Does the “Fiduciary Rule” Align Capitalist Incentives with the Public Interest?

The link above is an EPI article on the risks associated with implementing the Fiduciary Rule of Dodd-Frank. This rule is so meaningful, relating to the effective alignment of incentives, its full implementation has been delayed for eight years.

Economists are always concerned with alignment and realignment of incentives. The reason is because if you have the incentive to do something, or not, you probably will, or won’t. It is like a natural law because it has symmetry of charge, parity, and transformation, which physicists refer to as CPT-symmetry.

Much of the theory behind regulation of financial markets is based on the incentive to “make markets” so that the client of a fiduciary “tends to be” positioned to take “the risk” (the fully assumed risk of loss) in late order. Since this intends to do harm to the client it is a criminal act; but because it happens in late order capitalists argue it is an act of the gods, which means the natural, default condition is a probability (an uncertainty) beyond anyone’s control (which is the “major force” of nature).

Does the truth (the hidden image) really align with the capitalist’s notion of the natural condition (as Objectivists describe it — having the symmetry of charge, parity, and transformation)? Or does the notion of “fiduciary interest” naturally align with the innate, naturally obtaining accountability (the public interest) of a free-market economia, which capitalists always operate to defeat (existing in priority) to “make markets” more “competitive and efficient?”


About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
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