How the State Can Help Poor People Stay That Way

GOP's Baker recommendations would cut off access to the market and make it harder for poor and middleclass investors to compete with the rich.

Hedge funds are innovative tools of finance. The flexibility and lack of regulation they have allow higher returns with less risk. The popularity of these investments and long history of safety speaks for itself. What better way to give the poor and middleclass a chance to get a leg up then by giving them access to the same services that millionaires have? What benefit does the State provide by cutting off voluntary exchange between two adults?

If politicians really wanted to help the poor they would get rid of the regulations that make it hard for them to move up in the first place. A good way to do that would be by letting the hedge funds themselves determine the minimum they would be willing to accept.

Perversely, the regulations put in place to help the poor (or whatever special interest group the political is trying to court) typically end up having the opposite effect of their intentions.

Examples are everywhere: the minimum wage laws that decrease employment opportunities, the rent controls that make housing scarce, the “equal opportunity” laws that turn women and minorities into liability time bombs against their will. The direct beneficiaries fight hard to retain their protected status and since the costs are diffused over a wide group, resistance to these laws is difficult to organize.
When a politician says he is “helping” the poor you can be sure of two things:


1. They will be worse off than before
2. He isn’t writing a check from his personal account