"Regulation -- which is based on force and fear -- undermines the moral base of business dealings. It becomes cheaper to bribe a building inspector than to meet his standards of construction. A fly-by-night securities operator can quickly meet all the S.E.C. requirements, gain the inference of respectability, and proceed to fleece the public. In an unregulated economy, the operator would have had to spend a number of years in reputable dealings before he could earn a position of trust sufficient to induce a number of investors to place funds with him. Protection of the consumer by regulation is thus illusory."
by:
Alan Greenspan
(1926- ) Chairman of the Federal Reserve Board of Governors (1987-2006)
Source:
"The Assault on Integrity," August 1963 in "The Objectivist"
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Reader comments about this quote:
I don't respect anything this puppet said, esp. in regard to regulation; witness the fall of Glass-Steagal and it's culminating debacle of 07-08. Judges Brooksley Born tried to warn of derivatives and Judy Preska was forced to stop her full audit of the Fed "for some reason"... sounds like somebody's "regulations" had been broken !
 -- Dr. Tom LaMar, Keeseville, NY     
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    Pure hogwash and Adam Smith would be the first to say so.
     -- Popeye, Wichita     
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    This is so obvious a truth that it tells greatly of Greenspan's dupilicity. On one hand he is aware of, and capable of telling the truth. On the other, his integrity and honesty were obviously for sale as Chairman of the "Privately" owned, UnConstitutional and power seeking Federal Reserve, which is not Federal and has no Reserves. Thumbs down to Greenspan and the Fed, 5 stars for the quote at face value.
     -- J Carlton, Calgary     
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    Not shooting the messenger, yep - pretty much and, I agree with J Carlton. Greenspan expressed my personal experience. Regulation and statute are good when they are in harmony with law. The new policies, regulations further benefit the elites in their unlawful and heavily regulated environment of fleecing the people. I have 2 eastern European acquaintances that are taking their business back home because U.S. regulations are too inhibitive and expensive. Even a truck driver that has a few trucks is moving back with them for the same reasons.
     -- Mike, Norwalk     
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    Regulation & having a good reputation are two separate axis... J & Mike rightly so question the messenger, but fail in their own analysis of the message.
     -- Anonymous, Reston, VA, US     
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    Without regulations we get Bubbles, big bubbles and who gets stuck paying for these Bubbles? Greenspan is a major con artist.
     -- George T., portage,michigan     
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    We've had, to a great extent, a regulated economy since FDR, and look at the mess our country is in with debt so high that we can't even pay the interest.
     -- jim k, Austin,Tx     
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    He was a student of Ayn Rand in his young days, but he must have forgotten everything she said. If Ron Paul cannot get rid of the Fed-then at least he will obtain the first-ever audit of it.
     -- cal, lewisville, tx     
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    I Love that an avowed statist (Reston) calls into question my ability to analyse the effect of regulkating the so called "free market". And that george thinks without regulations we get bubbles. What bthey both miss is that A: We've "never" had a free market. We've "always" had economic fascism aka. Corporatism condoned and promoted by Government. And B: The very system that regulates the "free market" creates the bubbles with the manipulation of the currency and its value as well as implementing a "demand" economy over an actual "free" market. That kind of thinking is the result of a life time of public indoctrination and media misinformation. And it leads to the complete inability to think "critically" and call into question the staus quo. Have a good one folks.
     -- J Carlton, Calgary     
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    Yes, Mr Greenspan; well, that certainly didn't work.... That man should be in prison.... He is now creating a commodity buBble that is only harming the poor - AS USUAL............
     -- RBESRQ     
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    What's illusory is the justice that should put these criminals in prison. Bernanke is just doing what Greenspan and cohorts tell him.
     -- RBESRQ     
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    Thank goodness there are a few on this blog that see the lunacy of this quote.
     -- RBESRQ     
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    Agenda serving nonsense, as has been proven by the economic disaster.
     -- Casey, Warren     
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    I hope J, Mike, and Jim are multi-millionaires for, if not, their perception of economics and government is sadly contrary to their own interest.
     -- Dick, fort worth     
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    All those with the thumbs down, are you saying regulation based on force and fear is a good and supportive moral base of business dealing? Its been my experience in those states that heavily extol union participation, force strict adherence to regulation, and promote fear based codes fair far worse than those that don't. By way of example: construction quality is far better in Texas than Nevada for the above given reasons.
     -- Mike, Norwalk     
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    No Mike, they just don't really get what the quote is saying or that it is absolute truth.
     -- J Carlton, Calgary     
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    Once again the simpletons cry for more 'regulation' without saying what is to be regulated, by whom, and for what. "Change!" Same partisan crap. How about making it a regulation that the government cannot make promises to the people (for getting votes) to give them something (i.e. food, housing, drugs) without the money and authority to do so? How about a regulation to stop all the piling of debt upon the next generation ad infinitum to essentially buy votes in the next election? All these empty promises have broken our economy -- and the ignorant continue to cry out for more and more of their 'fair share'! I am sure these compassionate parasites have never produced anything, taken it to market, sold it, and then paid for their food, housing, and medical care with the money they made. No, they are more likely the ones that once the producer has sold his goods stop the good man and demand a percentage of what is in his pockets and an annual percentage of what his home is worth then when the good fellow dies, ransacks his home and property leaving his widow and children destitute. What these ignorant do-gooders fail to see is that the very rich they wish to plunder are the ones that benefit from the plundering regulations! Take away the regulations, and their monopolies will fall.
     -- E Archer, NYC     
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    Once again we here the tied rhetoric of the misinformed and there only form of jubilance, EGO. It's amazing that all they can do is shove tied and abusive slurs that make them feel as though they have a place in the world without realizing they are just pawns who follow the corporate mantra. We have given these people the time of day and now it;s time to stop this madness and allow them to crawl back into the caves to play with the shadows on the walls.
     -- RBESRQ     
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    It's interesting to see the same four musketeers playing their tune.
     -- RBESRQ     
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    First lets try something between 5 stars and a thumbs down. First, gold stars to Greenspan for a true statement, but only 3 stars for failure to adhere to this ethic; as the "Maestro" he was famous for his control and manipulation of the economy. He even went so far as to admit to Jon Stewart on the Daily Show that we do not truely live in a free market society. I read a lot of comments accusing others of adhering to partisan rehtoric. Regulation isn't bad, and infact is nescesary for peaceful society; the only people who don't think so are anarchists. The question isn't to regulate or not to regulate, but rather HOW to regulate. Adam Smith's idea of regulation is what Greenspan is espousing in this quote; the idea that crooked individules utilizing poor business practices, who are only out to line their own pockets at the EXPENSE of society will fall on their faces eventually, suffering the consequences of their actions. Government plays a role in this by punishing behavior that harms others (financially, physically, etc.) Regulation or no, there will always be scam artists trying to pick your pocket, whether on a busy steet corner, or in the stock market. Bernard Madoff fleaced his clients (marks) for years, perhaps as far back as the 1970's! Madoff was successful even during highly regulated times; why? For the exact reasons layed out by Greenspan here. Corruption exisits in a Capitalist society, not because capitalisim encourages it, but because in every society there are corrupt individules. The problem with institutionalized regulation is that it is people who must enforce. I recomend watching episode one of "Free to Choose" http://www.youtube.com/watch?v=D3N2sNnGwa4
     -- Travelingsponge, San Francisco     
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    Also, does anyone know when Greenspan said/wrote this? Is this from his time at the Fed, or from earlier days?
     -- TravelingSponge     
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    Individualism is not corporatism, RBE, but collectivism is! Your collectivist mantra ignores the obvious -- that the group is a corporation, and thus regulated by the corporation. The individual is not a corporation, he stands as a sovereign ruling over only himself. What collectivists fail to recognize is that we have had nothing but collectivism since the 30s and that it doesn't work, primarily because the individual is relieved of his responsibility and is treated as a ward of the state. Unfortunately for the altruists, we have yet to find worthy men/women to rule over us, to regulate what we must eat, what we may produce, how much, and at what price. If anything, collectivism has built up huge monopolies, and laws are written to force us to accept their products and services -- paid for by the government which simply borrows the money and then the citizens have to pay it back -- but we never actually pay it back, we only pay the interest, and ever the debt grows higher. The result? Crappy education (Americans are among the most poorly educated in the world), forced vaccination, sick care (not health care -- not even healing), permits for EVERYTHING, even proposed rules on how much cardon dioxide we will be allowed to exhale! Talk about EGO, Robert! To believe that YOU know better than everyone else, that YOU know what we should eat, what drugs we should take, how much of our earnings we should contribute to the state (and obviously we cannot be trusted with deciding what causes we would like to donate to), that the individual is subservient to the group, and that politicians that produce nothing and spend like drunken sailors on government contracts with their buddies are the best judges of what We the People need and that the government should provide it. Your compassion is best placed in your own hands, under your own eye, and under your own judgement. Too bad if others do not share your views, and choose to serve causes you do not -- that is life, and we should all have the opportunity to contribute in our own fashion.
     -- E Archer, NYC     
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    TravelingSponge, I think your comments earned you a place on Robert's musketeer list. It is oddly amusing to watch the liberals here attack the messenger, and those agreeing with the message, to somehow try and lesson the truth of what was said. As has been set forth, there will always be scam artists with us and the biggest malfeasants will always make regulation to hide behind. All of the liberal's generalities and character assassinations haven't here produced one substantive or truthful proof against the quote's sentiment. Protection of the consumer by regulation is illusory but, that's not to say statutes and otherwise regulation are not needed to define law. It is not for protection's sake regulations are lawfully set forth (Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety), to the contrary, it is legitimately purist and correct to define natural law as exists. Unlawful acts need be recognized contrary to law so justice might have a clear understanding and enabling proceedure.
     -- Mike, Norwalk     
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    As Tom Paine expressed it:

    " Government, like dress, is the badge of lost innocence; the palaces of kings are built on the bowers of the ruins of paradise."
     -- Patrick Henry, Red Hill     
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    I get the concept but I do wonder if the total lack of regulation would work. On the other hand regulations are not used to protect the consumer they are used to extract political contributions and to punish political opposition, It just goes back to the concept that a government by the people can only survive if the people are moral. look what is happening now. Trump gets rid of a few bureaucrats drops a few regulations and the economy goes nuts. Fewer unemployed workers, Minority unemployment at an all time low because of less government interference. Politicians have told us that more interference is needed to make it more fair for the less fortunate. It would appear that the less fortunate are more victims of big government than beneficiaries.
     -- warren, olathe     
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    To regulate during the 17th and 18th centuries, as would apply to the laws of nature and of nature's God - more closely associated with, and meant: to "make regular". By way of example, interstate commerce was/is inherently subject to natural law's fiscal law, methods and availability of transportation, justice and so forth. To make regular would to be to pass rules of order such as everyone drive on the right side of the road. The economy, commerce - life, liberty and property, etc. are all subject to natural law. Corporeal man's administration of such can be assisted through closely associated thereto rules of order. Regulation has become the carnal god's absolute tyranny through force, fear and illicit prosecutions. Morals, economics, commercial endeavors, etc. security through carnal god's mandates ("regulation") is a cruel myth. Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. (Hellen Keller)
     -- Mike, Norwalk     
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    Deregulation, the promotion of personal responsibility and Independence have re-exposed the Backbone of this Country to true opportunity, prosperity and Self worth of the Individual At Liberty. regardless of how curtailed liberty really is. The flip side, is the fouling of the socialist nanny states ability to create welfare babies, at will, dependent on handouts. and yes, they, the welfare babies and illegal aliens are crying very loud. as also their parents. Rugged Individualist founded this nation, and it is Their Children who make up the majority of the Backbone Patriots now supporting President Trump. When We rise, all rise together, even ignorant welfare babies, kicking and screaming will come to face responsibility for themselves. As for the corrupting parents, they can be shown the door. MAGA is a joy to behold.
     -- Ronw13, OR     
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