The Nanny Government

The government is babying us to death. Its paternalism is invading all arenas of our lives, impelling us to live so cautiously that we no longer know what it is to truly live. Our fear of litigation and our inability to take responsibility for our own actions is diapering over what used to be called Common Sense.

I recently participated in a forum sponsored by the New York Society of Security Analysts (NYSSA) on the CBOE Volatility Index® (VIX®) products available to investors. I was particularly interested in learning about the iPath® S&P 500 VIX Short-Term FuturesTM ETN (VXX) and the iPath® S&P 500 VIX Mid-Term FuturesTM (VXZ), both of which give investors the opportunity to take a position on market direction by either buying or selling volatility.

At the beginning, the speaker representing iPath informed us that he would not be passing out his slide presentation, because his compliance department would not allow him to distribute written materials without providing a complete prospectus on the products he was discussing.  This would have been a presentation nightmare.  Thus overlawyering prevailed, and he opted only to present his Powerpoint on the big overhead screens to the potential detriment of his audience’s later reflection, without paper in hand.  Compliance 1, Common Sense 0.

When I returned to my office, miffed that I did not have that handout, I started thinking about the restrictions I have to follow in my own practice.  For example, if you take a look at the popup dialog box on my website when you click on the NY Times RSS feeds, you will see an eight line disclaimer stating that the material provided is from an independent third party and is not affiliated in any way with brokersXpress, LLC (somewhat obviously).  The warning reminded me of the disclaimers you read before entering a pornographic website, telling you that the material you are about to look at is graphic.  Yikes.  Compliance 2, Common Sense 0

That night, while picking out a bottle of wine for dinner, I looked at the label to see its origin. I was at once greeted by a warning reminding me that “consumption of alcoholic beverages impairs your ability to drive a car.”   Oh really? Thanks for the warning that does no more than protect the wine producers from rampant tort litigation.

Why are we being cautioned to death?  Whatever happened to prudent risk?  Why do we feel the need to protect ourselves from ourselves?  Why do we allow trial lawyers take advantage of disclaimer loopholes?

(According to my own compliance, I now have to say “I believe” before I state my opinion on my commentary; otherwise you might construe what I am saying to be anything other than my opinion, even though what I am writing is on my own website.)

I believe:

The U.S. Government is to be blamed to a great extent for the excesses in caution that permeate our society, and for the substantial financial and intellectual cost that have led to increased waste and inefficiency.  We are presumed guilty until proven innocent.

My company, which is typical, is so afraid of what the SEC might find wrong that they insist that every “i” be dotted and every “t” crossed and that everything be done to the letter, not the spirit, of the law, lest fines for relatively minor “infractions” become punitive.

The TSA doesn’t allow a four ounce tube of toothpaste onto an airplane because liquids over three ounces aren’t allowed. I once had to dump out my baby oil which I had measured out at exactly two ounces, because the bottle exceeded three ounces.

The resources we expend to keep ourselves free and safe make a mockery of our freedom and safety.

Obama and his administration are grabbing for more power, particularly in the financial sector.  We might feel under present circumstances that what he is doing is appropriate, but bureaucracies have a tendency to grow and stagnate. The next administration might not be as ostensibly benign.

Similarly, Bloomberg chooses to usurp the will of the voters of the New York City, with the complicity of the City Council, by overturning by fiat our twice voted imposition of two term limits.   He believes that he and he alone is capable of seeing us through the current financial crises, which he might or might not be.  But at a different time with a different elected official, would we act as obsequiously as we have this time, and what could we then do about it?  Most New Yorkers I know believe that a third term for Giuliani post 9/11 would have been a complete disaster for the city.

I thought we were a country which practiced the rule of law, not of man.  As with both Bloomberg and Obama, changing precedent and concentrating of power can lead to unforeseen circumstances, which could leave us more impoverished as a nation.

Robert Musil, in his book The Man Without Qualities*, describes the condition of Austrian society at the beginning of World War I.  Pointedly referring to his native homeland as Kakania (i.e. kaka), Musil describes the idiocy with which the aristocracy attempts to create an event to celebrate the Emperor’s 70 years on the throne. In preparation, every great intellect and important political, societal and military figure will be represented at a series of gatherings to determine the actions for so auspicious an occasion.  But this “committee”, which meets regularly, can never decide what action to take, and eventually most people lose interest in the process.  They can talk the talk, but can’t walk the walk.  An inability to decide leads to confusion and paralysis.

I feel as if we in America are becoming a Society Without Qualities, but for very different reasons than those represented by Musil.  Our own leaders are frightening us into living a life of mediocrity and non-commitment. To do so, they reduce the ideas associated with risk and change to behavioral outliers rather than moral imperatives.

Our greatest enemies are the self-professed do-gooders who seek to control our thoughts and actions, the politicians and commentators of public policy who treat us like perpetual children who are incapable of deciding for ourselves what is right and what is wrong.  They think we’re infantile and incapable of rational thought, but we’re not, and our intelligence is underestimated.

I’m not suggesting that a dearth of laws and regulations is the right solution; rather that reasonable people ought to be able to make reasonable decisions with reasonable expectations of the consequences of their actions.

What can we do?  I can only hope for an intellectual uprising, not unlike the civil unrest which we are witnessing in Iran, which will right us on a path toward freedom and enlightenment, toward the re-emergence of a National Character of Qualities, where decision making is rewarded and where the common good is represented by the collective decisions of the many, not by the arbitrary fiats of the few.

What we need are for “professional politicians” (the ultimate in oxymoronic phrases) and the bureaucrats of the public sector to get real private sector jobs, to have our healthcare plans (not the cushy one for federal employees), to use our transportation system (can you really see George Bush showing his holey socks at a TSA checkpoint?) and to try to play by their rules and regulations. Do I really have to start every sentence with “I believe”?

It scares the bejesus out of me that Geithner touts that he has never worked on Wall Street.  It was Woody Allen who said in Annie Hall** “that those who can’t do teach, and those who can’t teach, teach gym”.  How do you guard the henhouse if you’ve never been a fox?  The answer is, you don’t and you can’t.

I think we need to jumpstart the way forward.  For elected officials, I reiterate my oft-cited prescriptive “OINK” or Oust Incumbents Now for Keeps. For public sector employees, I now add “BOW WOW” or Bureaucrats Out of Washington, Work Other Ways. In other words, get a real job and take a risk to succeed or fail like the rest of us.

Now don’t forget the read the subsequent disclaimer…because I told you to.

*Robert Musil, The Man Without Qualities, 1930-1942, Alfred A. Knopf, Inc., New York, 1995

**Annie Hall, Director Woody Allen, Performances Woody Allen and Diane Keaton, United Artists,1977.

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