Vin Suprynowicz

Huge financial institutions long screened from normal investor skepticism by the assurance that “They can’t fail, they’re federally regulated!” are dropping like dinosaurs in the snow.

In this crisis of consumer confidence, the unreconstructed statists of academia and the Left Coast press finally see their main chance to advance socialism in America by another two or three giant strides.

The brazenly rip their shirts and wail that all the fine regulatory agencies built up under Roosevelt, Wilson, the other Roosevelt, and Saint Lyndon of the Pedernales have been secretly disbanded and sold for scrap since Reagan’s ascendancy in 1980, referring to “the structural changes of the past 28 years that have made all this possible — the waves of deregulation,” in the words of Thomas Frank, the Wall Street Journal’s token Trotskyite.

Why, “Thanks to the party of Romney and McCain, federal work is today so financially unattractive to top talent that it might as well be charity work,” Mr. Frank laments.

Really? Lots of those high-paid posts now going begging? Which federal regulatory agencies have been closed and boarded up, precisely?

In fact, the regulatory maze has only gotten vastly bigger and more intrusive over those past 28 years, as you can easily confirm by going down to the bank tomorrow and trying to open an account without giving a Social Security number.

Yet the Talking Points Chorus now join their jackass voices in cacophonous song to declare “Markets don’t work” thanks to “greedy speculators” who are driving up the price of everything.

Never mind the man behind the Federal Reserve curtain, printing up greenbacks to “loan” to his banker friends by the billions till the stuff degrades to the value of Play Money. In fact, gasoline is considerably cheaper now than it was in 1958 or in 1928, if in each case you ask how much you can get for a $10 gold piece. It’s only when you price it in the pieces of green funny money which the Fed now calls “dollars” that you feel like you’re trying to buy the stuff with Cheerios boxtops.

Senate Majority Leader Harry Reid, D-Nev., made a scathing floor speech Tuesday morning in which he blamed the current mess on a former John McCain economic advisor, former Texas Sen. “Phil Gramm who, as a senator, was responsible for deregulation in the financial services industries that paved the way for much of this crisis to occur.

“It was Phil Gramm who pushed legislation through a Republican Senate that … now allows Wall Street traders to bid up the price of oil, leaving us to pay the bill,” Sen. Reid said.

Out on the campaign trail, Democratic presidential nominee Barack Obama seemed to agree, blaming the falling dominos on “the economic philosophy” that he said Republican rival John McCain shares with President Bush.

What is that shared “economic philosophy”? And what’s the alternative proposed by Sens. Reid and Obama?

I went to a yard sale a few weekends ago. The kids were selling lemonade under a big umbrella in the hot driveway for 50 cents a cup. I bought one.

Would either the kids or I have been better off if we’d both been protected from the merciless, dog-eat-dog free market by a requirement that the kids acquire a government permit for this activity, subject to inspection of the cleanliness of the kitchen where they poured their lemonade into the pitcher, as well as a certificate that the prices being charged had been OK’d by some government agency? What if that agency had decided the maximum they should charge is 17 cents, and the kids had just given up the whole thing? What if the inspector ruled the minimum price should be $1.25, in which case I probably would have just gone without? Who would that have helped?

Who says the kids and I needed any help — which is what you’re saying, if you declare you’re now convinced “The free market doesn’t work”?

Imagine you’ve got two old beaters in the garage, with Blue Book values of $1,500. You run into a collector who wants one — a rare model he figures he can fix up and re-sell for plenty. He gladly pays you $5,000 for the heap, which then allows you to give the second junker to your nephew for 10 bucks; everybody’s happy.

But if we allow government regulators to replace the “free market,” how will they earn their pay? They’ll dictate you must sell each car for $1,250 to $1,750 (since that’s what’s “fair”), pay $180 sales tax on each, and on top of that pay an additional $180 “permit application fee” per car to compensate the huge new federal “Office of Auto Price Equity” for the time they’ll spend “regulating” and “certifying” your transaction.

Instead of $5,000 you now have to settle for $3,000, out of which you pay $720 in fees and taxes — or probably half those totals, since your nephew can’t afford the car at $1,250, anyway.

Some will say, ‘That’s silly, Vin, the government isn’t interested in regulating that kind of small-time transaction!” Really? Go back to 1943 and you’ll find a huge federal Office of Price Administration, combined with an Emergency Stabilization Act that froze wages but allowed employers to woo scarce workers by offering free fringe benefits, which is how we got our current dysfunctional system of health insurance tied to employment.

The OPA regulated not only the price but also the AMOUNT of sugar, coffee, gasoline, and virtually every other commodity Americans were “allowed” to buy.

That’s what regulators do. When they regulate one thing, they find people shifting their capital to unregulated sectors of the economy, so they have to go regulate those, too. Starting last year, pawnbrokers now have to report fair-sized gold or jewelry transactions. When the new rules came down, regulators sent the pawnbrokers the same forms used by banks to report “suspiciously large” cash transactions. This was all about blocking the “financing of terrorism,” we were told — nothing to do with the IRS.

Once started, regulatory schemes have to multiply, because they never work for long. Banning speed encourages home chemists to brew it from pseudoephedrine, so pretty soon you have to get them to stop putting that in cold pills, substituting stuff that doesn’t work as well. Black markets spring up to provide folks with what they need, creating new crimes, new networks of criminals who thereby raise the capital to get into lots of other great activities like numbers-running, protection rackets, extortion. And do you think those gangs disappeared when the war ended and everything “returned to normal” in 1946?

Many will say America’s isn’t a perfectly free market, right now. Of course it’s not. So why not work to make it more free, by removing expensive, dysfunctional and/or counterproductive regulations that encourage tax-dollar bailouts while duping investors into thinking, “This must be a safe place to put my money — why, it’s government regulated!”

Why move the other way — toward less freedom and more bureaucratic control? Because we think the trial runs in Italy, Germany, and the Soviet Union in the early 20th Century turned out so well?