I am fairly vocal amongst my friends (and a few strangers) regarding my bias towards limited government.  The typical response I get is something along the lines of, “Are you crazy, America is the freest country in the world!”  I think the secondhand dealers in information (public school teachers and the sensationalist media amongst others) have done a great job of indoctrinating the general population into believing that we are truly free.  They really don’t notice the subtle effects of a new law here and a new regulation there.  It’s kind of like the curse of income tax withholding where by stealing our hard-earned money a little bit at a time (each paycheck) we don’t notice that we are being robbed.  I feel that our freedom is being stolen a little bit at a time.  To help drive home the point, I’ll use an average day in my life as an example.

My alarm goes off each morning somewhere between 6 and 7 am.  I am not a big fan of the buzzer so I typically set my alarm to “radio” mode.  I haven’t paid up for satellite radio, so I still wake up to “Free FM.”  Well, I am awake for a whole 10 seconds and here is my first interaction with Big Brother.  The beast known as the Federal Communications Commission (FCC) has a complete stranglehold on what we hear over the radio waves.  As is the case with the majority of government regulation, we supposedly need the FCC to “protect” the people.  In this particular case, we are being protected from offensive material on the airwaves.  Of course, “offensive” is defined by whoever happens to be calling the shots at the FCC at the time.

Next, it’s time for breakfast!  Thank goodness for those FDA-mandated nutritional labels.  Without those, I would be a confused soul eating nothing but glazed donuts and breakfast sausages.  The FDA says it best on their website under their 2009 budget recap, “FDA affects the lives of every American every day.”  After polishing off my breakfast, I head to the shower.  I have to be honest with you: I didn’t really think about how the federal government regulates my showering activities until I read an entertaining article by Jeffery Tucker which discusses the Department of Energy water-pressure regulations.  I proceed to get dressed and get ready to leave my house.  Just to recap, I have already rubbed shoulders with the FCC (2009 budget of $339 Million), Department of Energy (2009 budget request of $25 Billion) and the FDA ($2.4 Billion).  I haven’t even left the house yet!

I live in Chicago, so to avoid the perpetual road construction and ensuing traffic, I typically commute via public transportation, constructed and managed by the Chicago Transit Authority (CTA).  The CTA’s motto is “On-Time, Clean, Safe, Friendly.”  If you polled 100 CTA riders on the accuracy of the above motto, my guess is 99 of them would proceed to laugh in your face.  Now — of course — if you only ride the CTA through the nice parts of town where political pandering results in significantly more expenditures on amenities, you might agree with their motto (except for the on-time part).  I happen to ride the CTA (both busses and trains) throughout the entire city, and I can ensure you that, “Late, Dirty, Dangerous, Arrogant” would be a better slogan.  But, that doesn’t solicit additional state/federal funding, so I don’t expect to see that one used in any marketing materials in the near future.

It would be one thing if the CTA were fully funded by its riders so that some aspect of market forces would take hold.  That isn’t the case.  As you can see from page 20 of the 144-page 2009 proposed budget, CTA only recovers only 53% of its expenses through system-generated revenue.  The remaining $723 million is footed by taxpayers, many of whom don’t ride the CTA (or even live in Chicago).

Well, I’m finally at work, and now the fun really begins.  Without getting into too many details, I provide investment advisory services to qualified retirement plans.  In short, this means that I probably could not have chosen a more regulated industry (maybe health care, but I am not conceding this one just yet).  In short, I deal with the Department of Labor (DOL), the IRS, the Securities and Exchange Commission (SEC), the State of Illinois, the Federal Deposit Insurance Corporation (FDIC), the Securities Investor Protection Corporation (SIPC), the Social Security Administration (SSA), the Department of the Treasury, and a host of others that I probably don’t even know about.

In fact, many of these organizations have underlying agencies that focus on different areas of the big picture (for example the DOL has no fewer than 27 different sub-agencies).  Is it really a wonder that America is facing a retirement funding problem?  How much wealth is being destroyed by all of these agencies and their vague, subjective, regulations?  There is only so much to go around, not to mention the opportunity cost of this perverse anti-business mentality.  We have to remember that every $1 that funds one of these agencies is $1 siphoned out of the pockets of taxpaying citizens (or created out of thin air by the Federal Reserve) that could have been put to more productive use elsewhere.

Well, it’s been a long day, and its time to go home.  I board the CTA train (after a 15-minute delay) and finally get home for some R&R.  I flip on the TV (please refer to FCC comments above), for about an hour before I hit the sack for the night.  As I lay in bed, dreaming of life in a truly free society where free trade, personal property, and low taxes rule the day, I feel a scratching sensation on my cheek.  Low and behold, I haven’t even escaped Leviathan in my bed.  The scratching sensation I feel is from the tag attached to my pillow that tells me that my pillow meets the requirements of The Bureau of Home Furnishings Technical Bulletin # 117.

Regards,
Chris Lakumb

May 8, 2009

Chris Lakumb

Chris Lakumb is an investment advisor working and living in Chicago. He has earned the right to use the Chartered Financial Analyst (CFA) as well as the Certified Retirement Services Professional (CRSP) designations. Chris received his Bachelor of Arts degree in Finance from Lewis University in Romeoville, Illinois. He is a Chartered member of the CFA Society of Chicago (CFASC) as well as the incoming Chair of the CFASC Social Advisory Committee. Chris is also a member of the Profit Sharing/401(k) Council of America's Education and Communication Committee.

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