Continua

Can we please all take a step back and recognize the nature of continua? (Note: That’s the plural of continuum)

Continua are the reason why the same cause can have two different effects, at different ends of the spectrum. For instance, blowing on hot food helps to cool it down, because our breath is cooler than the food, but blowing on our hands on a freezing winter day helps warm them up, because our breath is warmer than the ambient temperature.

A bell curve is a perfect example of a continuum, and I’ve spoken at length about the Supply/Demand curve and the Laffer curve and the mistaken notion that just because at some points on the curve a reduction in price and/or tax rate will result in higher overall profits somehow magically it follows that in ALL cases reduction will result in same. Although some politicians seem to want to imply to the contrary, cutting the tax rate to zero would not miraculously solve all of our resource problems.

The one I want to talk about today, though, is the continuum of governmental regulation. We can all cite examples of government regulation gone too far, causing damage far in excess of the problem it was intended to solve, but it is possible to take regulation cutting too far.

The examples are numerous. The Airline Industry. The Savings & Loan Industry. The Energy Industry (Enron). Most recently the Mortgage Industry.

And yet there are those who, having successfully removed large percentages of the governmental oversight of said industries and then watched as those industries got into huge trouble (either for themselves or for their customers), respond by wanting to cut even MORE regulation.

Case in point, a recent speech by John McCain in which he said “our financial market approach should include … removing regulatory impediments”.

Senator McCain, the fox was left in charge of the hen house, and now most of the hens are gone. Do you HONESTLY believe the best solution to the problem is to allow the fox more latitude?

Our society has been slowly and deliberately conditioned to believe in black and white. We see it every day in the labels “liberal” and “conservative” that leave those of us who choose a sensible mix of both philosophies branded as extremists on the other side by people of both stripes, for not swallowing THEIR philosophy hook, line and sinker. We see it in what we’re told about Iraq and Iran and other current hot spots of anti-Americanism, being told that they’re the bad guys and we’re the good guys instead of anything like a comprehensive approach to foreign policy that says “Let’s try to understand what we each want, so we can understand why we each think the other guy is the bad guy”.

And now we see it in the fallacious argument that because it is possible to have TOO much regulation, and that in such situations some deregulation is best for all concerned, that therefore that is ALWAYS true.

Don’t fall for it. The Mortgage Crisis happened because former Senate Banking Committee chair (and current McCain advisor) Phil Gramm persistently weakened governmental control over mortgage lending practices, allowing more foolish and ill-advised loans to be written, ending with companies like Bear Sterns going belly up and loads of people looking at losing their houses.

When an action has a bad result, only a fool thinks the solution is more of the same, while still residing in the same general area of that particular continuum.

Liam.