Archive for the ‘Bureaucracy’ Category

Inept Regulation, Real Costs

The following two messages were discovered, adjacent to one another in an inbox, while cleaning out some old mail.

Subject: *NY FED SUSPENDS NEW BUSINESS WITH MF GLOBAL
Date: 31 Oct 2011 07:38:46 -0400

Bloomberg Bullet Points on
MF Global…

*NY FED COMMENTS IN STATEMENT ON WEBSITE

*MF GLOBAL SUSPENDED BY NY FED: CNBC

*NY FED SUSPENDS NEW BUSINESS WITH MF GLOBAL

*NY FED SAYS MF GLOBAL SUSPENDED FROM CONDUCTING NEW BUSINESS

And 25 minutes prior to these
headlines, we saw:

*MF GLOBAL SHARES HALTED

*MF GLOBAL SHARES HALTED FOR NEWS PENDING, CNBC SAYS

Subject: *MF GLOBAL FINANCE FILES FOR BANKRUPTCY
Date: 31 Oct 2011 10:19:09 -0400

Just Out…Headlines only…

*MF GLOBAL FINANCE FILES FOR BANKRUPTCY

*MF GLOBAL UNIT LISTS UP TO $50 MILLION IN DEBT IN COURT FILING

*MF GLOBAL ESTIMATED ASSETS $100 MLN TO $500 MLN IN COURT PAPERS

*MF GLOBAL HOLDINGS, BROKER-DEALER UNIT ALSO FILE FOR BANKRUPTCY

Look at the dates of these two stories. The Federal Reserve is arguably one of the most effective regulators (at least partly due to insulation from partisan political considerations and a left-handed compliment to be sure). Still, they apparently didn’t know there was a problem with MF Global, or only took decisive action hours before the firm declared bankruptcy. Note also the possibility that it was the oft-maligned market that may have been the Fed’s first clue and, at any rate, reacted before the regulator.

The Bloomberg headlines are less than clear, but my initial reading was that MF Global was being cut off from new business with the Fed. If that reading is correct, the Fed acted first to protect the Fed, and left everyone else to fend for themselves. Those with unfettered faith in the ability of gubbermint to insulate us from every ill always whine about the “harsh realities” of unfettered competition. That’s a straw man, as this country hasn’t seen unfettered free enterprise in nearly a century (or more).

The industries which elicit the loudest cries over “unfairness” and “greed” when harsh realities are meted out after they blow up, are invariably the most regulated (banking, insurance, autos, etc.). Those which are less regulated don’t seem to blow up. When was the last time Apple, Google, Facebook, Twitter, Microsoft, Cisco, etc. needed a federal bailout? Where is the real innovation and economic value being delivered — in the most regulated, or less regulated industries?

Government regulators protecting the populace is a pipe dream. They protect themselves. The costs — both bureaucratic overhead and compliance, all born by we the people — are not.

Post to Twitter

Provincial Bureaucracy

An email soliciting an IT contractor came through my inbox the other day. The body of the message included this bit:

Category: Computer Systems Analysis Services

Location: 116 W. Jones Street, Room 5200, Raleigh, NC 27603-8005

Estimated Duration: From: 7/1/2011 To 6/30/2012

Please arrange to provide 1-2 local candidates with government experience preferably with Office of the Governor, NC with following skill-sets:

This rubs me the wrong way.

Any employer gets to specify the requirements to fill a position. One would expect, at least in the private sector, that the terms are set for the purpose of finding quality candidates. When the governor’s office specifies previous government experience, and preferably within that office, it’s easy to suspect this has more to do with finding a loyal partisan than with finding the best qualified professionals.

Any government employer should be obligated to maintain open hiring policies. There ought to be an inviolable fiduciary responsibility to get the best employees possible, and there ought never be any tolerance for policies that would enable rewarding of political patrons.

I’ll allow for the possibility that valid circumstances could exist for restrictions like those in the email. But those must be rare and transparent exceptions. Otherwise, the bureaucracy becomes another rent seeking special interest.

Post to Twitter

Getting Health Care from the DMV

I went to the DMV today and came away empty handed. In fairness, the glitch was my fault, but it was minor.  Yet there was no workaround. They are closed tomorrow for Christmas Eve, and closed on the weekend anyway. This agency, which none of us can avoid, is open Mon-Fri, closing at 5:00p, making it necessary for people to miss work to do their mandated business with the state.

It was impossible not to consider how miserable this would be if the DMV were in charge of my health care. A doctor is not going to withhold vital services due to minor problems with paperwork. They will find a way to work around technicalities. It’s happened to me. A government bureaucrat, or even medical personnel who answer to a bureaucrat? I wouldn’t bet on it.

How can anyone believe what our government is about to do to us will be an improvement?

Post to Twitter