Comments On FRONTLINE's The Warning

PBS is very popular, as is the show FRONTLINE, so there are quite a few online comments now regarding their show The Warning. Although there are dissenting voices in favor of capitalism, it is the pro-statist comments that illustrate how much work remains to change the culture into a more rational environment.

Imagine attempting a rational debate with someone who says:

Big government is scary, but big business is truly terrifying and what is even more terrifying is the US government is simply a subsidiary of corporate America. The people in charge (Government and Wall Street) epitomize pure evil.

or the following:

Where are the consequences for the arrogant males who decided they would not only refuse to listen to Born--they would ruin her! Now we see that she was correct all along, while those "good ole boys" had their own free feed. Why have they not been fully investigated, brought to trial and had THEIR millions confiscated? The least that should happen to them is that they should go to prison for a very long time.

Who should go to prison? By what standard should this be determined? It is likely that instances of genuine fraud are already being prosectuted. Are we to also prosecute those who participated in deriviatives markets simply because they collapsed? Such critical questions are lost in the din of angry pronouncements.

Ayn Rand once described the protests of the hippie movement and (as I remember) attributed it to irrationality and the consequent inability to understand the world. We are still feeling the effects of the Anti-Principle Revolution in the desperate calls for enslavement (which is what oppressive economic laws amount to) constantly heard from the Left. It is like a lynch mob going after Frankenstein's monster, in which the monster is the remnants of capitalism, pieced together from parts of various ideologies and scarcely resembling its proper form. Such anger is dangerous and destructive, since it is directed at the wrong target. What we have is not capitalism, and the enemy is not freedom.

There is nothing inherently wrong with commercial transactions occurring under the radar of government, and it is only today's anti-business climate that makes such opinions commonplace. Private transactions are the essence of free trade.

At the same time, protection against fraudulent activity is an absolute requirement of capitalism. Trade itself cannot exist without contracts, and contracts are meaningless without objective statements of truth and without both parties living up to the terms described by such statements. Fraud constitutes a violation of individual rights, by undercutting the basis of voluntary interaction: knowledge.

Alan Greenspan positions himself against Brooksley Born and regulation when he says -- during an introductory meeting with her -- that fraud should not be prosecuted, and that "I think the market will figure it out". It should be noted that this information is offered second-hand in the documentary, since neither Born nor Greenspan would speak on the record about that particular conversation (starting at 15:45 in the program).

If true, this statement by Greenspan sounds very close to anarchy, so I'm hesitant to attribute it to him as presented. In other words, there is a big difference between objecting to the CFTC's particular proposal for monitoring fraud, and saying that fraud should be left to markets entirely. That sounds like the libertarian "competing governments" theory (which is actually anarchy) more than capitalism.

We cannot simply have no laws against fraud, and hope that market participants will avoid those who have committed fraud in the past. Fraud is not a market phenomenon; it is contrary to the very essence of trade. Capitalism requires fraud protection, but it must be done in a way that does not violate individual rights. Regulatory agencies violate our rights when they coerce disclosures to customers by law, or impose other such requirements for action prior to any violation occurring. This amounts to an assumption of guilt, and we must find another way.

Due to the way this issue was presented in the show, the viewer is left with the false impression that the alternative is either A) accept anything regulatory agencies want to do or B) do nothing and have no protection against fraud. That choice is itself fraudulent. Every citizen must be protected against fraud, however it must be done in a way that preserves freedom to act and to engage in private voluntary agreements with others. In fact, it is an essential part of such agreements.

On the issue of how this should be implemented, i.e. whether the CFTC has a legitimate purpose, and what form fraud protection should take, I cannot say, because I am unable to find any suitable examples. However, the principle is clear: as with violent crime, individuals -- and the businesses they form -- must be left free to act until a violation has actually occurred. In my opinion this was the issue at the heart of the documentary, and unfortunately it was an issue that was not discussed.