Templeton Times: How Government Officials are Using Bank Regulations to Shutdown Industries By Robert Wenzel Economic Policy Journal

Monday, November 24, 2014

How Government Officials are Using Bank Regulations to Shutdown Industries By Robert Wenzel Economic Policy Journal

How Government Officials are Using Bank Regulations to Shutdown Industries

By Robert Wenzel

Economic Policy Journal

November 24, 2014

Lew Rockwell, in his important book, Fascism versus Capitalism, argues that the United States rather than having a capitalist economy, at its core has a fascist economy:

The state, for the fascist, is the instrument by which the people’s common destiny is realized, and which the potential for greatness is to be found. Individual rights, and the individual himself, are strictly subordinate to the state’s great and glorious goals for the nation.

In Rockwell’s view, via fascism, although the means of production are technically owned by the private sector, the rules are set for much of the economy by the government:

The reality of bureaucratic administration has been with us at least since the New Deal, which was modeled on the planning bureaucracy that lived in World War I. The planned economy — whether in Mussolini’s time or ours — requires bureaucracy. Bureaucracy is the heart, lungs, and veins of the planning state. And yet to regulate an economy as thoroughly as this one is today is to kill prosperity with a billion tiny cuts.

How accurate is Rockwell in his view that the state now plays a major role in directing the economy for the goals of the state?
Many examples can be shown, but perhaps it is most instructive when a former government official, William Isaac, former chairman of the Federal Deposit Insurance Corp., clearly explains how government is using regulations to snuff out entire industries:

The Justice Department touts its Operation Choke Point as a good-faith effort to crack down on illegal businesses, weed out fraud and protect consumers. None of these claims is true.

It is becoming clear that the real goal of the program announced last year—or at the very least a desired collateral benefit—is to target entire industries deemed undesirable by putting regulatory pressure on the banks that serve them. The House Oversight and Government Reform Committee recently released evidence that “federal regulators are pressuring banks to terminate relationships with legal yet disfavored industries, without regard to the legitimacy or risk profile of individual companies.”…

The government has gone after two dozen businesses including ammunition dealers, check-cashers, payday lenders, telemarketers, firearms and fireworks vendors, raffles, pharmaceutical sellers, surveillance-equipment firms and home-based charities. The Justice Department and several regulators have pressured banks to close accounts with these businesses—on a sweeping, industry-wide basis—without any proof of wrongdoing. By choking off their access to bank services, the government is attempting to shut these industries down or drive them underground.

An economy where the government snuffs out entire industries through back-door regulations is hardly a free market system. And the more that individuals look to government for solutions to problems, often largely caused in the first-place by government regulations already on the books, the more we move toward even more fascist-type rule, where it is the government who decides what firms are allowed to live and which are killed off. The march to this type of regulation is doing nothing but putting the ghost of the fascist Mussolini in charge.
Reprinted with permission from Economic Policy Journal.

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