“Regulation” v. “Free Market”

An old friend is back in the news. Once again, we hear a lot of jabber about our economic system and whether we should have more regulation or more freedom from regulation. I suggest that financial planners are uniquely positioned to provide special perspective on the issues.

We have to change the nature of how we address the issues, however. We are not doing ourselves any favors by arguing macro policies that are merely continuations of old and irresolvable arguments between partial truths. People have been clashing over these issues for a very long time to no productive end that I can see. Rather, I think we should acknowledge that both “regulation” and “free-market” are going to be part of whatever system exists. From there, I suggest we should be looking at what is special about our perspectives. I think it is part of financial planning’s special gifts back to the world that we can look at them through the eyes of folks with the unique experiences of working with individuals and the consequences of words in action– for better and for worse.

Some of this is a matter of chosen metaphors. Obviously, economies must function within containers reflecting human and legal realities. Accordingly, as noted above, there will be some measure of both “free markets” and “regulation” in any functional economic system. From there, the issue is the nature of the container in which we function from a macro perspective.  If we look at them as the metaphoric container in which individuals function for their financial lives, then our conversations can engage the nature of that container and work towards creating the sort of container that lets us build wealth consistently and productively.

The mistake is to treat these issues as swords– which seems to be the prevailing temptation.  With that view, the conflict between the “regulation” and “free-market” will be as unproductive as it will be perpetual. At this point in history, these swords stem from the capitalist/communist dialectic that is as tired as it is old.  The Wealth of Nations was published in 1776 and Capital (Das Kapital)  was published in 1867.  Both were written in mostly preindustrial resource-based economies and class-based social orders. Communications were primitive, at best. Political theory was essentially undeveloped. While market tampering shenanigans certainly existed in Marx’s time, they did not have the reach of today’s financial vehicles. Neither were institutions “too big to fail” nor could computer-based financial instruments exists. Most importantly, people’s lives were considerably less money based than is the case today. The same forces that gave rise to money based lives are the same ones that have generated a robust financial planning profession.

The question is what to do with this? Especially, how can we help with the “free markets” versus “government regulation and administration” conversations in the creation of viable, healthy containers? As personal financial advisors what do we know that we can share? How can we hold our end of the rope to provide appropriate tension within the conversation?

This business of working with money is generating huge issues. I don’t believe we can afford to sit on the sidelines as others hash these out without the benefit of our experience and perspective. It is a huge challenge.

I want to encourage you to sign up for the Art of Hosting gathering at the end of August in Estes Park sponsored by FPA (http://www.berkana.org/index.php?option=com_content&task=category&sectionid=14&id=345&Itemid=447. I believe this gathering will be important to these issues and that these issues are important to the world.

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