Last week I asked, in effect, Who regulates the regulators?
It does no good to say “the people,” because — as much as I want government to be ultimately controlled by the people — if you’re like me, you don’t know enough to micro-regulate high finance.
But there’s something I didn’t mention last Wednesday: The regulators don’t have that knowledge, either.
Even keeping eyeballs on simple fraud turns out to be difficult. Trying to micromanage high finance? Much harder.
But the congenital inability of regulators properly to regulate doesn’t mean that we must consign ourselves to a never-ending, Sisyphean cycle of boom and bust.
Many of the instruments of the modern federal government try to do too much. These very institutions, because they hubristically attempt to regulate away boom bust deliver just the opposite. They make sure booms go bust in messy ways.
Here’s a fresh example: “Lack of regulation” wasn’t the main reason for this latest bust. More important? The “too big to fail” subsidy. By giving Wall Street, big bankers, and financial intermediaries the impression that they would be bailed out in case of implosion, those very same folks behaved in such a way to risk said implosion, and thus needing the bailouts.
Which happened.
Which started the cycle all over.
Only by going back to basics can we improve our long-term economic outlook — not by government micromanaging the economy.
Nicely, citizens like you and me can understand these “basics.”
And defend them.
This is Common Sense. I’m Paul Jacob.
2 replies on “Our Limited Abilities Require Other Limits”
Government “Regulators ” who are not contained by strict provisions of law tend to expand. Once regulations are in place, they look ou and say, “O.K., what do I do now?”
:ike th EPA and its regulations, they protect species which aren’t even native because they have run out of native spcies to protect. Try to change toilet habits of milkcows by charging fees on their flatulence. See residential storm drains as waterways because they need to find new ways to exercise their authority. :olethe Public Privae Partneship, they operate withou any real oversight. An invitation to abuse. Even if intentikons are good. Back to basics. Minimum regulations with both limits and oversight defined by law.
Good observations.
Has any regulator been held accountable? What regulator or Congressman was held accountable for Bernie Madoff? What regulator or Congressman was held accountable for the failure of Fannie Mae and Freddie Mac?