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Archive for June 17th, 2010

The kids filed back into class Monday morning. They were very excited.
  
Their weekend assignment was to sell something, then give a talk on productive salesmanship.
  
Little Sally led off: “I sold girl scout cookies and I made $30,” she said proudly, “My sales approach was to appeal to the customer’s civil spirit and I credit that approach for my obvious success.”
  
“Very good,” said the teacher.
  
Little Jenny was next.
  
“I sold magazines,” she said, “I made $45 and I explained to everyone that magazines would keep them up on current events.”
  
“Very good, Jenny,” said the teacher.
  
Eventually, it was Little Johnny’s turn.
  
The teacher held her breath…
  
Little Johnny walked to the front of the classroom and dumped a box full of cash on the teacher’s desk. “$2,467,” he said.
  
“$2,467!” cried the teacher, “What in the world were you selling?”
  
“Toothbrushes,” said Little Johnny.
  
“Toothbrushes,” echoed the teacher,
  
“How could you possibly sell enough tooth brushes to make that much money?”
  
I found the busiest corner in town,” said Little Johnny, “I set up a Dip & Chip stand, I gave everybody who walked by a free sample.”
  
They all said the same thing, “Hey, this tastes like dog shit!”
  
Then I would say,”It is dog shit. Wanna buy a toothbrush?”
  
“I used the governmental approach of giving you something crummy that they say is good, and then making you pay to get the awful taste out of your mouth.”

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President Andrew Jackson is believed to have said that “One man with courage makes a majority.” Well, let’s hope this statement also applies to women. The incoming Prime Minister of Slovakia, Ms. Iveta Radicova, has the power to stop the corrupt and misguided European bailout scheme. At one point, Irish voters had the power to stop more centralization, bureaucratization, and harmonization in Brussels. Then the President of the Czech Republic had the opportunity to derail the movement to a socialist superstate in Brussels. In both cases, the forces of statism eventually prevailed. The bailout is a different issue, but the underlying issues are the same. Should nations have both the sovereign right to determine their own policies and should they also have the responsibility of dealing with the consequences of those actions? Here’s a blurb from the EU Observer about whether Slovakia will save Europe from the political elites:

The emerging new leadership in Slovakia has said the country will not contribute its share of the €110 billion rescue package for Greece. In addition, Bratislava is likely not to add its signature to the €750 billion eurozone support mechanism – something that could put the entire project on ice. …”It would be a serious blow to the EFSF and the euro area’s ability to stand behind its members [if a member does not sign],” a senior eurozone official told this website. He explained that all 16 signatures on the document – which specifies provisions on how to issue loan guarantees if necessary – are required to bring the emergency mechanism to life. …Conservative politician Iveta Radicova, the likely next prime minister, described the bloc’s €750 billion rescue fund during the pre-election debates as “bad, dangerous and [the] worst possible solution.” On Tuesday (15 June), Ms Radicova also re-iterated that she is against Slovakia providing any financial support to Greece.

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In a column for the Washington Times, my Cato colleague Richard Rahn uses the Securities and Exchange Commission as an example of a government agency that fails to perform its core mission and then uses that failure to seek a bigger budget.

The budget for the Securities and Exchange Commission (SEC) grew tenfold (to more than $1 billion) in the past 25 years, but there is no evidence it has made us any safer from financial fraud. In fact, the opposite seems to be the case. The Madoff Ponzi scheme was the biggest financial fraud ever. Yet when knowledgeable people presented evidence of the Madoff scheme to the SEC, they were just blown off. Now the SEC wants a bigger budget as a reward for its failure, and the agency and members of Congress are demanding more power for the SEC. The United States has many laws against financial fraud, so that is not the problem. The problem may be – in addition to SEC incompetence – that the public assumes the SEC is looking out for it and consequently fails to do proper due diligence. In other words, the existence of the SEC may be increasing rather than diminishing risk.

The more profound issue, which Richard also addresses, is whether the very existence of bureaucracies such as the SEC results in more fraud and financial turmoil. Or, let’s flip the question: Is there any evidence that the SEC (or other bureaucracies) have made a positive difference? The answer isn’t necessarily no, but it sure would be nice to see any peer-reviewed evidence that the answer is yes.

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