For most of the USA’s history, transactions occurred based
on pragmatic experience. Society was
shaped by countless voluntary transactions based on the accumulated knowledge
gained through experience, largely free from government interference. Frederick
Hayek stated “all the famous early law-givers did not intend to create new law
but merely to state what law was and had always been.” For example, for decades, experience had shown
that to remain strong, banks needed a certain capital base, and to lend money
to buy a house, banks required that the recipient of the loan have a 10 percent
down payment (so they would have a vested interest in the property, and to show
they had the self-discipline to manage a budget to save up the down payment) and
that payments not to exceed 30 percent of income. This kept foreclosures at a minimum. “New” law was written requiring banks to
change their policies, not based on what worked, but to make the housing market
more “fair” and to increase home ownership, and this new law did not take into
account what experience had shown to be successful, but instead was based on
how bureaucrats envisioned how things “should” be. The result was the real estate bubble that
ended with the financial meltdown of 2007. The “Affordable Health Care Act” is
the latest huge law written by our ruling elite which will replace largely
voluntary transactions between doctors and patients with detailed laws that all
caregivers and patients must follow…forget voluntary transactions based on
years of experience. More and more, voluntary
transactions, based on knowledge gained through experience, are being replaced
by very detailed, specific laws, written and implemented by an elite few who
think that their limited knowledge can construct a society of rules that is
superior to a free society. We are
quickly turning away from what has made the USA prosperous, and so far, the
results are not favorable.
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