I have the freedom to choose to invest outside of Wall Street. Or, at least, I still firmly believe this to be the case. As a law-abiding citizen of the United States, however, I cannot choose to operate outside of the rules that come out of Washington D.C. or Lansing, the state capitol of Michigan.
Since last month’s blog post, I attended two continuing-education classes for my real-estate license. One of them focused solely on the SAFE Act of 2008 and the Dodd-Frank Act of 2010, which go into effect as of January 10, 2014. These Acts are enforced by the new government agency that Congress created, called the Consumer Financial Protection Bureau (CFPB).
As a result of what I learned from this class, it became clear to me that these Acts essentially killed our business model, which heavily involved the use of such techniques as seller financing and lease options. For the first half of 2013, I had poured my heart and soul, not to mention time, money, and effort into implementing this business. In fact, right before the class, we came very close to closing on some deals.
Talk about going through multitudes of emotions in a short period of time – before, during, and after the class! I went from:
- fear of the laws which were little known to me at the time;
- to frustration about how Congress makes it sound as if it were the banking industry which had created the subprime-mortgage fiasco when, in fact, the origin of the problem was none other than the Congress itself which mandated to “make housing affordable for all” by forcing the banks to lend to those who should not have been qualified for loans in the first place;
- to disbelief that Congress would continue to issue mandates, in the form of these Acts, as if we, the people, need to pay for what had happened on Wall Street – instead of going after the very people who were responsible for the market crashes of 2000/2008 and making them pay for these financial disasters;
- to additional disbelief about the government officials’ inability to see what is crystal clear to most sensible Americans that to kill small businesses is to kill one of the biggest tax-revenue sources;
- to dismay at those who enacted these laws, who seem to have no concern whatsoever about stifling freedom of enterprise;
- to further dismay that we, the people, are willing to collectively elect those representatives in Congress and the President with no prior business experience, who have no clue how to create massive economic recovery through small businesses like ours;
- to feeling relieved that we did not close on any deals that would even remotely involve seller financing to consumers;
- to acquiescing to the laws for what they are – because I have no choice;
- to coming to grips with the fact that the quicker I move on to other real-estate investing methods, which clearly stay within the bounds of the latest laws being enacted, the better.
That being said, I am compelled to make a case as to why I respectfully but firmly object to our government getting involved in providing “entitlements” and “financial protections” for us, the people of the United States of America. Why?
- In the long run, NONE of the entitlement programs have ever worked as intended. Any time the government institutes programs with the best of intentions to “help us,” we, the people, end up having to pay even more for the unintended consequences. In terms of our huge national debt, what better examples could I provide than the biggest culprits, as noted below, which came to exist with the best of intentions by the government at the time?
- Social Security, enacted in 1935.
- Medicare and Medicaid, enacted in 1965.
- The above Acts under CFPB do nothing for us, consumers, who already paid the hefty price on Wall Street when there was neither protection nor restitution. Many of us, who found ourselves bewildered by what had happened on Wall Street in terms of our retirement savings in 2000 and 2008, have been doing whatever we can to recover from the losses without becoming dependent on the government. The last thing we needed was for the government to get involved and kill our personal efforts – through our small businesses – for financial recovery.
- Usually, attempts by legislators to pass new laws to “punish” businesses result in those businesses adapting to the new laws to their best advantage and passing any new costs of doing (or staying in) business along to the consumer. In the end, consumers always end up paying for the well-intended rules. For example, when laws were passed limiting banks’ abilities to charge certain fees, they quickly changed their products to charge alternative fees to make up the losses. The result is that it is now more difficult for consumers (particularly lower income) to get a “free” checking account.
- The end result of the SAFE Act and Dodd-Frank Act is that most renters (i.e., consumers) will be forced to remain renters.
I think time is ripe for us to remind ourselves of President Abraham Lincoln’s Gettysburg Address at the conclusion of the Civil War in 1863 as he spoke about freedom: “The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us — that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion – that we here highly resolve that these dead shall not have died in vain — that this nation, under God, shall have a new birth of freedom — and that government of the people, by the people, for the people, shall not perish from the earth.”
Freedom, the most precious gift bestowed upon us American citizens, is not free. America’s predecessors fought for our freedom through the Revolutionary War (1775-1783), the Civil War (1861-1865), and World War II (1941-1945, the period of US involvement).
How will we lose our freedom? Quite easily. By changing our form of government of the people, by the people, for the people, to that of the government officials, by the government officials, for the government officials. This is already happening with the government officials enacting laws that apply to all citizens except for themselves. Not all but many of them behave as if they have forgotten that they work for us, the people, and not the other way around.
The increasing number of laws that get enacted in the name of “protecting” the people from harm is analogous to us, the people of the United States of America, being frogs in a pot of lukewarm water. The changes are so insidious that, by the time the majority of us, the people, realize that these rules and regulations are doing more harm than good, it will be too late. Once lost, the only way to regain freedom would be through much bloodshed, once again, I’m afraid.
It is time we, the people, started to voice our concerns before it is too late for our children and grandchildren; i.e., the future generations of all Americans. This blog post is my first such attempt at having my voice heard.
In the meantime, I will continue to work toward my simple goals that I set out to achieve in 2004 as I left corporate America to become an investor in an effort to retain my freedom and independence.
