Safety Third

About a year ago, I saw part of a TED talk by Mike Rowe. You can see it here. From time to time, this gem is pushed to the forefront of the chaotic studio control room that is my mind.

The video starts with an amusing talk about his experiences in sheep castration on his show "Dirty Jobs," but the part I have mulled over time and time again is his brief discussion on "safety" on his other show "The Deadliest Catch." It starts 12:54 into the talk. He describes his epiphany on safety regulation and how they can give a worker (or user of a given tool or piece of equipment) a false sense of security - factitious safety, if you will. The worker trusts that all safety regulations, labels, and any one of a myriad of "safety" items will keep him safe. He puts so much trust in these things that, to varying degrees, he eventually relinquishes responsibility for his own safety.

Don't get me wrong: Safety training is very important. Important because it imparts knowledge - mental tools - for one to protect one's self. But too often the physical tools and book regulations can be a smokescreen. The very point the crab boat captain makes when he says, "My job is not to get you home alive. My job is to get you home rich. If you want to get home alive, that's on you."

In light of the recent passage of new financial regulations by the House of Representatives, I posit that the same is true for financial safety. In my younger years, I was very pro-regulation and pro-government. My mind was bent on seeing the government fix that which was wrong, unfair, or unsafe...but that was before I realized it's really ALL just smoke and mirrors.

Financial regulation gives the consumer/investor a false sense of security. Financial regulation is simply a maze of laws and rules that unscrupulous people learn to navigate in order to find as many loopholes as possible. New rules simply mean they look for new ways around them, while the well-intentioned, law-abiding investor places his money in a system wrought factitious safety.

Regulation encourages the investor to assume that Uncle Sam has everything protected. The reality is the regulators and the firms are in bed together. Wall Street traders learn the ropes, wine and dine with the Who's Who in the world of finance then move over to the public sector, where they end up regulating friends.

The best regulator is the investor's own mind. For example, in a wide-open, unregulated stock market, rather than relying on the myth that the Government is the fiduciary vanguard of all, investors/consumers would be use their own brain as their safety net when deciding what to do with their money. This encourages the investor to be fully educated as to their investments - or to not be an investor at all (which might actually be a good thing.) Caveat emptor should be viewed as the mantra of the consumer, rather than the harbinger of the unscrupulous seller.