Browsing the archives for the intervention category.

Ancient Wisdom

intervention

ancient_wisdom

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Equal Opportunity

finance, government, intervention

The poor need not apply.

I was discussing hedge funds with my uncle a few weeks ago and he was impressed that many had very high annual returns.  Of course, with higher returns comes higher risk, as demonstrated by the massive losses hedge funds suffered during the 2008 stock market correction.

However, he was interested enough that he asked me how he could invest in a hedge fund.  I explained that he would have to buy into one with a large sum of money, typically $1-$5 million dollars.

He was disappointed, not so much that the investment was out of his reach, but that the system seemed rigged against poor people.  He didn’t like the idea that there were opportunities only available to the rich.  Rich get richer, and all that.

Well, I didn’t know exactly what to say about that.  Sure, having more capital will always open up more opportunities.  Not many individuals have the savings to start a competitor to FedEx.

I considered trying to justify the minimum buy in by arguing that it lowered administrative costs of dealing with lots of clients.  However, there are other investment vehicles, like close-end mutual funds that are exclusive, too.

Then today, I was reading a little bit about hedge fund history.  Apparently, Regulation D of the Securities Act of 1933 requires that hedge funds be offered solely to “accredited investors.”  What is an accredited investor? 

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Parent’s License

intervention

A friend of mine said, “It is ridiculous that the government regulates driving, but not having children”.  I agreed with her statement, but not her sentiment.

It makes sense that if driving is licensed, then then having children should also be licensed. So logically the choice comes down to total government or no government.

It’s true that not all parents do a great job, but government hasn’t exactly stamped out automobile accidents either.

You might think that licensing drivers at least gives people an incentive to learn some basic driving skills.  But think about what is required to get a driver’s license.  Not much.  Some very basic driving techniques.  Basically nothing in the way of being responsible.

Now consider a free market system. 

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Be an Organ Donor

intervention

The government sent me a nice, glossy advertisement telling me that it would sure be swell if I signed up to donate my organs when I die. Apparently there is a tragically short supply of organs and many people who need transplants are on waiting lists to get them.

Since shortages are only caused by government price controls, it seems a little strange for the government to ask me fix the problem.  All they need to do is remove the price control and the free market will provide all the organs people want.

In this case, the government sets the legal price of organs at zero dollars. The only people who are supplying them are those who are willing to give them away for free.

According to organdonor.gov, each day about 77 people receive organ transplants.  However, 19 people die each day waiting for transplants that can’t take place because of the shortage of donated organs.  The first thing that occurs to me is that the government kills 19 people each day with their price control on organs.  The second thing is that such a large number of people are getting their organs for free.  It seems likely that the remaining gap would be easily surmountable with a little bit of freedom.

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