This country has become more and more and more regulated with each passing year. Nearly every part of our lives, and essentially, every single bit of our business lives, is touched (molested?) by government.
For all the talk of how the banks were deregulated prior to the crash of 2008, I can tell you first hand that this is absolutely not so in many ways. The amount of paperwork involved in doing anything in a bank was massive thanks to any number of laws, but Sarbanes Oxley, and The Patriot Act were the most obvious regulatory burdens day to day.
Now we have Dodd-Frank layered on top of all the prior regs which essentially codifies a 2 tiered economy. Now there is Too Big to Fail, which has the backing and largess of the government at its disposal, and then everyone else. The “everyone else” is the heart of the economy, where jobs are created and ideas blossom.
Insurance is highly regulated. Anything to do with health care is highly regulated. Farming is regulated. Opening a business of any kind is highly regulated. Everything must be reported. Everything must meet certain guidelines if one wishes to stay within the good graces of the law. The TBTF guys have the resources to comply. Many of the smaller fish do not.
Add a Federal Reserve, which is repressing interest rates and making it very difficult to amass capital without significant risk, and it’s easy to see why this economy keeps sputtering.
(From the Washington Times)
The Fed also imposed the hidden tax of capital allocation as a result of its artificial low-interest-rate policies. Simply put, large institutions with strong balance sheets or companies that have been designated “too big to fail” (a few major financial institutions) can obtain all the loans they want at virtually zero interest. Smaller companies, particularly new ventures, are being restricted in their ability to get funds because of all the new regulations supposedly designed to reduce risk. Those regulations have the same effect as imposing a high tax on smaller firms and startups — which also happen to be the big job creators and innovators. In effect, we have created a system in which small, innovative firms are being “taxed” to subsidize large or government-favored enterprises.