Cognitive Dissonance and…Capitalism: Metaphysical Libertarianism in Changes to Dodd-Frank?

According to “Nobelist Milton Friedman”[1] “we are all Keynesians now.” I believe this may not be true if we eliminate Dodd-Frank.

So is President-Elect Donald Trump’s attempt to eliminate Dodd-Frank (“regulatory reform measure”[2]) an example of metaphysical libertarianism? Metaphysical libertarianism “asserts that people are free and responsible”[3] which if true we could eliminate Dodd-Frank and there wouldn’t be repercussions.

So where can we turn to find answers when we know people are not always responsible?

John Maynard Keynes believed that fixing problems in capitalism involves putting pressure on our representatives to support a mixed economy one where the government has a role in the laws regarding investment banking. This mixed economy may be what Dodd-Frank has provided Americans with now and in the past few years.

Which brings us back to last week’s blog topics on “the free will problem.”

The free will problem is defined as “the problem of nature of free agency and its relation to the origins and conditions of responsible behavior. For those who contrast ‘free’ with ‘determined’, a central question is whether humans are free in what they do or determined by external events beyond their control. A Related concern is whether an agent’s responsibility for an action requires that the agent, the act, or the relevant decision be free. This, in turn, directs attention to action, motivation, deliberation, choice, and intention, and to the exact sense, if any, in which our actions are under our control. Use of ‘free will’ is a matter of traditional nomenclature; it is debated whether freedom is properly ascribed to the will or the agent, or to actions, choices, deliberations, etc.” [4]

If we provide Americans with free will to borrow as much money as they want without a regulated credit reporting system then there is no checks and balances system in our day to day transactions. If we allow banks to do whatever they want we can breed terrorism.

In the case of eliminating Dodd-Frank it is the banks and credit reporting agencies that would be free, which is confusing. This in my opinion would eliminate a mixed economy under Keynesian ideals.

What is the Dodd-Frank Act?

“The Dodd-Frank Act implements changes that, among other things, affect the oversight and supervision of financial institutions, provide for a new resolution procedure for large financial companies, create a new agency responsible for implementing and enforcing compliance with consumer financial laws, introduce more stringent regulatory capital requirements, effect significant changes in the regulation of over the counter derivatives, reform the regulation of credit rating agencies, implement changes to corporate governance and executive compensation practices, incorporate the Volcker Rule, require registration of advisers to certain private funds, and effect significant changes in the securitization market. Although the legislation calls for a number of studies to be conducted and requires significant rule-making, we all will be required to be intimately acquainted with the Dodd-Frank Act.”[5]

[1] Economics Explained by Robert Heilbroner and Lester Thurow page 40

[2] Summary Dodd-Frank Act | Morrison-Foerster, page 1

[3] Cambridge Dictionary of Philosophy | Second Edition page 327

[4] Cambridge Dictionary of Philosophy | Second Edition page 326

[5] Summary Dodd-Frank Act | Morrison-Foerster, page 3


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