Think Freely Media presents Common Sense with Paul Jacob

Every time a financial fiasco hits, politicians readily expand regulations. But what’s the point of adding to the regulatory barrage if it’s all just for show?

They studiously avoid asking the right questions:

  1. What previous regulations caused (or helped cause) the fiasco?
  2. What previous regulations that could have prevented the fiasco weren’t enforced?

Economist Gerald O’Driscoll, Jr., writing in the Wall Street Journal, adds a few notes of caution to the current regulation madness. Most regulatory bodies get “captured” by the businesses they regulate. A huge amount of research shows how supposedly anti-business regulations serve the interests of some businesses at the expense of their competitors.

It’s the crony capitalist equivalent to politicians making it harder for challengers using “campaign finance” regulations. Same game, different venue.

O’Driscoll also explains which regulations weren’t enforced prior to the recent meltdown — those against fraud. This form of regulation is not like the regs politicians usually propose. It’s basic rule of law, the government’s first responsibility.

And regarding Lehman Brothers, Goldman Sachs, and Bernie Madoff, government failed.

O’Driscoll argues that multiplying rules and regulations is not merely the wrong response, but a sorry repeat of the last century’s “great intellectual failure.” Pity, then, to see the current administration push just that.

Following this path will just lead to the same old recycling of the boom and bust cycle. Freedom and responsibility — where criminal fraud is actually fought by government, not encouraged — work better.

This is Common Sense. I’m Paul Jacob.

By: Redactor

9 Comments

  1. Bill G says:

    The place where regulation is most needed is against the government. We used to have the Constitution to do that but it has sadly been trampled underfoot. Corruption has taken hold and the moral checks and balances which once made this country workable have diminished in direct proportion to the decline of religious adherence. It shouldn’t surprise us, John Adams said our government wouldn’t work with immoral people.

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  8. Drik says:

    Management by intent instead of management by objective.

    Management by objective is actually taught in business school and requires assiduous determination of results as one goes along in order to continue making decisions.

    Witness the Department of Education, which despite spending 100 billion a year now, has had zero impact on student test scores in all the years of its existance. Somehow, voting against the continuance of this sacred cow is allowed to be confused with being against education.

    What we’re doing in DC, does not depend on results at all. Sort of the legitimization of management by teen angst.

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