can no better run banks than bankers can hold national elections. And yet, this is what seems to be happening. The solution seems pretty clear. Banks need to be regulated in a way that makes them either less big or less risky, or both. If, to use the banking regulators euphemism, some institutions are “systemically important,” then they should be regulated like public utilities: They are allowed to make certain profit over cost and submit to local political control. That will make them less sexy and banking less prestigious. But, private individuals and institutions can lend each other money on a smaller scale, without the use of government leverage or federal guarantees to depositors. This is true capitalism, when the risks (and rewards) are more fully borne by the parties to the transaction and not the broader society.
To reclaim America, we have to return both political and economic power to the people - as envisioned by the framers of the Constitution. Only when big government and big finance get out of the way will there be any hope for renewed prosperity in this country.
• Armstrong Williams is on Sirius Power 128, 7 to 8 p.m. and 4 to 5 a.m., Monday through Friday. Become a fan on Facebook at www.facebook.com/arightside, and follow him on Twitter at www.twitter.com/arightside. Read his content on RightSideWire.com.
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